January 7, 2016

Why are Iran and Saudi squaring up to each other, why now, why Saudi Arabia is going bust and who is likely to win

Posted in Irish Independent · 66 comments ·
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In this first article of the new year, I’d like to discuss the reasons why the global financial markets began the year in turmoil. The Chinese market fell 7pc on Monday, as did several major stock markets, while the dollar rose against a prevailing backdrop of chaos and uncertainty.

 

What happened over the weekend to send the moneymen into such a panic? There are specific reasons in China which I won’t discuss here, but why the panic elsewhere?

The key to all this is the Middle East. On Monday morning, the moneymen realised that the status quo in the Middle East is not only changing but could be shattering before their very eyes. On Sunday night, Saudi Arabia cut off diplomatic ties with its sworn enemy Iran. This was in reaction to the sacking of the Saudi embassy in Tehran, itself a reaction to the Saudi’s execution of 47 prisoners, including senior Shia Muslim cleric Nimr al-Nimr.

Why did the Saudis act now and why did the Iranians react?

At its core, the row between Iran and Saudi is an inter-Muslim, sectarian fight. Saudi is a Sunni Muslim country and Iran is a Shia Muslim country. The difference between Sunni and Shia, for argument’s sake, is not unlike the difference between Catholics and Protestants in Christianity – with the Shia being more like Catholics and the Sunni more like Protestants. The most extreme version of the Sunni tradition is called Wahhabism. This is what the Saudis practise. Wahhabis are, again for the sake of comparison, a bit like evangelical fundamentalist Protestants.

Possibly the most important tenet of Wahhabis is that they believe in what they call “the oneness of God”. As a result, association with lesser gods, other gods, mysticism, shrines, temples, saints or holy men amounts to idolatry and must be stamped out.

This puts Wahhabis on a collision course with the other strains of Islam, such as Shias or – even worse in the eyes of the Wahhabis – Sufism.

Over centuries, the dispute has rumbled on in the background but in the modern day, the battle lines for leadership of the two Islamic tribes has been drawn between the big boys – Shia Iran and Sunni Saudi Arabia.

Since 1979 the West has backed Saudi Arabia. But the problem for the Saudis is that Iran is still standing even after years of sanctions, isolation and being regarded as a Pariah. Worse for Saudis, Iran has now been ushered in from the cold. If anyone won the war in Iraq it was Iran because the Baghdad regime is Shia. Finally, and most worryingly for the Saudi monarchy, eastern Saudi Arabia (where most of the oil is found) is populated by an indigenous Shia Muslim minority which is pro-Iranian. These people have been squeezed by Riyadh for years, but they haven’t gone away.

These various developments are undermining the entire Saudi twin strategy in the region, which has always been about (a) keeping Iran isolated internationally and (b) keeping the people quiet at home.

To achieve both these aims the Saudis need (a) unambiguous American support in the region to surround the Iranians and (b) high oil prices to buy off its own population.

Both of these central planks now look shaky and as a result, the consequences of recent Saudi policy are laid bare for everyone to see.

Between 1979 and now, Saudi Arabia, buoyed up by oil revenues and driven by its own extreme Wahhabi doctrine, has been responsible for financing extreme Sunni mosques all around the world, as well as being the major source of private donations to the Mujahideen, Al Qa’ida and now Sunni groups in Syria, including Isil. Don’t forget that most of the 9/11 hijackers were Saudi as was indeed, bin Laden. Meanwhile, on the Shia side, Iran has backed the Shia group, Hezbollah, in Lebanon. Both sides are fighting proxy wars with each other in Yemen and Syria, however an extra difficulty is that in 2015, the fall in the price of oil has led to a race to the bottom for both. But – and this is the crucial but – Iranians, having been isolated and under sanctions for years, have endured hardship and can deal with it. In contrast, the average gilded Saudi doesn’t know what it means to turn off his air con at night. The hardy Iranians are able to deal with adversity; I am not so sure about the average Saudi.

