Month: April 2014

Rosneft has recently signed a series of big contracts for oil exports to China and is close to signing a “jumbo deal” with Indian companies. In both deals, there are no US dollars involved. Reuters reports, that Russia is close to entering a goods-for-oil swap transaction with Iran that will give Rosneft around 500,000 barrels of Iranian oil per day to sell in the global market. The White House and the russophobes in the Senate are livid and are trying to block the transaction because it opens up some very serious and nasty scenarios for the petrodollar. If Sechin decides to sell this Iranian oil for rubles, through a Russian exchange, such move will boost the chances of the “petroruble” and will hurt the petrodollar.

It can be said that the US sanctions have opened a Pandora’s box of troubles for the American currency. The Russian retaliation will surely be unpleasant for Washington, but what happens if other oil producers and consumers decide to follow the example set by Russia? During the last month, China opened two centers to process yuan-denominated trade flows, one in London and one in Frankfurt. Are the Chinese preparing a similar move against the greenback? We’ll soon find out.

The US has, to use the phrase du jour, a great deal of “privilege” because the US dollar is the standard unit of trade, most significantly, trade in oil. If you get frozen out of the dollar, you get frozen out of a large part of the world economy. American sanctions can virtually destroy a country, as banks, even non-American banks, won’t do business with a country the Treasury department has forbidden doing business with.

Breaking that—moving to a multilateral world, or to a world where trading in Yuan is just as acceptable, goes a long way to breaking American power. In general, the Europeans will follow the US lead, so moving to the Euro provides no protection from America. But moving to the Yuan and the Ruble, does. Pricing large oil transaction in rubles also helps protect the Russian currency from large moves: if the ruble drops too much, people will go into it if you can buy oil in rubles, and the Russians are opening a futures operation as well, meaning traders can make that play, even if the US doesn’t like it.

Of course, the US could go harder in sanctions, making it difficult to take those winnings and get them back into dollars or Euros, but if the trade is large enough, Chinese and Oilarchy banks will clean the money and hide the flows. London and New York will then want to get in on it, and will, through their offshore subsidiaries in various banking havens.

Note also the poke in the eye: the deal to take Iranian oil and sell it as Russian oil, bypassing the sanctions against Iran.

All of this is far more harmful to America’s real interests than any sanction the US has so far imposed on Russia.

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The Decline of Europe

By Ian Welsh

On April 2, 2014

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While the US is the hegemonic state, and the sicknesses of the world largely emanate from it, Europe is falling apart as well, it is simply doing so more slowly–unless you are Greece, Portugal or Spain.

Europe has unquestionably swung right, and England in particular was entirely complicit in the great financial collapse. Neither were Germany, or France or pretty much everyone else not involved.

Germany’s behaviour since the financial collapse has been disgusting and cruel.

Nonetheless, the northern Europeans, overall, have done a better job than the US. They have made mistakes, one of which was playing along with Bush–there was an opportunity around 04 to put the boots to America, as Europe, to break America’s hegemonic power. Europe was too scared to take the chance, and as a result America has rebounded and Europe has grown weaker–in large part because they also have refused to discipline their bankers, and because they have decided to cannibalize the weak sisters.

Everyone in the developed world, with the small and essentially irrelevant exception of Iceland, and perhaps the Scandinavians except Sweden, is going in the wrong direction. Apparent exceptions, like Germany, are only apparent. Germany’s exports are reliant on the Euro being lower than it otherwise would be because of weak sister nations in the Euro. Germany is cannibalizing the South of Europe to stay prosperous, but it’s not a sustainable situation.

The Scandinavians, overall, are handling things best, with the Swedes the worst of the bunch. They have privatized a great deal, they have not been able to handle immigration well, and have developed an underclass.

England is completely dependent on the financial industry for its survival, having, under Thatcherism and the Labor governments which continued Thatcherism, completely destroyed its industrial base. Ireland is a basket case, whose politicians repeatedly betrayed its citizens in the aftermath of the financial collapse in order to bail out banks at maximum cost to their own population.

France has been complicit in Germany’s crimes and seems not to understand that they can’t have their socialist policies in a Europe where everyone doesn’t break the rich. The Greeks are victims, but they rolled over: they had a chance to vote for Syriza, but believed the Troika’s lies that if they just played along it wouldn’t be so bad. They failed to understand that to Germans and French, they aren’t actually Europeans and need not be treated as such.

Italy suffered a coup when Mario Monti was put in power without an election and imposed austerity. To be sure, his predecessor was a scumbag, but he was, y’know, elected.

Spain, again, made the mistake of bailing out banks.

You never borrow money from the Troika to bail out your bankers. All it does is add more unpayable debt and thus increase the depth of austerity.

Europe is on a downward trend. They started from a better place than the US (universal healthcare, decent welfare systems), but that does not alter the trajectory. Their fall is an odd mixture of an insistence on keeping the EU together, while refusing to actually make the EU a proper federal state and take care of everyone in it. As it stands, the EU does not make sense: most countries, including Greece, Italy, Spain and Portugal, but not limited to them, would be better off leaving it. Or, frankly, the rest of the EU should kick Germany out, and erect tariffs against their goods.

England should be kicked out as well, for serial bad behaviour.

It is impossible, right now, to regulate the world economy in any way beneficial to ordinary citizens of the majority of states. The doctrine of free trade, which is really about free financial flows and deregulation of labor, has made actual economic policy almost impossible unless a country finds a way to opt out of the neoliberal consensus (aka. China), or use its structure to their (temporary) advantage (aka. Germany.)

