Tuesday, April 18, 2023

Real World Problems

 ​Practical People,​

The Fed Cannot Fix Today’s Energy Inflation Problem
, Gail Tverberg​
​  ​There is a reason for raising interest rates to try to fight inflation. This approach tends to squeeze out the most marginal players in the economy. Such businesses and governments tend to collapse, as interest rates rise, leaving less “demand” for oil and other energy products. The institutions that are squeezed out range from small businesses to financial institutions to governmental organizations. The lower demand tends to reduce inflationary pressure.
​  ​The amount of goods and services that the world’s economy can produce is largely determined by fossil fuel supplies, plus our ability to use “complexity” in many forms to produce the items that the world’s growing population requires. Adding debt helps add complexity of various types, such as more international trade, more advanced education, and more specialized tools. For a while, the combination of growing energy supplies and growing complexity have helped pull economies along.
​  ​Unfortunately, the world’s oil supply is no longer growing. Without an adequate oil supply, it becomes difficult to maintain complexity because complex solutions, such as international trade, require adequate oil supplies. Inasmuch as we seem to be reaching energy and complexity limits, nothing the regulators try to do to change the debt and money supplies–even reeling them back in–can fix the underlying oil (and total energy) problem.
  I expect that the rich parts of the world, including the US, Europe, and Japan, are in line to be adversely affected by high interest rates this time. With their high levels of complexity, they are among the most vulnerable to disruption when there is not enough oil to go around...
..With their high per capita oil consumption, the combined oil consumption of Europe, Japan, and the United States amounted to almost 38% of total oil consumption in 2021.​..​ If this consumption could be brought to zero, the rest of the world could consume about 60% more than they would otherwise.​  [Note that US  per capita oil consumption is 15X that of India.]

​  ​Of course, the US currently produces most of its own oil, so its oil cannot be obtained unless the US economy collapses to such an extent that it cannot access the oil that it now extracts and refines. As indicated in the introduction to this post, the US is very dependent upon imported goods. Even goods used in the extraction of oil, such as steel pipe used to drill wells, and computers, are imported. Furthermore, whether or not problems with imported goods occur, financial problems seem likely in the near future, either caused by collapsing debt, or by the issuance of excessive new governmental debt to try to offset the problem of collapsing debt. Such financial problems are likely to make imports of required foreign goods difficult. Problems such as these might be one way the US loses access to its own oil.
​  ​A loss in a “hot” war could also reduce the ability of the US to access its own oil. Poor countries most likely covet the US’s oil resources. In my opinion, the more oil the US leaves in the ground related to climate concerns, the more vulnerable the US becomes to other countries’ trying to access its resources. For most of the world, adequate food supply has priority over climate concerns.
​  ​If total world oil supply is shrinking, as seems likely with OPEC cutting its output, poorer countries around the world are now becoming concerned about finding workarounds for this expected oil supply shortfall. One workaround would be for oil exporting countries to reduce their exports to countries that are not their close allies. Another approach would be for the poorer nations of the world to reduce the quantity of oil now used for international transport by cutting back on exports of all types of goods to richer countries...
..​When the rate of growth of the energy supply is constrained, the system starts encountering more debt defaults and banking crises. I think that this is where we are today.
​  ​In a way, the economy with all its debt is like a Ponzi Scheme. It depends on a growing supply of energy and other resources to continue to be able to pay back its debt with interest. The higher the interest rate, the more difficult it is to keep the whole arrangement operating.
​  ​Something will have to “give,” as the growth in oil supply turns to shrinkage.

​  Mish Shedlock observes new candor from ECB President, but she does not mention the "weaponized dollar", which is fundamental to the 10 points he agrees with. Is global finance now opening for frank re-negotiation?
​  ​Christine Lagarde Made 10 Key Points Today and I Agree With All of Them.

