Posts Tagged ‘Germany’

Obama avoids the topic of invading EU over rising gas prices

May 31, 2012

Obama avoids the topic of invading EU over why gas prices are rising

Gas prices in late May 2008.

Gas prices in late May 2008. (Photo credit: Wikipedia)

Imagine that you owned a home which you are trying to sell and you got three bids of offers to buy it: for $300,000, for $400,000, and for $1,000,000. Maybe you listed it for $400,000 because that is about what you paid for it. So, before you choose which offer is most appealing to you, consider this additional factor: it was a foreigner that offered $1,000,000 and someone from California offered $400,000. So, would where the buyer is located make any difference to you at all?

Before I reveal why I mentioned all of that, let’s talk about the topic that Obama (and all the other presidential candidates as well as the mainstream media) are totally avoiding, instead focusing on confusing controversies and generally inciting hysteria, which may be their essential function. Let’s talk about gas prices and what to do about them. Ready? Let’s begin with a simple example.
Consider that if you had a gallon of gasoline and you could sell it for $3, $4, or $10. Before you choose which offer to accept, consider this: it is a European offering $10 and a Californian offering $4. Again, does the location of the buyer make any difference at all to you?
Of course, the price paid by the buyer is not going to all go to the seller. For instance, in a real estate transaction, there could be a commission for the realtor(s) and taxes and legal record fees and title company fees, right? So, accepting the $1,000,000 offer instead of the $300,000 offer might not produce exactly $700,000 of additional “net” (profit after expenses) for the seller, but it would make a big difference, right?
Likewise, in selling a gallon of gasoline to people in different parts of the world (or different parts of the US), there will be different expenses for the seller, right? I’m not saying that a gasoline refinery in Oklahoma does not have additional costs to ship gasoline to California to sell it there or to Europe to sell it there. However, I am saying that Europeans paying $8 or $10 per gallon are partly responsible for rising gas prices in the US.
That is why the US may eventually invade the EU (or expand the existing US military presence). We want lower fuel prices in the US, right? The Europeans are the ones paying so much for it that it drives up our prices.
Again, why are fuel prices so high in California? Could it be because Europeans are paying $8 to $10 per gallon of gasoline?
In Oklahoma and South Carolina, fuel prices recently passed $3 per gallon. Why? Is it because Californians are paying over $4 per gallon?
March 2009, Dunellen, New Jersey

March 2009, Dunellen, New Jersey (Photo credit: Wikipedia)

I know that South Carolina hypothetically could invade California, (not that they would dare) but there would still be Europeans paying $11 per gallon, right? Better for South Carolina might be to form an alliance with California and together invade the EU.
The EU is in serious trouble economically, which is resulting in serious political instability. They produce very little oil or gasoline and are extremely dependent on imports from other regions.
The US previously blocked Iraq from importing various things. Why not at least block the EU from importing oil? How much could that drive down prices of gasoline in the US?
In 2004, I published “The Real U.S. Deficit: OIL.” I emphasized my expectation that gasoline prices in the US would rise enough to lower consumption and slow the US economy, bringing down prices of real estate and stocks (and, eventually, fuel). That article did not emphasize that Europe (and Japan) had the same issues, but with far more severe  instability.
It was in 2005 that I focused more on the global dynamic of energy markets in “Worth It’s Weight in… OIL!” I also made fun of the hysteria regarding gold and silver (and hyperinflation). The US Dollar is the dominant currency in the world by far and has some of the lowest inflation rates ever (now in 2012). Nevertheless, there are huge numbers of folks who (in 2005 and even still today) are talking about the US dollar the same as they did in 1980, which made much more sense then given that interest rates (and inflation) were nearing 10% (or even 15% in some markets). However, the same logic about a pending devaluation of the US Dollar (which was false in 1980) is still popular among some groups today. One might wonder if certain economic interests would attempt to influence or even mislead the perceptions of investors to enter extremely volatile markets like gold or silver, such as dealers in gold and silver and owners of large quantities of those substances, such as mining companies.
Obviously, there are many alternatives to invading the EU. The US could simply keep paying $3 or $4 or even $5 per gallon. The US government could even attempt to “nationalize” (confiscate) the oil industry in the US, similar to the recent involuntary buy-outs and bail-outs of the auto industry and the banking industry. Or, the US government could go in to open competition with oil companies and start a government oil company like is present in Venezuela and Mexico- similar to how government in the US rose to dominate public schools and, to a lesser extent, colleges of higher education.
However, none of those alternatives would reduce global demand for gasoline, which I assert to be the obvious primary issue. Since 1999, global demand for crude oil has been rising faster than global supply (extraction) of crude oil, which actually peaked in 2006, as predicted to eventually happen by geologists since at least the 1950s.
As I have been saying publicly since 2004, with rocketing demand for oil (not just from Europe, but also Indo-China) and declining supply of oil, it has not taken a very clever forecast to predict that fuel prices might rise dramatically. If not for Europeans paying prices of well over $10 per gallon, gas prices would probably not have exceeded $2 in the US.
However, the fact is that Europeans did drive up global fuel prices by consuming far more fuel than they produced, just as the US has since the early 1970s. Still, what is happening in Europe now is far worse than what happened in the US in the 1970s.
English: Gas prices in Gometz-la-Ville in Fran...