I’m not the only one questioning the resolve of the average Saudi.

This worry about the backbone of the average man on the Riyadh street, when faced with a fall in his living standards driven by a fall in oil prices, is driving Saudi Arabia’s latest neurotic moves in executing prisoners.

The mass executions in Saudi Arabia suggest panic at the highest level of the monarchy. Even by the diabolic standards of Saudi Arabia, these killings are unusual. Most of the 47 prisoners shot and beheaded last week had sat quietly in Saudi jails for a decade. They were a threat to no one.

The decision to kill the prominent Shia cleric Nimr al-Nimr, the spokesman for Shia Muslims in the Eastern Province, seems particularly inflammatory.

Why kill them all now?

It’s impossible to know what’s going on inside the regime, but it’s clear that 2015 has been ‘annus horribilis’ for the Saudi monarchy.

Saudi Arabia finds itself isolated as America cuddles up to Iran. It is also outflanked by the return of Russia to the region, particularly in Syria. The Saudi-backed Army of Conquest – a Sunni militia – in Syria is crumbling under Russian attack. In Yemen, Saudi’s forces are losing out to the Iranian-backed Houthi rebels. And its Turkish ally-of-convenience – a country bonded to Saudi by a millennia-old Turkish dislike for the Persians – is deflected by the rekindling of problems with the Kurds who are beating Isil on the ground in Syria and Iraq.

Geo-politically nothing has gone right for Riyadh.

If all this weren’t bad enough, Saudi Arabia is going bust.

Yes you read right. The IMF reckons that the kingdom’s $700bn in financial reserves will be gone within five years, if oil prices stay low.

All this uncertainly is causing money to flood into the dollar and the US as it is traditionally the safe haven in times of crisis. And believe me, if this regions blows, this will be the crisis to top all crises.


  1. goldcore

    “All this uncertainly is causing money to flood into the dollar” and gold …
    Gold up nearly 3% versus the dollar in recent days as dollar, US bond markets and US equities look overvalued … especially versus depressed gold.
    Academic research and history shows gold remains the ultimate safe haven and this will be seen again in the coming months. Overnight, Soros warned of new 2008 style crisis.

  2. What is scarce now in Dubai ? Is it a Camel or a Magic Carpet ? When the stampede commences all rationality will be gone to get out quickly .The desert wins once more like a wave of emotion and everyone entrapped ……with their gold.

    Irish mothers need to worry.

  3. Eireannach

    Good article David. It establishes the broad outline of what is happening in the Persian Gulf.

    Whenever one reads lists of countries with the world’s largest oil and gas reserves, the significance of the Persian Gulf, taken in it’s entirety, is overlooked.

    On Wikipedia, say, the ‘List of countries by proven oil reserves’ reads:

    https://en.wikipedia.org/wiki/List_of_countries_by_proven_oil_reserves

    1. Venezuela (mostly not light, sweet crude but tar sands and shale oil, which require too much water and electricity to produce)
    2. KSA
    3. Canada (also mostly tar sands and shale)
    4. Iran
    5. Iraq
    6. Kuwait
    7. UAE
    8. Russia
    9. Libya
    10. Nigeria

    Remove Venezuela and Canada and join up the other countries into one Persian Gulf country and you get

    1. Persian Gulf (Eastern Province of KSA, Kuwait, UAE, Qatar, Iran, South Iraq)

    Which is absolutely head and shoulders above the rest of the world – even the rest of the world combined.