​  ​Putin Makes Surprise Visit To Troops Near Frontline In Ukraine
​  That should read "visits to front lines"​. Putin is shown landing in Kherson and Luhansk battle zone-oblasts, now members of the Russian federation​, walking openly with Generals outside and inside in both headquarters, and engaging in substantive meetings to be informed by the General staff. This is a bold statement to Russians, Chinese and Americans alike. This is a national leader.

Christine sends this from Gilbert Doctorow:   Russia in the world news today: visit of Chinese defense minister, high alert naval exercises in the Pacific and charm offensives in Brazil and India
​  ​The significance of cooperation in defense of these two superpowers is news too big to ignore... Li was responsible for acquiring military hardware, and he signed the contracts to buy Russia’s world beating air defense system, the S-400, and its most advanced fighter jets. It would not be surprising if during his 4-day visit Li continued his pursuit of other world-beating Russian equipment that could be very useful in any pending military clash with the United States over Taiwan. It would also be logical for Li to be discussing which Chinese hardware could be supplied to Russia if and when the clash with NATO over Ukraine escalates to a new order of risk and China decides to abandon its present caution and throw in its fate with Russia. None of these questions, of course, figure in the reports of Western media today.​..
..On Russian television today it was a very different ongoing event which took center stage: the snap high alert exercises of the Russian Pacific fleet...TASS today has the most informative text account... We are told that the exercises involve over 25,000 personnel, 167 combat ships and support vessels, including 12 submarines, 89 aircraft and helicopters.
​  ​However, the television coverage of the military exercises on Vesti tell a far more interesting story. We were taken aboard the ships, which are nearly all newly constructed, compact, with a sharply reduced radar profile, packed with the latest design cannon and rapid fire artillery such as we otherwise see daily on the battlefields of Donbas. And they are carrying Russia’s hypersonic Kinzhal missiles, which proved their worth in the devastating attack on a bunker used by NATO officers near Lviv on 9 March. We were told today that the Kinzhal also serves as an unstoppable and highly accurate destroyer of enemy aircraft. That it sinks ships to the scale of aircraft carriers was never in doubt.​..​..Russians decided to call their Pacific Fleet exercise, which operates in particular near the Kuriles and in close proximity to Japan, at the very moment when the G7 foreign ministers are meeting near Hiroshima. Nor can one ignore the close sequence between the Russian exercises and China’s massive show of naval strength last week in the waters around Taiwan..
​..​Today’s Vesti carries video reportage of the arrival of Russian Foreign Minister Sergei Lavrov in Brazil for the start of his Latin American tour that will also include visits to Venezuela and Cuba...
​..​We may assume they have a great deal to discuss following President Lula’s visit to Beijing last week. Topics may well include the Brazilian position with respect to China’s 12 point peace plan for Ukraine, the question of creating a new BRICS currency for trade between its member states and the plans for further growing the New Development Bank in Beijing. The NDB is the BRICS’ answer to the IMF and World Bank. It is part of the new architecture of global institutions that China, and Russia, are building to underpin multipolarity.  It is relevant to Lavrov’s discussions that Lula’s former protégé Dilma Rousseff was recently elected as the Bank’s president by its Board of Directors. Since 2021 the NDB has among its members Bangladesh, Egypt, the United Arab Emirates and Uruguay. There surely will be many more members to come.
​  ​Lastly, Russian news today is carrying extensive text and video reports on the talks that Denis Maturov, RF Minister of Industry and Trade, is having in Delhi, where he heads a substantial Russian corporate delegation. The Indian Foreign Minister is shown warmly receiving Maturov with words to the effect that Russia and India share the ambition to establish multipolarity in global governance.
​  ​Per Rossiiskaya Gazeta, one of the key tasks of Manturov’s delegation is to sway the opinion of the Indian government in favor of granting Russia a further contract to build a second atomic power station. The online news agency AEX tells us that Manturov is in talks to expand direct air links between the two countries to better facilitate business exchanges and tourism. Vechernaya Moskva informs that Russia and India are working to create a reinsurance company to provide coverage for oil deliveries by ship.
​  ​In the latter regard, if I properly caught the figure given by Vesti on the fly, Russian deliveries of oil to India are now running at the extraordinary volume of 1.5 million barrels a day. This has driven up the level of bilateral trade by 50% versus a year ago. To date the figure is 45 billion dollars.
​  ​Other subjects for trade talks include closer ties in the pharmaceutical and automotive industries. An agreement for a free trade zone is under discussion, as are legal protections for capital investments.

