06/4/15

The Evolution Of The Oil Weapon

In the age of derivatives, swaps, and electronic money transfers, a new form of warfare has emerged: financial warfare.

Recently, the US has passed sanctions on countries such as Syria, Venezuela, and North Korea , but the majority of energy related sanctions passed have been targeted at Iran and Russia.

An estimated 68 percent of Russia’s government revenue is derived from oil and gas exports, while 80 percent of Iran’s revenue comes from oil exports. That presents a very large target for the use of financial weapons.

To understand why financial warfare is now so commonplace, one must understand how it came into existence and what has been achieved taking such an approach.

The oil weapon first came into existence in 1965, when Egypt nationalized the Suez Canal. What resulted from this was a declaration of war by France, England, and Israel. As a way to counter this invasion, Saudi Arabia decided to ban exports to England and France. This embargo turned out to have minimal economic impact, as the US increased shipments to Europe, and international oil companies redirected shipments to England and France.

The next embargo imposed was in 1967, when Arab states imposed an embargo on the US, Britain, and West Germany. This embargo was enacted after a rumor surfaced that Britain and the US were providing air cover for Israeli planes, after Israel bombed Egyptian military airports in the 1967 war. This embargo failed, due to the fact that Arab oil revenues declined. This embargo also wasn’t enforced properly, as Western countries were still receiving oil from Arab countries.

But the most famous incident came in 1973. This was when OPEC issued a new embargo on countries that provided military aid to Israel, in the Yom Kippur war. This proved to have a greater economic impact on Europe and the US, because Saudi Arabia displaced Texas as the world’s swing producer.

The 1973 embargo led to an increase in domestic fuel prices, shortages of gasoline, and the rationing of gasoline fuel. This embargo changed the dynamics of US foreign policy.

After the 1973 embargo, Richard Nixon sent his secretary of state Henry Kissinger to Saudi Arabia with a proposed deal, to ensure that an embargo such as this would never happen to the United States again.

After some revisions, in 1976, the House of Saud and Henry Kissinger finally reached an agreement. The agreement did the following things, according to Marin Katusa’s 2014 book, “The Colder War.” The Saudi’s agreed to:

1. Give the US as much oil as it desired, for general consumption and national security measures. Thus increasing or decreasing oil production to the benefit of the US

2. To only sell oil for US dollars, and to reinvest profits in US treasury securities.

In return, the US guaranteed:

1. The protection of the Saudi Kingdom from rival Arab countries

2. The protection of Saudi oil fields

3. Protection from an Israel invasion.

The Saudi’s agreed to this because, even though they had vast amounts of oil, they didn’t possess an army which could protect them from its surrounding enemies; which included Iran, Iraq, and Israel.

This deal not only secured a steady supply of oil to the US, but allowed the US to expand its global footprint.

How the US and the Saudi’s colluded to topple the USSR

In 1982, a secret declaration for economic war with The Soviet Union was signed. This declaration included:

• No new contracts to buy Soviet natural gas
• Accelerate development of an alternate supply to Soviet gas for parts of Europe
• A plan to substantially raise interest rates on credit to the USSR
• The requirement of higher down payments and shorter maturities on Russian bonds.

This declaration made the USSR’s debt load much more burdensome, but what delivered the final blow to the USSR was the doubling of oil production from Saudi Arabia in 1986. This pushed oil prices down to roughly 10 dollars per barrel, thus vastly decreasing the USSR’s government revenue. This declaration combined with low oil prices, according to James Norman, author of the 2008 book, “The Oil Card,” is what led to the collapse of the USSR.

Today, the international financial system is much more sophisticated. Still, using financial sanctions with the intention of creating a de facto embargo on oil is a widespread practice today – just look at the cases of Iran and Russia.

Source: http://oilprice.com/Energy/Crude-Oil/The-Evolution-Of-The-Oil-Weapon.html

By John Manfreda of Oilprice.com

05/12/15

This one policy has correlated with higher unemployment, more bankruptcies and greater inequality. Can you guess what it is?

By: Benjamin Weingarten
TheBlaze

In a new book titled “The Floating Kilogram,” former long-time Wall Street Journal editor and founder of the New York Sun Seth Lipsky makes an impassioned, reasoned, common sense case for returning America to sound money in the form of the gold standard.

Much like Steve Forbes and Jim Grant with whom we have touched on this issue before, as Seth and I discussed during an in-depth interview, Lipsky believes there is significant economic and moral merit to backing currency with a tangible asset, with benefits for all Americans.

