The fall in oil prices has so far saved American consumers nearly $2 billion per week on gas. But there’s a dark side to paradise. The drop in oil prices, caused by a simultaneous fall in economic demand and the sudden arrival of new supplies, has upset the status quo everywhere. The New York Times describe how we got to where we are: “United States domestic production has nearly doubled over the last six years, pushing out oil imports that need to find another home. Saudi, Nigerian and Algerian oil that once found a home in the United States is suddenly competing for Asian markets, and the producers are forced to drop prices. On the demand side, the economies of Europe and developing countries are weakening and vehicles are becoming more energy-efficient. So demand for fuel is lagging a bit.”
If this trend continues, a number of countries will be beggared, some of them quite important. The World Bank has predicted that Russia’s economy will contract by 3 percent. Yet for some strange reason the fall in energy prices isn’t boosting other countries. The World Bank “cut its global growth forecast for 2015 and next year due to poor economic prospects in the euro zone, Japan and some major emerging economies that offset the benefit of lower oil prices.”
They’re sick of something that cheap gas can’t cure. At all events Venezuela will be among the first over the cliff. According to Stratfor, a coup may even be in the offing. Frances Coppola at Forbes predicts “impending collapse” based on arithmetical certainties. “Venezuela needs an oil price of $100 per barrel to balance its external accounts, but oil is falling rapidly towards $40 per barrel.” Maduro is behind by sixty bucks on every barrel and can’t hold on for much longer.
China didn’t want to lend him any money, and oil producers didn’t want to cut production. However, he does seem to have swung some sort of financing deal with Qatar to soften the balance of payments problem. But in his absence, his opponents seized the opportunity to liven things up. Claiming that the country was “in a state of emergency”, the opposition leader Henrique Capriles called for people to “mobilize in the streets”. It is all too easy to see where this is headed.
It’s headed for the boneyard. But Venezuela is small potatoes. The recent focus on France has temporarily obscured momentous events in China. The Chinese Communist Party is purging its security apparatus, arresting one of the country’s top “spy chiefs”. China is in the midst of a life and death struggle among the men at the top. It would be as if president Obama were arresting the leadership of US intelligence and intelligence agencies and all his political rivals.
Ma [Jian] the executive deputy minister of the omnipotent Ministry of State Security and who sources say was in charge of the mainland’s massive counter-espionage operations, is believed to be close to Founder chief executive Li You who allegedly financed hugely profitable securities trades carried out by one of Ma’s relatives. …
Ma’s removal makes him the highest-ranking national security official to be investigated since the downfall of Zhou Yongkang, the country’s former security tsar, and signals a likely wave of high-level changes at the key intelligence agency.
Confirmation of Ma’s detention, first rumoured on Friday in a report by the US-based Mingjing News website which specialises in Chinese political intrigue, is sure to cause a stir in the international intelligence community where he is well-known.
According to sources, Ma is also closely linked to Ling Jihua , the one-time chief of staff to former president Hu Jintao who retired in 2013. Ling was detained last month.
Reuters says Xi Jinping has gone to the mattresses. “Security has been stepped up for Xi, his top graft buster, Wang Qishan, and Gen. Liu Yuan, who blew the whistle on rampant corruption in the military, two sources with ties to the leadership in Beijing said. Liu, one of Xi’s closest confidantes, has received death threats for exposing senior officers who were selling promotions to top posts, the sources said.”
So far Xi has survived and should he succeed we will be witnessing, according to sources who spoke to Reuters, the emergence of the first dominant figure in Chinese politics since Deng Xiaoping. Even Obama is treating Xi like someone special, as if he were what he is: a new emperor in the making.
Despite the threat of a political backlash, Xi is sending a powerful signal at home and abroad that he will be a far more assertive leader than his predecessors, Hu and Jiang Zemin. “He has consolidated power faster and more comprehensively than anybody since Deng Xiaoping,” U.S. President Barack Obama told the Business Roundtable group of U.S. chief executives in Washington last month, comparing Xi to the late party giant who led China into its market reform era. Obama and Xi met in Beijing in November.
In some way Obama’s own future depends on Xi’s specialness. The overarching uncertainty surrounding the purges is whether the leadership that triumphs can keep the Chinese locomotive chugging. If China falls over — actually experiences the long-feared hard landing — then the drop in oil prices will presage a wider downward spiral in global economic output. China, like a 400 pound climber roped to a string of mountaineers, will in its fall simply yank all the bolts out of the rock .
The Bank of America warned of “‘lethal’ damage to China’s financial system as deflation deepens”. “A credit crunch is highly probable,” said the bank in a report entitled “Deflation, Devaluation, and Default”, written by David Cui and Tracy Tian. And Disaster, he might have added.
“Eventually, all things merge into one,” Norman Maclean once wrote. And a river of oil runs through it. Petroleum serves as a hydraulic fluid that transmits pressure through the whole global economic system. Without it the landing gear won’t deploy and the control surfaces droop. It’s importance is underscored by the “28 missing pages” of the September 11 report which reportedly implicate Saudi Arabia in the attack.