English: Gas prices in Gometz-la-Ville in France Français : Prix de l’essence à Gometz-la-Ville en France (Photo credit: Wikipedia)

Forecasters like myself have been suggesting for around 10 years that a predictable emerging economic reality (which we have begun to witness in the last 5 years) would result in a destabilizing of the EU and a discontinuing of at least some of the alliance, such as Greece and Ireland seceding from the Union. Maybe the EU will attempt to maintain the Union through violence, as when the Union army of the US “invaded” the Confederacy.
If the EU were to invade Greece, would the US side with Greece or with the rest of the EU? We may recall that in the US Civil war, much of Europe supported the Confederacy.
While it may seem shocking or even hilarious to reference an invasion of the EU by the US, note that the US maintains active duty military bases in many dozen foreign countries throughout the world, including in Europe. The US has been “occupying” some of the wealthiest parts of Germany for the last 7 decades. Why? Same for Japan and dozens of other “satellites,” such as Afghanistan and Iraq and of course throughout Central America (See USMC Major General Smedley Butler’s “War is a Racket”) as well as cases like the US involvement in the rise of the Shah of Iran.
English: Smedley Buter at his retirement cerem...

English: Smedley Buter at his retirement ceremony. Received from the Marine Corps Archives. Freely distributable Removed from the following pages: Smedley Butler –OrphanBot 05:49, 20 October 2007 (UTC) (Photo credit: Wikipedia)

Consider that “national interests” is a code word for economic interest. The US currently operates the most extensive global empire in human history. Some of us in the US may like to argue against a “new world order,” but the “new world” (the US) has been the dominant superpower in world affairs for most of the time since oil was discovered in the US in the 19th century. By 1913, with the establishment of the Federal Reserve and their motto “New World Order” (in Latin: Novus Ordo Seclorum), the US Dollar went from being a parallel private currency in 1913 to being the only circulating currency in the US by 1933, and then to being the most successful currency in the world to this day.

Pyramid with the all-seeing eye on the back si...

Pyramid with the all-seeing eye on the back side of the US 1-Dollar bill (Photo credit: Wikipedia)

Has the empire of the US brought a new order to global economics and global politics since the early 20th century? Yes. After all, the US has maintained a constant military presence throughout it’s many colonies since the 1940s, with consistent huge increases in the number of official and unofficial colonial territories, as well as the new states of Alaska (1959) and later that same year Hawaii (1959).
Note that when the Japanese bombed Hawaii, Hawaii was just a territory of the US, like the Philippines or American Samoa today, which are official territories of the US. If the EU were to attack the Philippines or Iraq or even just an ally of the US, would the US respond militarily as it in the 1940s did by bombing Japan?
Remember that in the 1940s, three of the biggest economic competitors to the US, who were also big importers of oil already, were Germany and Japan and Italy. Germany and Japan were on their way to passing France, the UK, and the USSR to become the #2 and #3 economies in the world (throughout recent decades).