One of his more interesting and overlooked arguments concerns some of the devastating consequences for the country since we officially severed the link between the dollar and gold under President Nixon in 1971. Lipsky explains:

From 1947 when [the] Bretton Woods System really got operating to 1971, when the dollar was convertible into gold at a 35th of an ounce, unemployment in America averaged 4.7 percent. And then we got rid of the Bretton Woods system — we defaulted on it — we went to fiat money, and in the years from 1971 to today, unemployment has averaged significantly above 6 percent. Low unemployment: gold standard. High unemployment: fiat money.

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But it’s not just unemployment. The bankruptcy rate which Elizabeth Warren likes to focus on was one point something per thousand for years, and suddenly it shot up. When did it do that? The mid-1970s when we went off the gold standard and moved to the age of fiat money.

And you’ve no doubt read about this economic Thomas Piketty who likes to warn about the inequality rate. It was trending gently downward for years and suddenly it began to shoot up. That was the mid-1970s when we abandoned the gold standard and went to a system of fiat money.

So there are a lot of reasons to start looking at this and to see whether the absence of a sound dollar is the root cause of our system of growing inequality and high unemployment and lack of jobs and high bankruptcy rate, and to see whether something can be reformed so as to bring us back to a system of sound money. [Links ours]

The title for Lipsky’s book, “The Floating Kilogram,” reflects an editorial published in 2011 in his New York Sun, in which Lipsky asked the question, “Why don’t we let the kilogram float?” The implication is that if weights and measures are no longer defined, why shouldn’t the kilogram — a man-made measure which the New York Times noted may have been losing mass — fluctuate just as a dollar fluctuates in value. Lipsky wrote:

[H]ere in the modern age, the members of the Federal Reserve Board don’t worry about how many grains of silver or gold are behind the dollar. They couldn’t care less. And when the value of a dollar plunges at a dizzying rate, the chairman of Federal Reserve, Ben Bernanke, goes up to Capitol Hill and, in testimony before the House, declares merely that he is “puzzled.” No “new urgency” to redefine the dollar for him. The fact is that we’ve long since ceased to define the dollar, and it can float not only against other currencies but against the 371 ¼ grains of pure silver.

So why not the kilogram? After all, when you go into the grocery to buy a pound of hamburger, why should you worry about how much hamburger you get — so long as it’s a pound’s worth. A pound is supposed to be .45359237 of a kilogram, of course. But if the Congress can permit Mr. Bernanke to use his judgment in deciding what a dollar is worth, why shouldn’t he — or some other PhD from Massachusetts Institute of Technology — be able to decide from day to day what a kilogram is worth?

During our interview which you can listen to in full below, we discuss the fundamental flaws in and immorality of floating fiat money and several other topics including:

Why the gold standard is a live and vital issue today
What the Constitution says about money
Congress’ dereliction of duty on money, but causes for optimism given recent reform efforts
The three times when sound money should be sought out
Central planning of the money supply enables the expansion of the welfare state
The folly of the Fed’s full employment mandate
How America has been in default since the early 2000s

Note: The link to the book in this post will give you an option to elect to donate a percentage of the proceeds from the sale to a charity of your choice. Mercury One, the charity founded by TheBlaze’s Glenn Beck, is one of the options. Donations to Mercury One go towards efforts such as disaster relief, support for education, support for Israel and support for veterans and our military. You can read more about Amazon Smile and Mercury One here.

01/15/15

The Root of The Problem: Russia – Part 3

By: Glenn Beck

Below is Part 3 of the report compiled by Glenn’s research team for “The Red Storm”. Read Part 1 HERE and Part 2 HERE.

Vladimir Putin and his advisors have a dream. That dream is not of a great Russian Nation that once again commands respect as it used to. Their sites are set much higher. They dream of a great civilization that dominates all of Eurasia. Historically for Russians this struggle is anything but new. They’ve pursued it their entire existence. From Prince Vladimir I, to Ivan the Great and later Stalin it’s always been about Russian domination of Eurasia. Throughout history there has always been an antagonist for Russians to struggle against. The Tatars and Mongols, the Nazis from Germany and now Putin has the United States. This struggle along with their devout loyalty to the Orthodox Church has given the Russian people one of the most fiercest forms of nationalism in the world. Tapping that nationalism, historically, has had global impact.

Putin has watched the threat to Russian civilization since 2000. The ousting of Slobodan Milosevic, the Rose Revolution in Georgia, and the Orange Revolution in Ukraine would all be viewed not as native grassroots attempts at democracy but rather a direct attack from the Unites States and the EU. From then on Moscow has been on a slow methodical plan that began with the invasion of Georgia in 2008. Those in the Eurasia Party wanted Putin to invade the entire country but he stopped short. Last year, as a result of the overthrow of the Yanukovych regime in Kiev, Moscow annexed Crimea and invaded Eastern Ukraine. Again, Putin stopped short despite cries to go all the way to the capital.