    Similarly, the largest natural gas reserves are in the Persian Gulf. The list of countries by proven gas reserves are: https://en.wikipedia.org/wiki/List_of_countries_by_natural_gas_proven_reserves

    1. Russia 48.7 bn m3
    2. Iran 33.6 bn m3
    3. Qatar 24.7 bn m3
    4. Turkmenistan 17.5 bn m3

    But Iran and Qatar’s natural gas reserves are located in one giant Persian Gulf gas field called the North Dome field in Qatar territorial waters and the South Pars field in Iranian territorial waters. So adjust the stats to read:

    1. Perian Gulf (North Dome/South Pars) 58.3 bn m3
    2. Russia 48.7 bn m3
    3. Turkmenistan 17.5 bn m3

    If Shia Iran leads a region including Southern Iraq, Bahrain (Shia majority), Eastern KSA (Shia majority) then it is no surprise that the USA will keep it’s options open between the Shia Persian Gulf and the Sunni Persian Gulf, because the Shia Persian Gulf is by far the greater oil and natural gas superpower.

    So in oil and gas, Iran is, in this sense, a ‘superpower’. No other word will do.
    3.

    • michaelcoughlan

      The military industrial complex must be in hoopla about all the mayhem going on;

      The region will sell its oil cheap to buy its guns dear.

      Peace always has been a huge pain in the ass to big business.

      Do you not remember the scene in Dallas where JR was ecstatic about the iran iraq war turns around to bobby and says;

      “Hey Bobby, I wonder if we can figure out a way to get the Iran Iraq war to SPREAD!” Reduction in supply means oil price goes up and good for JR.

      I know I have posted a link before to acme door gunner but I just love this scene from full metal jacket. In the scene the psycho manning the door gun claims to have killed 50 water buffaloes.

      If you really want to stop the nutters in Afghanistan or the middle east you should mow down the goats.

      Goats can live in the mountains on next to nothing and provide milk and meat. You never said a truer word about adversity and hardship increasing the survivability of the population.

      Geeeeeeeeeeeeeeeeeeetttttt Sooooooooooommmmmmmmmme!

      https://www.youtube.com/watch?v=Aqz3zTpYIKk

    • Mike Marketing

      If you don’t think that this man is dangerous just read about the close shave the world had during the Cold War in Sept 1983.
      We were saved by the courageous decisions of Lt. Colonel Stanislav Petrov to do nothing.

      http://www.theatlantic.com/technology/archive/2013/09/the-man-who-saved-the-world-by-doing-absolutely-nothing/280050/

      All it takes is just 1 mistake and bye bye birdie?

  4. McGoo

    The amount of oil that Saudi has should have turned it into a world power. But, thanks to careful management by the USA, it hasn’t. US strategy in Saudi was always to pump the place dry while encouraging the Saudis to waste their temporary wealth on shiny imported trinkets instead of using it to build a modern industrial and military powerhouse economy. So, Saudi going bust is not unexpected, it’s just unexpected that it might happen while they still have oil in the ground.

  5. It surely won’t be long before the US decides it can do business easier with Iran than SA. Watch as the Saudis’ mask really slips and they take more desperate measures as their very survival will be threatened.

  6. CorkRob

    A friend who worked in KSA in the 80s told me that on a drive from Jeddah to Riyadh he asked his driver what some huge fenced areas in the desert were (10′s of miles long) and was told that the Saudi’s had discovered huge reserves of Gold and Bauxite, but weren’t going to mine them until the oil ran out.

    Perhaps the demise of KSA might not be as close as imagined.

    • Ah Jaysus

      Sounds like bullshit.

      • dfaugh

        It’s not. Saudi really is “Gods Country”. Unbelievable natural wealth in oil, gas and minerals. They have one of the largest gold reserves in the world. They are also starting to develop the extensive mineral deposits within the country. Aluminium, Phosphates, Gold, Iron, etc.

  7. AlfieMoone

    “Neoliberal Economics is the Manufacture of Consent for the USuk Empire’s post Peak Cheap Oil geo-political strategic plan for C21st Hegemony”

    “Economists are the concubines of politicians,who are the whores of philosophers. Philosophers are the Marines Of The Mind. Music trumps all”

    “The ‘oil price rout’ shifts pawns on the Peak Cheap /Shale Oil chessboard. ‘Market Forces’ do not exist, only political strategy matters.”