Here are the WW2 era rankings in order of GDP (Gross Domestic Productivity)
           1938                                         1941                          1945
USA           800                               USA      1094              USA    1474
USSR         359                              Germany 412               USSR    343
Germany     351                              USSR     359               UK         331
UK              284                               UK        344               Germany 310
France        186                               Japan    196                Japan     144
Japan         169                                Italy       144               France    101
Italy           141                                France   130               Italy          92
*Based on Table 1 found in Mark Harrison, The USSR and Total War: Why Didn’t the Soviet Economy Collapse in 1942? from Mark Harrison, “The Economics of World War II: an Overview,” in Mark Harrison, ed., The Economics of World War II: Six Great Powers in International Comparison, Cambridge University Press (1998), 10.
So, by winning the war, the Allies as a group went from a 2:1 GDP ratio over the Axis countries (in 1941) to a 5:1 ratio (in 1945). However, who REALLY won world war 2?
Well, which nation had ZERO civilian casualties and had the ratio of their GDP to that of the next 6 biggest nations go from 800:1490 to 1474:1321 (from 1939 to 1945)? It was the US.
In other words, before WW2, the USA had a bigger economy than the next 2 countries combined. After WW2, the USA had a bigger economy than the next 6 countries combined.
The much-hyped “cold war” rivalry between the US and USSR (who were allies in WW2) was never really a close contest. While the USSR did pass the USA in oil production in the 1970s, the wealth accumulated by the US in the prior century of being the #1 producer of oil was immense.
Regarding casualties, 11 countries had more military casualties than the US, which had 295,000 casualties. 8 countries had more civilian casualties than the US had military casualties. Of the total military and civilian casualties in WW2 (which have been calculated between 50 million and 78 million depending on various counting methods of war-related famine, disease, and injuries), US casualties totaled between .4% and .6% of the total deaths.
Now, most US citizens may not know much about the immense economic benefit to the US of WW2 and the immense cost to much of the world in terms of millions of deaths. We in the US do not need to know either. We just reap the benefits of being born in the nest of a globalist empire. We are indoctrinated by public education and mainstream media to be distracted from the otherwise obvious reality about WW2 and the current reality as well. However, for the rest of the world, it may be very relevant to fear our immense military capacity.
Addicts are known for denial, blame, rage, and a variety of other reactions prior to acceptance and adaption. The US is addicted to gasoline and oil. So is Europe and Japan.
However, unlike the desperate folks in other parts of the world, the US can reasonably claim to have the uncontested dominant military force in the world. Further, many of us in the US are eager to belligerently blame someone for gasoline prices exceeding $3 or $4.
Are we seriously going to blame the people who supply us with those resources? While that may have been a factor in the US expanding it’s colonies to include Afghanistan and Iraq, there is a reason that WW2 was not fought where the most valuable resources were, but in the places that were most dependent on those resources.
Wars are fought by the competitors for the most valued resources, if possible, without endangering the actual resources. This does not require any special cleverness to recognize, though it may require an unusual amount of boldness to actually admit the simple and obvious reality.

  World War II Casualties

Source: Phil’s World War II Pages

Country Military Civilian Total
Soviet Union* 8,668,000 16,900,000 25,568,000
China 1,324,000 10,000,000 11,324,000
Germany 3,250,000 3,810,000 7,060,000
Poland 850,000 6,000,000 6,850,000
Japan 1,506,000 300,000 1,806,000
Yugoslavia 300,000 1,400,000 1,700,000
Rumania* 520,000 465,000 985,000
France* 340,000 470,000 810,000
Hungary* 750,000
Austria 380,000 145,000 525,000
Greece* 520,000
Italy 330,000 80,000 410,000
Czechoslovakia 400,000
Great Britain 326,000 62,000 388,000
USA 295,000 295,000

Bakken, oil, crisis, & prudence

February 17, 2012

This is an exchange between myself and “DK.” She sent me a broadcast email with a subject like this: “OIL – You better be sitting down when you read this !!!!!!”

Her email is about the Bakken oil field in the US. Her email referenced two figures as the total estimated amount of oil there: 503 billion barrels and 2 trillion barrels. She cited an article from the USGS indicating that the accessible, useful oil was more like 3-4 billion barrels: 


Image via Wikipedia

Here was my initial reply:

According to the USGS article that you cited at the bottom, only a few
billion barrels are currently classified as recoverable, or less than
1% of the 503 billion barrels referenced elsewhere.

Let’s put that in perspective. 3 billion barrels of oil is
approximately an extra 16 months of oil at the current rate of
production in the US (which has been near 6 million, but may have gone
up in recent years).

So, if oil production is up in the US already and even if the US
doubles production for 16 months, yes that will be a[n]… increase in
the global economic balance of affluence. 3 billion barrels of oil
does correspond to an extra 300 billion dollars or so of value.

However, what was the US government‘s spending in 2011? $6 trillion,
as in 20 times as large as the extra 300 billion dollars of economic
affluence represented in the USGS article.

Is that 300 billion dollars of value trivial? No! Does it
fundamentally change ANYTHING long-term? Not yet!

DK replied back to me:

Thanks for your insight.
What can the average person do to pressure them to do the right thing?

Hi DK,

Respectfully, I do not know who you mean by “them” (or what you mean by “the right thing”). [I now presume that she meant the US government.] Let me give you some of my perspective on the general subject.

Starting in early 2003, I have invited people to consider the actuality of trends and to adapt to those actualities, such as the shift in the long-term price of fuel. For the last several centuries, fuel prices have dropped dramatically (in “real” terms as in after adjusting prices for the fluctuating purchasing power of currency).

One of the ways that economists (as distinct from accountants) have measured the cost of fuel is this: how long does it take the average person to earn or produce the capacity to produce an hour’s worth of candlelight? You may have heard of measuring the brightness of light in “candles” and that is what I am referencing. The time-cost of producing an hour of one candle worth of light has gone from a large fraction of an hour centuries ago to under one minute and finally to under one second. The same kind of measurements can be done in regard to one unit of “horsepower.”

