Steve Bull's Blog, page 1192
February 14, 2018
The Power of Siberia and China’s Next Natural Gas Moves
Gazprom’s Power of Siberia pipeline is more than two-thirds complete. It will be delivering gas to China by the end of this year. A second pipeline is still under discussion.
A report yesterday from Alex Mercouris at The Duran noted some frustration from Chinaover the irregular liquefied natural gas (LNG) supplies coming from its contract partners in Uzbekistan and Turkmenistan.
It seems the Turkemi and Uzbek governments are shaking down China for better prices because gas demand in Western China’s autonomous regions is growing rapidly. Complicating matters is the tough winter in Europe which spiked LNG demand there as well.
Remember, Gazprom recently announced that delivered volumes to Europe rose by 8% in 2017 over 2016. And that number is likely to rise again this year. Even the U.K. is begrudgingly buying Russian LNG from the Yamal LNG project on the Eastern Baltic coast.
China National Petroleum Corp., CNPC, just signed a deal with Cheniere Energy to supply 1.2 million tons of LNG annually. China’s demand for natural gas has to rise as its leadership deals with the increasing costs of air pollution from running a major portion of its economy on coal.
This is part of the reason why Russia and China hooked up for the original Power of Siberia pipeline in the first place. And it’s why I have little doubt that a second pipeline is a slam dunk. This would be the expanded Altai Pipeline or Power of Siberia 2 that was postponed in 2015 but is now back on the table.
Last year China and Russia signed an MOU on Power of Siberia 2. Though no formal agreement has been reached, it’s obvious both parties want this done. The question for China is likely price. And they are not above holding out for better terms and cheaper gas prices.
…click on the above link to read the rest of the article…
February 13, 2018
Conflict between Fiscal & Monetary Policy
We are moving into a crisis of monumental proportions. There has been a serious fundamental problem infecting economic policy on a global scale. This conflict has been between monetary and fiscal policy. While central banks engaged in Quantitative Easing, governments have done nothing but reap the benefits of low-interest rates. This is the problem we have with career politicians who people vote for because they are a woman, black, or smile nicely. There is never any emphasis upon qualification. Every other job in life you must be qualified to get it. Would you put someone in charge of a hospital with life and death decisions because they smile nicely?
Economic growth has been declining year-over-year and we are in the middle of a situation involving low-productivity expansion with high and rapidly rising budget deficits that benefit nobody but government employees. Once upon a time, 8% growth was average, then 6%, and 4% before 2015.75. Now 3% is considered to be fantastic. Private debt at least must be backed by something whereas escalating public debt is completely unsecured. The ECB wanted to increase the criteria for bad loans, yet if those same criteria were applied to government, nobody would lend them a dime.
Monetary policy, after too long a phase of low-interest rates and quantitative easing, has created governments addicted to low-interest rates. They have expanded their spending and deficits for the central banks were simply keeping the government on life-support – not actually stimulating the private sector. Governments have pursued higher taxes and more efficient tax collection. They have attacked the global economy assuming anyone doing business offshore was just an excuse to hide taxes.
…click on the above link to read the rest of the article…
Four Rate Hikes in 2018 as US National Debt Will Spike
Chorus gets louder. But no one will be ready for those mortgage rates.
It didn’t take long for rate-hike expectations to be jostled further by last week’s “monster” two-year budget bill that Congress passed with its usual gyrations, including a government mini-shutdown, and that Trump signed into law on Friday. The bill increases spending caps by $300 billion over the next two years. It includes an additional $165 billion for the Pentagon and $131 billion for non-defense programs.
The bill comes after the tax cuts slashed expected revenues by $1.5 trillion of the next ten years. So pretty soon this is starting to add up.
Going forward, the US gross national debt will likely balloon at a rate of over $1 trillion a year, every year, even during the best of times. It’s $20.5 trillion currently [update 3 hours later, after debt ceiling suspended: $20.7 trillion]. It will likely be over $21.5 trillion a year from now – and this when the US economy is expected to boom. Any downturn will cause the debt to spike.
And what will the Fed do?
Four rate hikes this year – that’s what Credit Suisse’s US economists said in a research note on Monday. Previously, they’d expected three rate hikes for 2018.
“The FOMC has already boosted their growth outlook for 2018 in light of the tax bill passed in December and we anticipate another upward revision to their growth forecast at the March meeting,” the economists wrote in the research note, according to Reuters.
“With the economy near (or above) full employment, prudent risk management suggests the Fed ought to accelerate their tightening in response to a large positive demand shock,” they said.
…click on the above link to read the rest of the article…
How Establishment Propaganda Gaslights Us Into Submission
“Gaslighting” can be an effective tactic to instill confusion and anxiety in people, causing them to doubt their own logical abilities, but it can be countered by remaining confident in our judgments, argues Caitlin Johnstone.
Poster for the 1944 movie “Gaslight”
The dynamics of the establishment Syria narrative are hilarious if you take a step back and think about them. I mean, the Western empire is now openly admitting to having funded actual, literal terrorist groups in that country, and yet they’re still cranking out propaganda pieces about what is happening there and sincerely expecting us to believe them. It’s adorable, really; like a little kid covered in chocolate telling his mom he doesn’t know what happened to all the cake frosting.