    “We and our ancestors survived on dates and milk and we will return to them again.” King Faisal October 1973

  8. Adelaide

    http://www.bbc.com/news/business-35248798
    “Wall Street sinks as China turmoil hits global shares”

  9. michaelcoughlan

    @adambyrne

    Bitcoin going parabolic adam;

    http://www.nasdaq.com/article/this-time-bitcoins-price-increase-is-both-logical-and-sustainable-cm562649

    all the indexes going off a cliff.

    Madder than a bonbon.

    • cooldude

      It looks like Adam is on to a winner all right. Bitcoin was the best performing currency/money for 2015. I always said he was a bright lad

      http://www.zerohedge.com/news/2016-01-07/its-official-bitcoin-was-top-performing-currency-2015

      • michaelcoughlan

        Far more importantly there seems to be a stable trading range in recent times.

        Michael.

      • Grzegorz Kolodziej

        Yea, but that’s provided that someone did not buy Bitcoin when its price was $1,240. Nearly every currency in the world performed better than Bitcoin. It appears to be an interesting and promising technology though, although I wonder how will Russia’s banning Bitcoin influence its future.

        Here is an arresting short debate on Bitcoin:

        https://www.youtube.com/watch?v=Q3MAH3Rlr2s

        May I also point out that my summer predictions regarding FED and interest rates turned out to be more accurate than both Peter Schiff’s and David’s.

        On 30 July I wrote:

        “So what’s Yellen’s goal, apart from her urge to be loved and admired?
        I think it is to sustain that narration that even our David fell for that there is an economic recovery in the US; maybe to strengthen the dollar too.
        Then there were question to Mrs. Yellen about raising rates and to one of them questions she answered that we are going to go very slowly and if it’s causing pain, we are going to go back.
        All of it makes me quite iffy on her raising rates substantially (she probably will by 1pc or so)”

        David predicted substantial rates hike in September (which did not materialise)while Peter Schiff had predicted that Mrs. Yellen will never raise rates and then he changed his mind.

        I think 1pc rates hike in 4 rounds is the maximum what she will go for – nowhere near the nearly 20pc Reagan’s rate hike which saved the dollar – if even that, as the US manufacturing index is in the contractionary territory now (the post-Bretton Woods rates hikes were by the way disastrous for Poland and probably for many other developing countries because comrade Gierek borrowed $20bn in the 70s and then comrade Jaruzelski had to squeeze out of the population another €20bn in interest rates in the 80s, which was then written-off in the early 90s, in return for shares in state companies – a situation not that dissimilar to Ireland’s NAMA and foreign vulture hedgefunds; but President Reagan, having created a short recession, at least facilitated creation of real jobs, unlike President Obama – a staggering 97pc of his stimulus plan went to people who already have jobs).

        • michaelcoughlan

          “comrade Gierek borrowed $20bn in the 70s and then comrade Jaruzelski had to squeeze out of the population another €20bn in interest rates in the 80s, which was then written-off in the early 90s, in return for shares in state companies – a situation not that dissimilar to Ireland’s NAMA and foreign vulture hedgefund”

          Exactly the modus operandi demonstrated in John Perkin’s superlative work Confessions of an Economic Hitman.

          I have been trying to drive home the message that when McWilliams talks about the US and it’s monetary policy alone that this policy is in fact part of at least a twin track which includes military expansion.

          Perkin’s said any leaders he couldn’t corrupt the CIA killed them and if the CIA couldn’t get them the military took the place. Like I have been saying all along the US is fascist. The German people VOTED for Hitler.

          You hardly think all the good looking slim middle class Irish army officers will rattle their swords? No Chance. It’s like the top echelons of the Irish Civil service; You try and do the job right and you be fuck%d. Better to go along to get along.

          I have said it before and I will say it again; The monetary snake is eating its tail and has progressed to the stage where it is digesting it’s colon.

          Michael.