Human civilization has radically altered in recent centuries with the collapse in the cost of energy (fuel). Amish people and others have not participated much in the “boom” related to the huge decline in energy costs, but the huge ballooning of human population in recent centuries is the direct result of the huge decline in the cost of energy/fuel.

So, in 1999, that multi-century trend of declining cost of energy may have reversed. Starting in 2004, I wrote and published articles referencing the reasons that energy costs were rising and the predictable consequences of any continuing rise, which I did predict would continue.

I have noted that the average decline of 40% of the stock prices of the US airline industry in several months in 1999 [red line above] went along with a quick doubling of global oil prices [blue line above]. [Also, the green line above shows the simultaneous decline of the financial sector of the US stock market.] Further, I have consistently documented the general shift in the economies of Japan, Europe, and the US toward the economies of OPEC and other oil-producing regions (including places like Alaska, North Dakota, and the province of Alberta).

Japan’s decline started in 1989. The USSR, which was the #2 oil-producing region on the planet (and still is), has also collapsed politically since then (dissolving in to smaller political units). The EU (including the UK and Germany, etc) as well as the US have been declining now for over 10 years at least, depending on the exact measures used. [Below is a long-term chart of the UK stock market, which peaked at the end of 1999.

My assertion is that the global political history of the 20th century can be summarized in a few words: the rise of oil. Next are a few paragraphs summarizing the 20th century:

The prior two major powers, Great Britain and Germany, fought two massive wars against each other (world war one and world war two). In ww1, Britain won. In ww2, Germany lost.

But who won world war two? The USSR and the US did. In WW1, those two countries were not even major powers. However, after ww2, those two countries dominated much of the world and they even split Germany right in half between those two allied victors.

Britain did not get occupied like Germany did, but Britain did not get a portion of Germany either: just the US and the USSR. Britain did not win ww2. Germany lost (along with Japan and Italy) and the winners were the US and USSR. Further, lots of other folks (France, Poland, etc) could also be said to have lost or at least not to have won.

So, those two “superpowers” of the US and USSR had very different political systems and very different cultures, but those two nations rose from relative obscurity in the 19th century to become the top two global powers in the 20th century. What did they have in common was oil. In the 20th century overall, the US led the world in oil production (and consumption). In the early 1970s, the USSR surged past the US in oil production, leading to a significant power shift and the rise of OPEC to prominence.

In the latter decades of the 20th century, as the USSR and US slowly fought over regions like Afghanistan and Central America, the USSR eventually lost and crumbled. One of the most devastating economic events for the USSR was the joint effort by the US and OPEC to drive down global prices of crude oil, which was the main source of revenue for the oil-exporting USSR.

Normally, when a company produces something, then want to sell it for maximum profit. However, with the US and OPEC colluding to drive down oil prices, US and OPEC companies (like Aramco, the Arab American Oil company which controls much of the oil industry in the Middle East) sold oil for much lower prices than they could have. Governments may even outright subsidize oil production so that private companies can sell oil at a loss, but still receive tax incentives or other incentives so that the governments can drive down international prices of oil for political purposes.

American International Group

Image via Wikipedia

So, what is there to do about any of this? Recognize it. Adapt to it. Benefit from change. Reduce exposure to risk (like protecting assets using the fullest extent of the law while those laws still exist, settling debts rigorously, and investing wisely).

This is a time of unprecedented opportunity. Why? Because so many people who are currently so wealthy (in the US and EU) are so naive (if not arrogant) in regard to what is happening.

The mainstream middle class (not just in the US) have been taking immense financial risks with no appreciation for the basics of economics or investing. Most people do not understand the simple ponzi scam of the insurance industry and thus consider casino gambling and state lotteries to be less risky than their investments in ridiculous long-term annuity contrasts. There is nothing as risky as the global insurance industry, which is the largest concentration of financial risk in human history. AIG was not a fluke. The 2008 financial crisis in the US and EU was not a fluke. Myself and many others predicted it. People see the financial issues with the government of Greece or of the US, but a glance at most any insurance company might reveal a much less favorable long-term financial stability.

So, The investments that will be most valued in the next few years are almost completely ignored by the mainstream as of now. That will change and suddenly, which can produce huge increases in price.

By huge, I mean larger than the 1200% increase in the price of oil from 1999 to 2008. I mean larger than the 1600% increase from 2000 to 2010 in the stock prices of the HUI index of 15 conservative gold and silver mining companies. Those were certainly quite large gains. Some gains, however, are huge, like historically unique.

So, I am not especially interested in speculating as to what is they right thing that other people could do (such the US Congress or the leaders of OPEC or AIG or NATO). I am interested in identifying what I could do, in what results I can help individuals to produce with me, and in then producing the results that I value.

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