​  Christine also sends this piece from John Helmer​, where he asserts that the Pentagon-Paper leaks signify the approaching death of the "Emperor, Not the Empire" in Washington DC. The general staff are practical, have accepted the inevitable losses of US power and prestige in the world, and want to save what is left of their military forces, and the nation. Helmer sees this as the beginning of military coups d'etat in the US, similar to what Rome had after Caligula.

 Also from Christine.  US Democrats in the House and Senate have introduced a bill that would force the White House to seek Congressional approval before ordering a nuclear strike, insisting the president should not have unilateral authority to start a nuclear war.
  Introduced by Senator Ed Markey and Representative Ted Lieu on Friday, the ‘Restricting First Use of Nuclear Weapons Act’ would prohibit any US president from “launching a nuclear strike without prior authorization from Congress,” as well as reaffirm lawmakers’ war powers under the US Constitution.

The 21-year Old Leaker — Something Is Not Right , Larry Johnson
​  ​Before you join the mob eager to lynch the poor kid, let me share what some of my friends who are veterans of the CIA and the Air Force have said about this affair in the past few days.
​  ​Both men say that the story and alleged facts smell to high heaven. One longtime buddy, a veteran of the CIA, still provides consulting services to the U.S. Government and holds the same high clearances that he had prior to his retirement. He is an experienced operations officer. He has recruited foreigners to spy on behalf of the United States, managed highly classified programs and planned and executed many covert actions. In other words, he is no desk jockey...
..During our 18 years of working on these highly classified exercises we have never seen a E3 (i.e., an Airman First Class) anywhere in the SCIF. The enlisted personnel who worked on these TOP SECRET exercises were at least a Staff Sergeant (E5). So what is a lowly E3 doing in a SCIF with TOP SECRET material and no supervision? That is the first red flag.
​  ​Another red flag, as I noted in my previous piece, is the partial copy of the CIA Operations Center Intelligence Report. Both of us have had access to CIA systems available on the military servers and we have never seen the CIA Ops Center report on any of those systems. Never! How did this 21 year old kid get his hands on that?

​  ​American-made smart bombs are failing in Ukraine, based on successful Russian electronic jamming measures, according to a Pentagon document connected to alleged leaker Jack Teixeira.
​  ​The highly-classified document not only reviews use of effective Russian countermeasures to make the smart bombs ineffective, but also says that in some cases technical problems are resulting in failure to detonate.

​  ​It seems that European countries are going to pay for their attempts to profit on cheap Ukrainian grain, which, instead of feeding the starving African countries, is being transferred to quite well-fed Europe. Ukrainian grain has already brought farmers in Eastern Europe to the brink of bankruptcy, it also turned out that it is dangerous for its consumers.
​  ​On April 13, the Slovak authorities banned the processing and sale of Ukrainian grain and flour made from it on the territory of the country. The Ministry of Agriculture and Regional Development of Slovakia stated that it found multiple excess of the maximum permissible concentration of pesticides​ 

​  ​In a 1.5 thousand tons batch of wheat from Ukraine, which was sent for threshing, “the presence of a pesticide that is not allowed in the EU and has a negative impact on human health was confirmed.” 
[Chlorpyrifos, banned in EU and US for serious medical risks including neurological, developmental and teratogenic.]​ ​The Minister of Agriculture of Slovakia explained that three independent accredited laboratories confirmed the increased content of pesticide residues.