Everyone is going to have to learn that impoverishing other nations is not a sustainable path to wealth. We are destroying countries at a ferocious rate: Afghanistan, Pakistan, Iraq, Egypt, Libya, Syria, Greece, Portugal, the Ukraine; with many others tottering and in clear decline (Spain and Italy, for example).

Europe is not immune to these trends; nor immune to the policies which cause them. In fact Europe has become a major force for idiot austerity and for destroying nations, as the core states sacrifice the South in hopes that the Gods of austerity will spare them.

They won’t.

The Endless Apologia

By Ian Welsh

On April 1, 2014

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Enough.

I have heard enough.

Those of us in the West live in democracies. Those democracies are not perfect, but they admit the possibility of organized change.

There are three levels to this.

The first, and most superficial, is voting on election day from a slate of candidates chosen for you by other people. Though superficial, it is not meaningless. Electing Nixon mattered. Electing Reagan twice, mattered. Electing Bush in 2004 and having the election close enough to steal in 2000, mattered. This also matters in local elections, in the Senate and the House or whatever your legislative body is. Fairly consistently, for almost 40 years, the more conservative candidates have been more likely to win.

The second level is the first level of production: the primaries. You can join a party, and vote for which candidate is placed before the public. Again, consistently, the more conservative candidates have won. In 2008 Obama was the right most of the major candidates. The truly liberal candidates weren’t even considered “viable” and never stood a chance, even though 2008 was the year that almost anyone could have won as a Democrat.

The third level is creating the candidates, taking over an existing party, or creating a new party. All of these are possible, all of them can be done.

In theory.

Also, in practice, if enough people really wanted to do it, wanted it enough to do it.

They don’t.

We are consumers. We are a consumer society. Consumer are not producers. We choose from the options presented to us, we do not make our own options. Whoever controls the menu, controls a consumer society utterly. You can choose between Neoliberals 1,2 & 3.

But even as consumers, Westerners have failed. Again, we have very often chosen the rightmost candidate of those offered to us. Our political parties, the primary voters, are even worse. Fairly often general voters choose the leftmost candidate (even if he’s only left within the context of the same neoliberal policies); primary voters have often been given the choice of real liberals, real left-wingers, and have virtually never put them up as candidate, certainly not for the top slot.

The abject refusal to accept any responsibility as a group or as individuals is at the heart of the problem. Accepting responsibility means accepting power: people without any power, slaves, have little to no responsibility. They could not, can not, make a difference.

Refusing responsibility is a way of saying “we have no power to change this.” If that’s so, you are subjects, slaves, not citizens.

America is what it is, the West is what is, the world is what is, because of Americans, Westerners, and all of us, respectively. It cannot be any other way.

Those of us who live in democracies, in particular, bear more responsibility. We were given Republics and Democracies, if we could keep them. We either have, in which case we are responsible for what they do, or we have lost them, in which case we are responsible for losing them.

We have choices, and we can make new choices. If we, again, as a group, fail to do so, then as a group we are responsible for our fate.

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Things Are Different Now

By Stirling Newberry

On April 1, 2014

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Once it was up to the state to do what was required for a good society that corporations would not do.

That time is over.

Today about 10% of the population calls the shots: primary voters, because primaries are the real elections. This is as those in power wanted it: just enough people to thwart any attempt to stampede the election, but little more than that.

There is another side to story, often commented upon, but not paid enough attention to. What our leaders give is the powerto lord it over others: Whites over non-whites, men over women, middle management over workers, and so on. We are made afraid of each other, so that whites are frightened by African-Americans, African-Americans by whites. We resent each other, fear each other, oppress each other, hate each other. This is given to us by our lords.

Only 9% of the population believes Congress is doing a good job, but it doesn’t matter, and it won’t change, because only 10% of the population chooses, and they prefer reactionaries (Obama, for example, was the most right wing of the 3 major Democratic primary candidates.)

What the oligarchs want, and what they have arranged, rather than have most of the population benasty to them, have them be nasty to each other– to waste our time on sports, conquests, and whether the guy ahead of you is white, black, Asian, Muslim, Christian, Bi orGay. As long as we’re fighting amongst ourselves, as long as we see each other as the opposition, and not them, the oligarchs are happy.

But the game is changing, because the oligarchs are turning on each other. Diane Feinstein, one of the firmest friends of the military-industrial complex and the spy industry thought she was an insider. she throughtshe was immune to being spied on, even as she gave permission to spy on ordinary people.

Now she has learned that she’s not on the inside, has never been on the inside, She’s ordinary.

Elites have a pecking order, but there is inside and there is outside. Inside you don’t get spied on; you don’t go to jail for securities fraud; you don’t go to jail for torture and mass-murder.

Feinstein has now realized that she’s outside, not inside.

This pattern is not just amongst elites, but amongst nations. The Ukrainians hated their former leader, so they rose up and got rid of him. But what they are receiving in return is worse than that they had before. This is happening around the world: Ukraine, El Salvador, Libya and Egypt are only a few of the places where uprisings have produced something even worse : where large groups of people have been told they are on the outside of the world order, and must submit to their local oligarchs (the Egyptian military has huge holdings in the economy), or whoever has the power of the gun (as in Libya.)

The world is awash in monstrous people treating other people monstrously; and the pace of nations being destroyed is picking up.

The choice is no longer Democrat or Republican, progressive or conservative: the choice is human or not.

The horizon is not so far as we can see, but as far as we can imagine

Month: April 2014

The First Real Russian Retaliation for American Sanctions

The Decline of Europe

The Endless Apologia

Things Are Different Now