Jul 042019

Odilon Redon The Birth of Venus II c.1910


How do you define terror? Perhaps, because of the way the term has evolved in the English language, one wouldn’t call the west ‘terrorists’ per se, but ‘we’ are certainly spreading terror and terrorizing very large groups of people. Yeah, bring on the tanks and parade them around town. Add a marching band that plays some war tunes.

The ‘official’ storyline : at the request of the US, Gibraltar police and UK marines have seized an oil tanker in Gibraltar. The super-tanker, 1000 feet (330 meters) long, carrying 2 million barrels, had stopped there after sailing all around the Cape of Good Hope instead of taking the Suez canal on its way, ostensibly, from Iran to Syria.

And, according to the storyline as presented to and in the western press, because the EU still has sanctions on Iran, the British seized the ship. Another little detail I really appreciate is that Spain’s acting foreign minister, Josep Borrell, said Madrid was looking into the seizure and how it may affect Spanish sovereignty since Spain does not recognize the waters around Gibraltar as British.

That Borrell guy is the newly picked EU foreign policy czar, and according to some sources he’s supportive of Iran and critical of Israel. Them’s the webs we weave. He’s certainly in favor of Palestinian statehood. But we’re wandering…

Why did the tanker take that giant detour along the African coastline? Because potential problems were anticipated in the Suez canal. But also: why dock in Gibraltar? Because no problems were anticipated there. However, the US had been following the ship all along, and set this up.

A trap, a set-up, give it a name. I would think this is about Iran, not about sanctions on Syria; that’s just a convenient excuse. Moreover, as people have been pointing out, there have been countless arms deliveries to Syrian rebels in the past years (yes, that’s illegal) which were not seized.


The sanctions on Syria were always aimed at one goal: getting rid of Assad. That purpose failed either miserably or spectacularly, depending on your point of view. It did achieve one thing though, and if I were you I wouldn’t be too sure this was not the goal all along.

That is, out of a pre-war population of 22 million, the United Nations in 2016 identified 13.5 million Syrians requiring humanitarian assistance; over 6 million are internally displaced within Syria, and around 5 million are refugees outside of Syria. About half a million are estimated to have died, the same number as in Iraq.

And Assad is still there and probably stronger than ever. But it doesn’t even matter whether the US/UK/EU regime change efforts are successful or not, and I have no doubt they’ve always known this. Their aim is to create chaos as a war tactic, and kill as many people as they can. How do you define terror, terrorism? However you define it, ‘we’ are spreading it.

That grossly failed attempt to depose Assad has left Europe with a refugee problem it may never be able to control. And the only reason there is such a problem is that Europe, in particular Britain and France, along with the US, tried to bomb these people’s homelands out of existence. Because their leaders didn’t want to conform to “our standards”, i.e. have our oil companies seize and control their supplies.


But while you weren’t looking some things changed, irreversibly so. The US and Europe are no longer the undisputed and overwhelming global military power they once were. Russia has become a target they cannot even consider attacking anymore, because their armies, assembled in NATO, wouldn’t stand a chance.

China is not yet at the ‘might’ level of Russia, but US and NATO are in no position to attack a country of 1.4 billion people either. Their military prominence ended around the turn of the century/millennium, and they’re not going to get it back. Better make peace fast.

So what we’ve seen for a few decades now is proxy wars. In which Russia in particular has been reluctant to engage but decisive when it does. Moscow didn’t want to let Assad go, and so they made sure he stayed. Syria is Russia’s one single stronghold in the Middle East, and deemed indispensable.

Meanwhile, as over half of Syrians, some 11 million people, have been forced to flee their homes, with millions of them traumatized by war, ‘we’ elect to seize a tanker allegedly headed for a refinery in the country, so we can make sure all those people have no oil or less oil for a while longer.

So the refugees that do have the courage and will to return will find it that much harder to rebuild their homes and towns, and will tell those still abroad not to join them. At the same time Assad is doing fine, he may be the target of the sanctions but he doesn’t suffer from them, his people do.


Yes, let’s parade some tanks around town. And let’s praise the heroic UK marines who seized an utterly defenseless oil tanker manned by a bunch of dirt-poor Philippinos. Yay! There is probably some profound irony that explains why Trump and Bolton and Pompeo want a military parade at the very moment the US military must concede defeat in all theaters but the propaganda one.

Still there it is. The only people the US, the west, can still credibly threaten, are defenseless civilians, women, children. The leaders of nations are out of reach. Maduro, Assad, let alone Putin or Xi.

Happy 4th of July. Not sure how independent you yourself are, but I can see a few people who did achieve independence from western terror. Just not the poor, the ones that count. But don’t look at the tanks, look at the wind instead. The winds are shifting.





Jan 132015
 January 13, 2015  Posted by at 10:01 pm Finance Tagged with: , , , , ,  11 Responses »

Unknown George Daniels Pontiac, Van Ness Avenue, San Francisco 1948

I was thinking about something along the lines of The Center Cannot Hold and Something’s Got To Give earlier, but then I thought there’s no way I haven’t used those titles before. And then it occurred to me that The Automatic Earth started 7 years ago this month. Just looked it up, it was January 22, 2008. Party next week!

Of course Nicole and I had been writing before that on the Oil Drum, who then didn’t want us to write about finance. They claimed we didn’t have the – academic, they were big on academic – credentials, as if that would ever stop me. Economists, the only people with the ‘proper’ credentials, are the last ones anyone should listen to, they engage in goal-seeked analysis only (no worries, Steve, you’re still no. 1 in our blogroll).