Or least it would be adorable if it weren’t directly facilitating the slaughter of hundreds of thousands of people.
I recently had a pleasant and professional exchange with the Atlantic Council’s neoconservative propagandist Eliot Higgins, in which he referred to independent investigative journalist Vanessa Beeley as “bonkers” and myself as “crazy,” and I called him a despicable bloodsucking ghoul. I am not especially fond of Mr. Higgins.
You see this theme repeated again and again and again in Higgins’ work; the U.S.-centralized power establishment which facilitated terrorist factions in Syria is the infallible heroic Good Guy on the scene, and anyone who doesn’t agree is a mentally deranged lunatic.
This is also the model for the greater imperialist propaganda construct, not just with regard to Syria but with Russia, North Korea, Iran, and any other insolent government which refuses to bow to American supremacist agendas.
…click on the above link to read the rest of the article…
Closing the Gap between the Science and Politics of Progress
Ed.note: This article draws on a paper published this month in the international journal, Social Indicators Research. The paper is available on Richard’s website, www.richardeckersley.com.au
Global politics is based on an outmoded and increasingly destructive model of human progress and development. Can science change a dire situation?
‘My view of human progress has stayed surprisingly constant throughout my presidency. The world today, with all its pain and all its sorrow, is more just, more democratic, more free, more tolerant, healthier, wealthier, better educated, more connected, more empathetic than ever before. If you didn’t know ahead of time what your social status would be, what your race was, what your gender was, or your sexual orientation was, what country you were living in, and you asked what moment in human history you would like to be born, you’d choose right now.’ Barack Obama, President of the United States 2009-2017
It is unusual for a national leader to articulate his worldview in this way. Nonetheless, Obama’s view of progress is one that is, broadly speaking, shared by politicians and governments throughout the developed world and beyond (partly framed here by the ‘identity politics’ that characterises political debate today). The view reflects the dominant or orthodox model of development.
However, this model is increasingly at odds with what science tells us about the world. It is not that the specific achievements are wrong, but that they are incomplete, and so present a false picture of progress. The growing gap between the conventional view and the realities of people’s lives helps to explain the widespread public disquiet in many countries and its political consequences, evident in growing political volatility and extremism.
…click on the above link to read the rest of the article…
U.S. Department of Energy Doubles Down on Shale Optimism
The U.S. stock market is not the only thing that’s gotten overheated in the last few years. Exuberance over U.S. energy output has hit a record high as natural gas production has reached its all-time peak, and oil production nears highs not seen in 47 years. Thanks to the so-called “shale revolution” (tapping previously inaccessible fossil fuels in shale rock deposits through the use of hydraulic fracturing and horizontal drilling technologies), the U.S. government has green-lighted liquefied natural gas export terminals and pipelines and lifted the ban on oil exports. The statistical arm of the U.S. Department of Energy—the Energy Information Administration (EIA)—predicts that the United States will become a net energy exporter in the next five years, a status we haven’t enjoyed since Eisenhower was president.
Although shale development represents a remarkable technological achievement (made possible by cheap loans and questionable finances), the EIA seems to be betting heavily on the long-term prospects of tight (shale) oil and shale gas production, apparently in the erroneous belief that what goes up must keep doing so. This despite ample warning signs that the “shale revolution” will be a short-lived phenomenon. In fact, the higher production goes, the faster and sooner it will decline.
Since 2011 my colleague at Post Carbon Institute, David Hughes (an expert on fossil fuel production who worked for the Geological Survey of Canada for 32 years), has been sounding the warning bell about the danger of betting our energy future on shale. Through intensive analysis of oil and gas production data, he has identified a clear pattern of quite rapid boom and bust cycles in shale plays.
…click on the above link to read the rest of the article…
U.S. Mandates Biggest Non-Emergency Strategic Oil Selloff
The budget deal that the U.S. Congress passed and President Donald Trump signed into law last Friday calls for selling 100 million barrels of the Strategic Petroleum Reserve (SPR) by 2027 to help fund the government.
The sale of 100 million barrels of crude oil in the next decade would represent the largest non-emergency sell-off of strategic oil reserves and would equate to some 15 percent of the current stockpiles in the SPR.
The mandate for the SPR sale has drawn criticism because, some experts say, it would blunt the purpose of the strategic reserve to mitigate major global oil supply disruptions or price shocks. Other critics have said that tapping the emergency oil reserve for non-energy needs of the government is short-sighted, and that the SPR should not be used as a “government ATM.”
The Bipartisan Budget Act of 2018 mandates the Secretary of Energy to draw down and sell from the SPR a total of 30 million barrels of crude oil between fiscal years 2022 and 2025; another 35 million barrels during fiscal year 2026; and additional 35 million barrels in fiscal year 2027. In addition, under a budget deal from 2015, the Secretary of Energy is authorized to draw down up to US$350 million worth of crude oil from the SPR in the 2018 fiscal year to use for modernization of the reserve.
The budget deal also reduces the minimum required level in the reserve under which no drawdowns can be made, to 350 million barrels from 450 million barrels.