        • McCawber

          What are your predictions for the coming year.
          Buy where.
          Sell where.

          • Grzegorz Kolodziej

            First thing I would recommend is to diversify your assets – i.e., even though I am a believer in gold (long-term), I would not hold more than 10pc of my assets in gold. There is an old adage on Wall St to keep 5pc of your assets in gold and pray you would never need to sell it.

            Second thing would be, when considering high yielding speculative investments to buy when everyone is selling and sell when everyone is buying (“everyone” does not incluse insiders).

            The third thing to consider is the Fundamental Theorem of Investing:

            If there’s a commodity, there’s another security that’s made out of it (that’s why I would be afraid of investing large amounts of money in long term coffee futures contracts – even though coffee and sugar are possibly the most undervalued assets in the world), unless you intend to spread the Hemileia vastatrix – the fungus responsible for coffee leaf rust – world wide, which would make the prices of coffee to sky-rocket.

            In terms of a medium term investment in currencies, ringgit is an interesting one in view of the Chinese turmoil resulting from China’s painful reorientation from an export-driven economy to an internal-demand driven economy, which is accompanied by China dumping US bonds and US’s response both via cyber-attacks on the Chinese stock exchange and its pivot on Pacific.

            Malaysia is the only developed nation since its independence in 1957 that has not defaulted or experienced a full year of inflation above 20pc, but the ringgit can only be traded via non-deliverable forwards and with Islam on the rise, it may become a haven for Muslim terrorist money laundering after my predicted fall of Saudi Arabia.

            Then there is the Singapore dollar (Singapore had 18.6pc current account surplus in 2014) – attractive country because with increased disclosure in Switzerland, Singapore has become the new global center of hidden money and a future centre of world’s gold exchange should a currency backed by gold emerge after the collapse of the dollar.

            This is due to geopolitical reasons.
            Geopolitics is a method of studying foreign policy (particularly the history of diplomatic relations) focusing on political power in relation to geographic space (especially territorial waters and land territory) in order to understand, explain and predict international political behaviour through geographical variables.

            In terms of historical cycles of declining and rising empires, geopolitics has always been a clash between rimland countries (the ancient Meditteranean, England, USA) and heartland countries (India, China, Russia).

            Singapore is crucial for the US (to retain its maritime hegemony and free trade) and China (to block the rimland powers and stop the free trade – hence China’s recent geopolitical advances to divert the maritime trade routes into the new Silk Route, thus reversing the positive outcome of the discovery of the new world for rimland powers).

            In other words, Singapore will become the centre of the world’s trade, and that’s independently of who wins the new trade war – US or China (Russia does not count in this clash of the titans).

            Already Singapore is the world’s busiest port and the world’s busiest waterway. Singapore presides over all trade between Europe and East Asia, and all Middle Eastern oil sales to East Asia.

            Furthermore, every reader of this blog has something which went through the Strait of Malacca.

            Polish zloty – the 10th most undervalued currency in the world – land and properties in Poland would also increase in value (in smaller towns, as in big towns there already is a bubble) when China implements its plan of the new silk route as proposed in Warsaw at the 16+1 conference, where China proposed Poland to lead the group of 16 countries and form a geopolitical alternative to both Germany and Russia (Chinese view of Poland’s relation with Russia is different from both the Polish view and the continental western European view – they see Poland as retreating from Russia for the last 300 years as this is their timeframe).

            This would also explain Poland’s recent hard stance against the German pressure, but we are talking about the 20 years time perspective and therefore I would not recommend to buy Polish zloty or properties in Poland as I expect further German attempts to undermine Poland withing the framework of Germany’s desperate attempt to dissuade China to run the silk route through Poland and run it through Germany instead (a fight that Germany will lose because of Poland superior geoographical location and Germany’s ineptitude in being a leader of Europe, a view now shared by both China and Germany).

