October 3, 2022
Notable
- Kim Kardashian pays $1.26M to the SEC for promoting EthereumMax
- Truss throws Kwarteng under the bus
- The Baltic Pipe pipeline from Norway begins sending gas to Poland
- Rumor has it OPEC will cut by up to 1.5M bpd (barrels per day)
Wut?
Kim Kardashian has to pay $1.26M to the SEC. I just thought this was funny. I hated her reality show. My wife was smiling…as she made me sit next to her and watch it.
Liz Truss and Kwami Kwarteng. Who’s Kwarteng? Wut does he do besides look really grumpy? Kwami is the Chancellor of the Exchequer (of the UK). That means he’s responsible for taxing and spending, i.e., there will always be someone who hates him. The economic plan announced last week — tax cuts for the rich resulting in massive government debt while poor people are getting screwed by inflation — caused the markets to say WTF, why so much debt? while the people said WTF, I’m voting you the hell out of office. After carefully reviewing the ethics and morality of the situation, Truss took full responsibility by saying over the weekend that it was “a decision the Chancellor made.” Today Kwarteng announced that the tax cuts would no longer happen because he really doesn’t want to wear this shirt. Some real solidarity would have been nice here.
The Baltic Pipe pipeline. Wut is this and where did it come from? This natural gas pipeline from Norway to Poland was approved for construction but ran into problems with environmental permits. Coincidentally, on March 1 — a little over a week after Russia invaded Ukraine — a new permit was issued because when a dictator gets mad at you, Mother Nature can take a hike.
Now it’s time for our tin foil hats because hey, we need to get real here. The BP came online within days of the Nord Stream pipelines to Russia getting bombed. In Chris Tucker’s soliloquy in the economic documentary Rush Hour 2, he declaimed that in times of great uncertainty we need to “follow the rich white man [sic].” So who benefits from this situation? Maybe Poland while it flips the bird at Putin. Maybe Norway for the money that will soon be rolling in. Maybe the US because it’ll keep making bank selling LNG (liquefied natural gas) to Europe at crazy prices while also flipping the bird at Putin. Maybe Ukraine because Putin will lose his leverage on a shivering Europe, so western nations will keep giving Ukraine guns and tanks and artillery and, if they’re really lucky, maybe even Tom Cruise. (Though the idea that a country desperately at war could go several hundred miles north to bomb a bunch of underwater pipes is unlikely.) Basically, anyone who could make money or who hates Russia or both. Perhaps unsurprising to Mr. Tucker, there are probably a lot of rich white men involved.
Regardless of who did it, the clear losers are Russia and the people in Europe who are starting to wonder why they should lose their jobs and freeze to death because of a country hundreds of miles to the south that they’ve never even thought of visiting. Like ever.
Being an American, I don’t like to think my country would do something so underhanded, but we need to take an honest look (cynicism!) at motives and actions if we want to see the world in a realistic light. Walking around with rose-tinted glasses looks cool but makes you trip and fall in a dark room when the dark room is the world stage and you’re being a fool. Um. Great analogy.
OPEC was originally expected to cut between 500K-1M bpd of oil production but now people are wondering what the real cut will be. So wut. What happens when the Organization of the Petroleum Exporting Countries cuts production? As I’m sure we all remember from Mr. Montoya’s lectures on Keynesian economic in 10th grade which I totally listened to while daydreaming about Riley Madison’s legs, if demand stays the same but supply goes down, prices go which way? Yes, up! (which is not the direction Riley’s skirt blew in the wind, to my great disappointment) Fuel will become more expensive, making everything more expensive! What happens when rumors start going around that OPEC will cut even more than originally expected? We remember the power of expectations, right? (Like I said before — it’s why we hated The Phantom Menace even more than we probably should have.) It’s not good news for an inflation-harried world. If you never realized why the talking heads talk about oil so much, this is why. The price of oil affects practically everything, so when oil gets more expensive, everything gets more expensive. And that leads me to something so exciting that you better hold tight to your bladder…
The petrodollar! Oh no, time for my diaper! Uh, wut’s the petrodollar? You’ve probably rarely if ever heard this word, and the reason is because the US government keeps putting rose-tinted glasses on your face. Why would it do that? Because the petrodollar is one of the unseen sources of the USA’s power all throughout the world, and if you know about it you’ll start making connections (cynicism!) that you might not otherwise.
In 1945 after WWII when the USA could do whatever it wanted because everyone else was broke, the USA and Saudi Arabia made a deal — all oil would be paid for in the greenback. Thus the petrodollar was born. As you now know (because I magnanimously enlightened you), oil makes the world go ‘round, so the fact that countries HAVE to pay for their oil in dollars gives the USA enormous leverage in…pretty much everything. Our military and economic strength only bring us to 500-lb gorilla status. The petrodollar pushes us to that magical 800-lbs.
If you’ve ever wondered why boring TV people drone on and on and on about US relations with Saudi Arabia or why we didn’t totally excommunicate Saudi Arabia after Crown Prince Mohammad bin Salman (MBS — kind of a cool acronym for a not-so-cool guy) assassinated a journalist he didn’t like (Jamal Khashoggi) or why Biden visited Saudi Arabia in July to desperately beg the afore-mentioned death-dealer to pump more oil (during a mid-term election year! such a coincidence), THIS IS WHY. Or as Henry Kissinger would say, “Let’s get real. Realpolitik!” Yes, you’re allowed to laugh at this because it’s really funny. Or maybe real funny.
(Realpolitik — taking a pragmatic or realistic approach to things instead of moral or ethical. Sort of like Truss’s [lack of] loyalty to Kwarteng.)
Petrodollar. Remember the word. Don’t be brainwashed into forgetting it. It has nothing to do with dogs or dolls. It’s power. Real power. And only by living in reality with your eyes open will you understand it.
This bit down here is a plug. Ignore at your peril. I’m a huge fan of Vectorspace AI. They use AI/ML (everyone says that, right?) to help you make money in the markets (stocks and crypto) and then help manage risk to keep the money. Check it out! Full disclosure, I’m an investor.