According to the Congressional Budget Office, the sale of the 100 million barrels from the SPR would generate US$6.36 billion between 2018 and 2027.
As of February 2, 2018, the SPR held a total of 665.1 million barrels of crude oil, while the current storage capacity is 713.5 million barrels, according to the Department of Energy. The average price paid for oil in the Reserve is $29.70 per barrel.
…click on the above link to read the rest of the article…
What Just Changed?
The illusion that risk can be limited delivered three asset bubbles in less than 20 years.
Has anything actually changed in the past two weeks? The conventional bullish answer is no, nothing’s changed; the global economy is growing virtually everywhere, inflation is near-zero, credit is abundant, commodities will remain cheap for the foreseeable future, assets are not in bubbles, and the global financial system is in a state of sustainable wonderfulness.
As for that spot of bother, the recent 10% decline in stocks: ho-hum, nothing to see here, just a typical “healthy correction” in a never-ending bull market, the result of flawed volatility instruments and too many punters picking up dimes in front of the steamroller.
Now that’s winding up, we can get back to “creating wealth” by buying assets–$2 million homes in Seattle that were $500,000 homes a few years ago, stocks, bonds, private islands, offshore wealth funds, bat guano, you name it. Just borrow whatever you need to borrow to buy more.
(But don’t buy bitcoin. No no no, a thousand times no. It is going to zero, Goldman Sachs guaranteed it.)
Ahem. And then there’s reality: something has changed, something important.What changed? The endlessly compelling notion that risk has magically vanished as the result of financial sorcery is now in doubt. If risk hasn’t been made to disappear, and even worse, can’t be corralled into a shortable instrument like VIX, then–gasp–every asset and instrument might actually be exposed to some risk.
As I’ve noted many times here, risk cannot be made to disappear; it can only be transferred onto others or off-loaded into the financial system itself. Risk can be cloaked or masked, and indeed, that is the beating heart of financial alchemy: we can eliminate risk by hedging via exotic instruments.
…click on the above link to read the rest of the article…
Russian Fighters Killed In Clash With US-Led Coalition Forces In Syria
With the calm of global capital markets shattered in the past two weeks, the ongoing military conflict in the Middle East has taken an understandable back seat to monetary matters. And yet, tensions involving Syria, Iran and Israel continue to escalate, most notably with this weekend’s outright attack by Israel on Syria, allegedly in retaliation for an Iranian drone launch from a Syrian army base, and which led to the first downing of an Israeli F-16 jet in decades.
Yet what has so far prevented the proxy way from spinning out of control, was that Putin – as guarantor of the Syria-Iran axis on one hand, and Netanyahu as his nemesis on the other, had expressed restraint. For now.
That may change, however, following a Reuters report that Russian fighters were among those killed when U.S.-led coalition forces clashed with pro-government forces in Syria earlier this month.
While Russia’s Defense Ministry said at the time that pro-government militias involved in the incident had been carrying out reconnaissance “and no Russian servicemen had been in the area”, the story changed on Monday when it emerged that at least two Russian men fighting informally with pro-government forces were killed in the incident in Deir al-Zor province, their associates told Reuters.
One of the dead was named as Vladimir Loginov, a Cossack from Russia’s Kaliningrad exclave. Maxim Buga, a leader of the Cossack community there, said Loginov had been killed around Feb. 7 along with “dozens” of other Russian fighters.
The other man killed was named as Kirill Ananiev, described as a radical Russian nationalist. Alexander Averin, a spokesman for the nationalist party he was linked to, told Reuters Ananiev had been killed in shelling in the same fighting on Feb. 7.
…click on the above link to read the rest of the article…
The UK’s Hidden Hand in Julian Assange’s Detention
Photo by Billy Bob Bain | CC BY 2.0
It now emerges that the last four years of Julian Assange’s effective imprisonment in the Ecuadorean embassy in London have been entirely unnecessary. In fact, they depended on a legal charade.
Behind the scenes, Sweden wanted to drop the extradition case against Assange back in 2013. Why was this not made public? Because Britain persuaded Sweden to pretend that they still wished to pursue the case.
In other words, for more than four years Assange has been holed up in a tiny room, policed at great cost to British taxpayers, not because of any allegations in Sweden but because the British authorities wanted him to remain there. On what possible grounds could that be, one has to wonder? Might it have something to do with his work as the head of Wikileaks, publishing information from whistleblowers that has severely embarrassed the United States and the UK.
In fact, Assange should have walked free years ago if this was really about an investigation – a sham one at that – into an alleged sexual assault in Sweden. Instead, as Assange has long warned, there is a very different agenda at work: efforts to extradite him onwards to the US, where he could be locked away for good. That was why UN experts argued two years ago that he was being “arbitrarily detained” – for political crimes – not unlike the situation of dissidents in other parts of the world that win the support of western liberals and leftists.
According to a new, limited release of emails between officials, the Swedish director of public prosecutions, Marianne Ny, wrote to Britain’s Crown Prosecution Service on 18 October 2013, warning that Swedish law would not allow the case for extradition to be continued.
…click on the above link to read the rest of the article…