            I would wait and see what comes out of the recent institutional wrangling in the EU between Poland and Germany (i.e., will Germany use force as it plans – so far Germany threatened to cut the EU subsidies for Poland, but this was laughed at in Poland as according to the new government’s calculations Germany receives far more money from Poland than it pays in EU subsidies – German exports to Poland are twice as big as to Russia).

            If you are of a hazardous inclination, then Russian ruble might be a consideration as a medium term investment (I would still wait though as the rubble further collapses due to Russia’s dependency on high oil prices).

            After all, you cannot be worse off buying rubble when it further falls than if you had invested your life savings in Bitcoin (even though I think its price will continue to rise due to bubbles bursting) in December 2013 – even with Bitcoins recent rise, you would have lost 2/3 of your life’s savings, as opposed to 300-600pc (depending on the region) yield from an agrarian land in certain parts of Poland had you invested in it 10 years ago.

            According to the latest Big Mac index, the Russian rouble is one of the cheapest currencies around, 69pc undervalued against the dollar, followed by the South African Rand and the Indian Rupee.

            I think that the best long-term investment advise would be to follow my late grandfather – to bury gold and machine guns in the ground and spend the rest of your life rearing all sorts of animals and growing all sorts of fruit and vegetables.

            He never told anyone though where he had buried his gold and guns and it will never be found out as the forest was sold decades ago – so maybe his advice was not that good after all as precautious people tend also to be diffident and take their secrets to their grave.

            One thing I would never invest in is property – unlike what people think, in hyperinflationary environment it is a liability rather than an asset as its price is related to income and incomes fall in recessions (hence you could buy a whole block of a real estate in Berlin in the Weimar Republic for 25 (TWENTY FIVE!) ounces of gold).

          • Grzegorz Kolodziej

            “a view now shared by both China and Germany” – I meant both China and the US:

            I refer to the recent Washington Post article accusing Germany of breaking the EU energy solidarity principle over its Nord Stream 2 deal with Russia.

            Those concern are, of course, voiced not because the neo-cons worried about Poland paying the highest prices in Europe for the natural gas but because Poland, seen so far as a playground between three major forces – Germany (Donald Tusk), USA (Jaroslaw Kaczynski) and Russia (the former President Bronislaw Komorowski), has now upped the ante playing with the China option, thus making the US to try to come up with a better offer than selling Poland an old overpriced military junk in order to improve the US unemployment figures:
            Poland paid more for older version of F-16 52+ than Greece for their more modern versions F-16 C/D BLock 30; furtermore “Polish” F-16s have obsolete missiles (with a range of 360k – Finland’s have 500k and USA sold them to Finland for 60pc of what they had charged Poland – and Finland is not even a NATO member).

            To drive another nail in the coffin of David’s misconception that Poland enjoys favourable, Israel-like relations with the US and its supported by the latter, I will shock the readers of this blog by revealing that in 1996 the Kingdom of Belgium had officially proposed to give Poland for free their 30 used F-16s Block (Belgium would have got rid of the servicing cost and Poland would have fighter planes for free)m but this was blocked by the US that insisted on Poland buying new planes.

            Meanwhile Israel – now in intelligence alliance with Saudi Arabia – gets modern military equipment from the US for free, along with $3.1bn financial aid – money which Israel immediately lends to the US on high interest.

            If the US does not improve on its offer to Poland in return for Poland being a part of their rimland empire, then with the new offer from China to 16 Eastern European countries they can beat it.

            The world is getting multipolar, the petro-ollar is crumbling and its time for Ireland to think whether it is better to depend on the US multinationals (I am not saying that we should charge them 12pc as that would be more than France charges them in reality – 8pc, but should we depend on exports and tax intakes from them?) or follow the example of the United Kindom which received the Chinese President like the leader of the world:

            http://www.theguardian.com/uk-news/2015/oct/18/britian-has-made-visionary-choice-to-become-chinas-best-friend-says-xi

  10. goldbug

    @DAVID -> FORGET SAUDI

    -> THEY ARE SITTING ON GOLD.