The big question is…what happens next? What’s Russia doing? What should we look out for?

The Putin regime sees two main obstacles blocking their path.

The United States and European Union alliance structure.

The dollar dominated world economy.

Moscow knows they can’t defeat the U.S. and EU militarily. Instead they’ve taken Aleksander Dugin’s philosophy in Russia and exported it to Western Europe. The message is clear. Remember what makes you unique and different. For Russians it’s the Orthodox Church and their culture. For Western Europeans, it’s the self identity of each individual nation state. To tap into this Russia has been contacting and supporting far-right groups all over Western Europe. At a time when the EU has been suffering from economic hardship, unemployment and immigration issues the far-right has made significant gains.

What’s the goal? The systematic break up of the European Union at the hands of Western Europe’s far-right. Russia, like the rest of the world, remembers what happened the last time the far-right dominated Europe…but that’s exactly what they want. Remember Dugin and the Eurasia Party’s eventual goal. Before order there must be a coming chaos. As the Kremlin continues it’s operation in Eastern Ukraine the political chaos has already begun in Western Europe.

Scotland attempted to split from the UK. The Golden Dawn party gained ground in Greece. 15,000 Nazi’s marched in Germany last month. The list goes on and on and Russia has ties to nearly every major right-wing group involved:

Bulgaria – Ataka Party (there are claims that they report directly to the Russian embassy)
Hungary – Jobbik (Dugin hosted their leader Vona at Moscow State University)
Austria – FPO
Italy – Forza Nuova (Met multiple times with the Russian Duma and Putin himself)
Greece – Golden Dawn (Dugin wrote their leader Michaloliakos while he was in prison)
Germany – Pegida
Netherlands – Freedom Party
France – National Front (In November a Russian bank donated 9 million euros to Marine Le Pen and the National Front)

Not only is the Kremlin supporting these groups at the highest levels they’re also targeting Europe’s youth. Straight from Hitler’s playbook, Dugin has created a branch of his Eurasia Party that’s sole purpose is to infiltrate Europe’s young minds. They’re called – The Eurasian Youth. Sound familiar? Like their founder Aleksander Dugin, the symbol of their movement is also the 8 pointed star of chaos.

France’s National Front has a legitimate shot at gaining power in the next election. Putin has taken a special interest in Marine Le Pen and Le Pen echoes that interest back toward Moscow. Russia doesn’t even try to hide it. A bank with close ties to the Kremlin recently donated 9 million Euros to the National Front.

If Le Pen takes power in France that could be the catalyst Russia has been waiting for. A rebirth of European nationalism and the continent reset back to the 1930’s.

Russia’s second major hurdle is the dominance the dollar has on the world economy. Putin believes that the World Bank and the IMF are agents of western imperialism. He believes they use state banks (like the Bank of Russia) to lure nations into their debt based economic model. To combat this Moscow has been gathering other like minded nations who are sick of the dollar’s dominance. They’re trying to build their own version of the IMF.

They’re also trying to emphasize an economy backed by tangible resources. That’s why both China and Russia are buying up gold in bulk. That’s an understatement. Russia and China are filling their vaults with gold by the truck load. They see an eventual collapse of the western debt based economies. When that occurs the world economy will return back to the gold standard. With the combined gold reserves of Russia and China on top of their immense natural resources their economies would be unstoppable. Even more formidable if they combined that with oil and gas from the middle east. A Middle Eastern ally is crucial to that goal and partly explains their relationship with Iran.

The problem Putin’s Russia now faces is their current economic crisis. Western sanctions and the drop in oil prices have devastated the Russian economy. Lines to ATM’s and bank tellers wrap around street corners as Russians attempt to exchange rubles for dollars and euros. The Kremlin has labeled it economic warfare from the United States. The rhetoric stops just shy of calling it an act of war.

The situation in 1941 Japan can tell us a lot when analyzing Russia today. Japan attacked Pearl Harbor on December 7th 1941. But why did they do it? On the surface the act seems irrational. Most people don’t look at the root of that problem either but doing so can help us see the world from Putin’s eyes.

Like today’s Russia Japan had become increasingly aggressive. In July 1941 Japan invaded and occupied French Indochina (present day Vietnam, Cambodia and Laos). This put Japan within striking distance of other resource rich nations like Malaysia, Singapore etc. This threatened Great Britain’s cash flow giving the Nazis an advantage.