​  ​EU slams Poland and Hungary’s ban on Ukrainian food imports as other countries threaten to join blockade
​  ​If Hungary, Slovakia, Romania and Poland all block the transit of Ukrainian food products, it would effectively result in a geographical blockade in Europe

​  The same evildoers who invested heavily in Ukrainian farmland, intending to break the laws and pay some bribes.
  ​Big Ag Panicking Over Bill to Require Labeling of Gene-Altering Products
Missouri House Bill 1169 would require labeling of products that can alter your genes. Big Ag lobbyists strongly oppose it, because it would mean labeling livestock injected with mRNA vaccines

  From Christine: Mexico’s government already faces the threat of international dispute settlements over its energy reforms and proposed ban of GM corn. It now wants to radically change the rules of the game for its huge mining sector.
  Mexico is the world’s largest silver producer, accounting for roughly one out of every five metric tons of the precious metal mined in 2021. It is also among the top ten global producers of 15 other metals and minerals (bismuth, fluorite, celestite, wollastonite, cadmium, molybdenum, lead, zinc, diatomite, salt, barite, graphite, gypsum, gold, and copper). For the past 31 years the country has functioned as a veritable paradise for global mining conglomerates, serving up some of the laxest regulations in Latin America. But that could all be about to change...

​..One thing that sets Mexico apart from most, if not all, other resource-rich countries in Latin America is the extreme preferential treatment it grants to the mining industry. In the country’s 1992 Mining Law, mining activity took precedence over all other industries and activities. Article 6 of the law reads:
​  "​The exploration, exploitation and beneficiation of the minerals or substances referred to in this Law are public utilities and will have preference over any other use or utilization of the land, subject to the conditions established herein, and only by a Federal Law may taxes be assessed on these activities.
​"​ ...

​..​In total, 11% of Mexico’s territory (20,853,928 hectares) has been licensed for mining exploration and exploitation. Of that, some 188,320 hectares are actually being actively mined by a grand total of 874 mining projects, according to a study carried out by the non-profit civil organization CartoCrítica. More than 80% of those projects operate without reporting the damages they cause or the pollutants they emit into the water, air, or land as a result of their operations, according to the study. Also, many do not report the volumes of minerals they extract from each project or how much water they use.
​  ​“Given the potentially toxic nature of contaminants associated with metal mining, such as cyanide and heavy metals, these results are especially alarming,” said Manuel Llano, a geographer with CartoCrítica.
​  ​The AMLO government’s new mining reforms are supposed to change this. The president insists that the reforms are not about expropriating mining companies’ assets but rather looking after the environment. But they also represent a rebalancing of power between the government and mining companies. They also form part of a growing resurgence of resource nationalism, not just in Mexico but across Latin America, that could have major repercussions for global supply chains.

  ​An informative interview with the Argentine Finance Minister who negotiated their last debt restructuring with the IMF. 
​  ​A Debt Crisis Looming in the Global South?​ 
 ​People are waking up to discover that another international debt crisis of enormous proportions looms on the horizon of a scale not seen since the early 1980s, after which Latin America and Africa slogged through a “lost decade.” Implosions of this magnitude can wipe out years of progress in health, education, and social stability. Yet not many people understand why and how this is happening.
​  ​As a new crisis gains momentum, economist Martin Guzman, former Minister of the Economy of Argentina and co-president of Columbia University’s Initiative for Policy Dialogue offers his perspective on what has gone wrong and what can be done to address it. In his view, you can’t understand debt crises without confronting the power dynamics at play.​ 
[Those dynamics will be renegotiated.]

​  Peter McCullough MD , ​ Novel Vaccine Technologies in Veterinary Medicine: A Herald to Human Medicine Vaccines
Explosion of Genetic Vaccines in Animals Gets Human Attention

​  Professor Anthony Hall,  Canadians Organi​z​ing to Seek Accountability for COVID Crimes
The National Citizens Inquiry on Cross-Canada Tour to Investigate "Canada's Response to COVID-19"
Seeking Justice (pictured with Chairman Mao t-shirt before cooking curry with fresh green beans)

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