    => WHICH THEY WILL MORTGAGE LONG INTO THE FUTURE.

    WHAT ABOUT CLOSER TO HOME?
    .
    .
    THE EU GOING THROUGH THE “STAGE 3″ OF CULTURAL MARXISM?

    GERMANY?

    1 MILLION 2015

    3 MILLION 2016 PREDICTED

    ADD FAMILIES -> 15 MILLION ?

    RESEARCH FOR A FUTURE ARTICLE

    http://www.express.co.uk/news/world/632735/Germany-sex-attacks-gang-rape-Cologne-New-Years-Eve

    http://newobserveronline.com/helsinki-police-prevent-second-cologne/

    “THE ECONOMIC AND SOCIAL EFFECT OF MASS INVASIONS?”

    COME ON DAVID -> BE A TRAIL BLAZER

  11. michaelcoughlan

    Anyone for some country and western music? And there was I thinking it was Dick Cheney who forecasted never ending war. It seems the knew it as far back as Vietnam at least. From the song “I don’t suppose that war will ever end”

    https://www.youtube.com/watch?v=MwMPZR3sS2o

  12. survivalist

    “And believe me, if this regions blows, this will be the crisis to top all crises”

    I will…certainly, if you can supply the evidence that supports you claim that contraception is the major factor in a lessened birth rate for Ireland as reported in a recent article I just got round to reading .

    However without facts to support the claims made in these pieces I will continue to regard them as the genre of entertainment.

  13. Aturpaat

    What you have failed to mention is the equally if not more crippling financial difficulties that Iran faces and its not rocket science, its simple maths. Iran exports 1 million barrels of crude oil a day at $29/barrel. This translates to $900 Million oil revenue per month. With the current FX rate of one $ to 36000 Rials, Iran’s oil revenue in Rials is 32000 Bn Rials per month, yet the cost of paying the cash for subsidies program alone for the government is 34000 Bn Rials per month. A deficit before even the wages for government employees is paid let alone the development projects. Many government employees and even armed forces have not been paid regularly recently. Obama really did give a lifeline to Iran with JCPOA

  14. McCawber

    I’m sanguine about the middle east.
    All the major players are on board.
    It’s a fair bet that the US has massive oil reserves, certainly enough to keep the pot boiling for as long as it takes to develop the renewable technologies to replace oil based consumption (mostly transport)
    They’ve loads of gas too and are investing heavily in renewables.
    Never underestimate the ability of US business to recognise the main chance even if the government/politicians are making a bags of things.
    The middle east is already in crisis and yet the ar$e is still falling out of the price of oil.
    Ten years ago, in the same scenario, the price of oil would have been $200 a barrel by now and rising. God but you’d miss Lehman’s (NOT)
    So I’ve a question with my own answer but I’m curious to know how other people are reading it.
    What is ISIL’s main purpose?
    ISIL’s main purpose is to recruit malcontent nutjobs from anywhere in the world so that the world (western world in particular but not exclusively) can be rid of said nutjobs.
    These nutjobs have been “dealt” with in the passed by events such as the 1st, 2nd, Korea, Vietnam etc wars but that sort of release is no longer possible.
    So ISIL has succeeded in corralling these nutjobs in one relatively small location (no mean feat) and now their “elimination” is in progress.
    Good war/conspiracy film plot maybe but…..nah.
    Before you dismiss it tho’, ask yourself this little question.
    Do you think the powers that be are capable of something like this.

    • michaelcoughlan

      Nahhh.

      Isil are like all nutjobs and are pure opportunists. They sense the weakness and vacuum and are taking advantage.

      The powers that be? yes but not in the way you think.

      Michael.

    • redriversix

      Korean War was fine up until Macarthur decided to head North…if he stayed on the 37th parallel , China would not have got involved , as he was advised. he even wanted to use nukes

      But ..no..he had to go all the way…which ended in a retreat back to the 37th parallel and him getting fired by Truman….