Like the west retaliated from Russia’s annexation of Ukraine, President Roosevelt retaliated and imposed economic sanctions on Japan. One of which was an embargo of U.S. oil which the Japanese economy was critically dependent on. Rather than deterring the Japanese they got even more aggressive. They saw the sanctions as an act of war. They decided that war with the United States was now inevitable. To make up for the loss of U.S. oil and other sanctions the Japanese planned to invade the Dutch East Indies, Malaysia, Singapore and the Philippines. The attack on Pearl Harbor was basically a giant flanking maneuver to make sure the U.S. Pacific Fleet couldn’t intervene.

With the Russian economy under attack and the future of Ukraine and Crimea in jeopardy how will Putin react? Do the Russians see war with the U.S. now inevitable as the Japanese did in 1941?

The way Putin responds in the next few months may decide whether he holds on to his presidency. He now finds himself in a land where he’s unleashed monsters that he may not be able to control. The fires of Russian nationalism burn hot. Russians see themselves as under attack. Not only their culture but their religion. Putin typically is content with taking his time but there is a growing majority that, like Dugin, want action now.

On the night of February 24th 1956 the public session of the 20 Congress of the USSR came to a close. Most of the delegates went home, but Nikita Khrushchev called the most senior members back to a closed private session. This session would later be dubbed Khrushchev’s “Secret Speech”.

Stalin was dead and his closest supporters (Molotov, Malenkov, Kaganovich) were set to take over. Khrushchev’s goal was to show the government that Stalin and his followers were victim of “the cult of personality”. That Stalin had made the Russian cause and struggle about his own ego and not about the Russian people. The speech was so shocking and contrary to how things had been going in the Soviet Union at the time that multiple people within the auditorium had heart attacks and passed out. The speech would be a huge success for Khrushchev and lead to the de-stalinization of the USSR. Khrushchev would seize power from Stalin’s successors.

Who is going to be the modern day Khrushchev? Who is going to come forth and point out Putin’s failures if he doesn’t give the Russian people what they want?

If Putin is forced out under present circumstances the Russian people will look for direct and immediate action. They’ll look for a leader outside the current politburo. A war hero with a track record for fighting for the reclamation of Russian civilization. The next Russian leader will see Orthodoxy not as a tool for nationalism but as a treasure he must champion. He’ll be profoundly religious and dedicated to the Russian Orthodox Church.

He may be a man like Igor Girkin Strelkov.

Girkin typically just goes by his nickname Strelkov which means “shooter” in Russian. He’s basically the Russian version of a cross between Rambo, John Wayne, and the Pope. He served in both the FSB and GRU leading insurgencies in Chechnya, Bosnia, Moldova, and Georgia.

Russians see Girkin as a sort of holy warrior defending Russian civilization from what Girkin calls “the Godless west”. Girkin’s generals and followers echo their Orthodox mission:

“As we are Orthodox Christians, this connection, this line of Orthodox Christianity goes through everything, including the awards, connection of past, future and present.” Girkin’s General “Prapor” – (on the resemblance of the Novorossia medal to the cross of St George)

“A Clash of civilizations is taking place, no more no less” “one of these civilizations stands on clearly anti-christian basis” “preventing it’s triumph itself would be an enormous contribution to the Orthodox Christian cause” – Vladimir Khomyakov

According to Girkin it was he and not Putin that “pulled the trigger of war in Ukraine”. After the Maidan protests in Kiev Girkin crossed into Crimea and led the take over. After Crimea was fully annexed he crossed into Eastern Ukraine and led the uprisings in both Donetsk and Luhansk. When the ceasefire was negotiated Girkin relocated back to Russia and has been the leading organizer for Russian fighters and equipment flowing into what he calls “Novorossiya” (New Russia).

Ditching his military uniform and donning a suit Igor Girkin has been all over Russian media lately. While Putin addresses the nation and tells them not to worry about the dire situation of the Russian economy Dugin can be seen preaching the liberation of New Russia. Not stopping at Ukraine but uniting all Russian lands…by force if need be.

“The whole Russian people should merge into one Russian state…Ukraine, Belarus, and Russia must unite” – Girkin

Ivan the Terrible was the first Czar of Russia and ruled in the mid 1500’s. He believed he was chosen by God to lead the Russian people and defend Orthodoxy. During his reign the Russian Empire would see its greatest territorial expansion ever. Is Igor Girkin the modern day version of Ivan the Terrible? Is Russia at the precipice of another period of great territorial expansion with a champion of their faith at the helm? Time will tell.