So we started The Automatic Earth, where we could write about what we wanted and thought needed to be addressed. In 2005 it may not have seemed important to the energy crowd, but they’ve all since seen that what we insisted on talking about back then was indeed a big event. 2007 brought Bear Stearns, and 2008 gave us Lehman. Not a minor trifle to write about in 2005. Plus, that means we’ve been doing this for 10 years already. No minor trifle either.

Meanwhile, peak oil has moved way back in the line of pressing events, the Oil Drum went so far south it’s out of sight and shale oil has just about everyone believing the peak oil theory was wrong all along. It wasn’t, not for conventional oil, which was all it addressed to begin with, but so things go. The financial casino trumped energy. But now those days seem over.

In January 2012, we were forced to move again, away from the Blogger platform, where the hacking and heckling and spamming had taken on absurd forms, from which Google refused to offer us protection. We made the mistake to move to Joomla, and it took a while to change – again – to WordPress, where we are now.

That last move cost us a lot of readers and – subscription – donors, something we’re still recuperating from today. It makes the work a lot harder, as Nicole’s long absences are testimony to. But that won’t end The Automatic Earth, and at the same time, that’s enough history. In the end, there’s nothing but forward. Best rock ‘n roll line ever, hands down: I Don’t Care About History, ‘Cause That’s Not Where I Wanna Be.

I was thinking today about Yeats’ The Center Cannot Hold when I saw European stock exchanges vs oil prices, and I wondered; are you sure about this, guys? France’s CAC40 and Germany’s DAX were up about 1.5% today, Greece even over 3%. While Europe’s Brent oil standard fell twice as fast as America’s West Texas Intermediate, diminishing the ‘normal’ $5 gap between the two to 50 cents or so. And stocks rise?

There is no way one can keep falling while the other rises. The Center Cannot Hold. I see stories about Texas homebuilders getting hit by the oil price drop, and it’s still very early innings. Sure, the price of oil will go up again at some point, but it’s the very reason it will that we should fear most, whatever it turns out to be.

It could be a war, proxy or not, it could be large scale lay-offs and defaults in the US shale patch, it could be severe civil unrest in one or more OPEC nations. None bode well for us, for the west, for its citizens. And if none of these things happen over the next year, oil prices won’t perform a Lazarus act. Or a phoenix.

That shouldn’t be all that much of a surprise. We’ve been living in cloud cuckoo land ever since the financial crisis we said back in 2005 would come, materialized. We live in a world of spin and propaganda and embellished numbers , and we’ve come to see them as a new normal. It’s the 55% drop of price of oil that is the first sign that central banks don’t control the universe, or the world, or even our own lives.

But, judging by those European exchanges, we’re still not listening, or keeping an eye out. We see signals, but we don’t recognize them, we don’t know what they mean. Like this little tidbit from CNBC:

Here’s Why Oil Is Such A Problem For Corporate Earnings

On December 1st, analysts anticipated that Energy earnings for Q1 2015 would decline 13.8% compared to Q1 2014, according to S&P Capital IQ. As of Monday, analysts expected Energy earnings for Q1 2015 to decline 41.0%. Think about that: in 5 weeks, earnings expectations for the entire Energy group have gone from down 13.8% to down 41.0%.

Q1 earnings for the Energy sector were cut by $7.7 billion from December 1 through today. The S&P 500 as a whole saw a cut of $9.1 billion during the same period. So Energy is $7.7 billion/$9.1 billion = 84% of the decline in the dollar value of the earnings decline we have seen in the past five weeks. See why the market is so focused on oil for the moment?

Methinks the market is not focused nearly enough on oil. Yet. Though numbers like that should be cause for pause. Especially combined with the knowledge that most other numbers, GDP, jobs, you name them, are nothing but shrewd spin jobs. And, lest we forget, that the Fed no longer supplies free lunch. That the Fed has a plan. A plan that will benefit its owner/member banks, not you and me.

In all likelihood, the oil mayhem will start blowing up in proxy territory, perhaps Turkmenistan, perceived as a possible wound to Putin, perhaps Bahrain, where the Saudis have been interfering militarily for quite some time.

Thing is, that whole line about how lower oil prices were going to be a boost for our economies was ignorant from the start. And there’s still plenty people believing just that. That may explain those EU stock exchange gains. That sort of thing all comes from people who don’t understand to what extent oil is pivotal to our societies.

That we would be lost without it. And that dropping its price by 55% and counting will make the machine run a lot less efficiently. Think of what you pay for oil and gas as the grease that keeps the machine running. Not the product itself, but what you pay for it. We just took away a lot of grease. And you know what that does to a machine. When oil drops, so do many people’s wages, and jobs. And then businesses start to close. And we enter deflation. And more businesses close. And more jobs are lost, and more wages squeezed. Ergo: more deflation.

It’s not yet too late, but ask yourself: can the machine run for, like, another year with this diminished amount of grease? Or with even less, what if oil falls to $40, or even $30? Bad for Texas, devastating for Alaska and North Dakota, and terrible for many Middle Eastern nations that have so far been our friends and allies (even if they don’t exactly espouse the ‘values’ we so proudly proclaimed at the #JeSuisCharlie promo events). What if they turn on us? The way ISIS did?

But that’s not our biggest, or most immediate, concern. We’re not in 2008 anymore, when an oil price drop actually helped us crawl out of a tight spot. We’re $50 trillion down the road, and there won’t be another $50 trillion, or another road. For all intents and purposes, we are the center today, and we cannot hold this way.