The lead author of the Senate’s report on 9/11 says it’s time to reveal what’s in the 28 pages that were redacted from it, which he says will embarrass the Saudis.
A story that might otherwise have slipped away in a morass of conspiracy theories gained new life Wednesday when former Sen. Bob Graham headlined a press conference on Capitol Hill to press for the release of 28 pages redacted from a Senate report on the 9/11 attacks.
And according to Graham, the lead author of the report, the pages “point a very strong finger at Saudi Arabia as the principal financier” of the 9/11 hijackers.
“This may seem stale to some but it’s as current as the headlines we see today,” Graham said, referring to the terrorist attack on a satirical newspaper in Paris. The pages are being kept under wraps out of concern their disclosure would hurt U.S. national security. But as chairman of the Senate Select Committee that issued the report in 2002, Graham argues the opposite is true, and that the real “threat to national security is non-disclosure.”
The 28 pages may tell us whether Bush let the Saudis walk, and explain to what extent and why? It may indicate why there’s bipartisan support for keeping whatever’s in those 28 pages under wraps. Even whether the need to keep oil onside was responsible for America’s retreat from the Middle East or Obama’s bow to the Saudi King. As Brian McGlinchey, who writes in 28Pages.Org notes, President Obama himself has kept the pages secret till now, even though he promised many of the survivors of September 11 that he would release them.
According to Rep. Thomas Massie—who read the 28 pages and described the experience as “disturbing”—declassifying the redacted finding wouldn’t jeopardize national security, but would trigger “anger, frustration and embarrassment.” If so, it appears Obama’s decision about declassifying the 28 pages values his own convenience more than his personal pledges to those most profoundly affected by 9/11.
We are belayed on the cliff-face of the early 21st century, along with those countries which would harm us, with the rope of oil and the linkages of trade. Oil, that strange substance, is — was — America’s weapon against Russia. It the means of bringing Iran to heel. It will probably topple Chavism in Venezuela. The lack of it may be China’s Achilles heel. But it is also the source of radical Islam’s power over the West, and the hold which an 8th century theology has over the glittering modern world.
It brings life and it brings death. And now we have too much of this substance. The commodity which menaced the world with scarcity now imperils it with overabundance. And just as a belay rope may have too little or overmuch slack, perhaps the oil supply has limiting values beyond which things are destabilized. But we’re for it now, and perhaps it is time to unhook the carbiner and see what lies beyond the status quo without belay ropes, just fingers on rock.
Rick Rescorla, who was the director of security for the financial services firm Morgan Stanley at the World Trade Center, “had boosted morale among his men in Vietnam by singing … songs [like “Men of Harlech”] from his youth” and he did the same in the stairwell of the doomed tower, urging the terrified hundreds down the stairwell.
Between songs, Rescorla called his wife, telling her, “Stop crying. I have to get these people out safely. If something should happen to me, I want you to know I’ve never been happier. You made my life.” After successfully evacuating most of Morgan Stanley’s 2,687 employees, he went back into the building.
He was never seen again. But maybe we’ll be free of the rope now. Or at least, its master again.
Recently purchased by readers:
Salmon Fishing in the Yemen
The Golden Pinnacle
The Warrior Ethos, Steven Pressfield
The Marne, 1914, The Opening of World War I and the Battle That Changed the World [Kindle Edition]
Thief on the Cross, Templar Secrets in America (Templars in America Series Book 2) [Kindle Edition]
Recommended:
The Rise and Fall of Black Wall StreetGates of Fire: An Epic Novel of the Battle of Thermopylae, Steven Pressfield
Superfortress, The Boeing B-29 and American Airpower in World War II [Kindle Edition], by Curtis LeMay
The Man Without a Face, The Unlikely Rise of Vladimir Putin
The Girl on the Train [Kindle Edition]
Torpedo, The Complete History of the World’s Most Revolutionary Weapon
Did you know that you can purchase some of these books and pamphlets by Richard Fernandez and share them with you friends? They will receive a link in their email and it will automatically give them access to a Kindle reader on their smartphone, computer or even as a web-readable document.
The War of the Words for $3.99, Understanding the crisis of the early 21st century in terms of information corruption in the financial, security and political spheres
Rebranding Christianity for $3.99, or why the truth shall make you free
The Three Conjectures at Amazon Kindle for $1.99, reflections on terrorism and the nuclear age Storming the Castle at Amazon Kindle for $3.99, why government should get small
No Way In at Amazon Kindle $8.95, print $9.99. Fiction. A flight into peril, flashbacks to underground action.
Storm Over the South China Sea $0.99, how China is restarting history in the Pacific
Tip Jar or Subscribe or Unsubscribe to the Belmont Club
Join the conversation as a VIP Member