      Vietnam.. ? nut jobs..? The only nutjob was America , once Indonesia defeated Communism in 65, that was the end of the domino theory and the withdrawal from Vietnam in 72 and 75 had the exact same outcome as if the U.S had withdrawn in 65.

      The West has lost its moral compass..we are the War mongers

      sad..but true

  15. McCawber

    If the Fed and ECB are smart they will do all of the following.

    1. State that the new target rate of inflation is 1% and that they are adjusting policy forthwith. They are surely capable of coming up with the appropriate reasons without my help.
    2. Ban spread betting in the financial markets.
    3. Ban CFDs.
    4. Ban derivative trading.
    Have I missed anything?
    Well yeah sure I’ve left out a lot of detail about timing and phasing etc but I’m sure you get the drift.
    If you disagree I’m all ears because my education on financial matters is still in its’ infancy.
    However no mumbo jumbo. You get null points for that and I know a spoofer when I see one.

    • michaelcoughlan

      “If the Fed and ECB are smart they will do all of the following.

      1. State that the new target rate of inflation is 1% and that they are adjusting policy forthwith. They are surely capable of coming up with the appropriate reasons without my help.
      2. Ban spread betting in the financial markets.
      3. Ban CFDs.
      4. Ban derivative trading”

      They are smart and will do none of this. This sounds like the bonbon stuff top down control.

      My post is meant to be respectful.

      Michael.

      • McCawber

        I’m not for the minute suggesting that all of the above should be done overnight but I am saying it should be done in a timely and controlled fashion and ban might be too strong a word but seriously reined.
        If you adopt the gold standard and still allow spread betting on the price of gold then that’s just plain stupid. It’s a standard not a betting casino game and it should be protected.
        All of the above was made possible (ie large scale trading) by computers and the internet so that’s something to consider.
        They are smart in the sense of looking after themselves but it was smart to allow CFDs, Derivatives, Spread Betting to have such a massive influence on the financial markets and ultimately the real economy.
        My point is that that influence should and needs to be scaled back to where it serves rather than being the snake devouring its’ own tail.

  16. McCawber

    There is a disconnect between the real economy and the financial industry.
    The financial has been creating money hand over fist in the last few years.
    Why – To boost demand in the real economy.
    It hasn’t worked. The Laws of supply and demand no longer apply.
    The financial big wigs need to take a serious look outside the box.

    • cooldude

      McCawber you have twigged it. All of this bullshit about monetary debasement helping the real economy is crap. The only real reason was to bail out the to big too fail banks. If you continue your search you will find that all these central banks are in reality private institutions who pay dividends to their shareholders who are the very same private banks they bailed out.

      It was never supposed to work and it never can work. Monetary debasement always leads to the poorhouse and this time will be no different.

      Look for a form of money that cannot be debased. Adam is the king at the moment but any form of non debasable money is preferable to the banksters scrip.

      Also the bail in shit has just been passed into Euro law. Stay away from their casino.

    • Mr Macorber

      This the central banks created the money which acting as reserves to bail out the banks are the leveraged with the fractional reserve commercial banking system to multiples of 10 to 30 times creating multiple trillions of cash.
      This has leaked into the financial bond and stock markets where it is levereged again and again.

      The result is a quadrillion or more dollars committed to the derivatives
      All is subject to counterparty risk of default. Thus one failure to meet an obligation causes a domino default collapse.
      Considering the interest rates are at six hundred year lows and thus the bond market at a six hundred year high we are poise for a one in six hundred year bust.

      Add the stock market elevated on fumes and no reality the fun has started for the mother of all financial collapses. All deposits in banks and safety boxes will be bailed in and reissussed as shares of bankrupted entities.
      Hold day to day operating cash in the bank, nothing of value.
      Hold three months cash at home.
      Hold gold and silver coin in a safe place as insurance.
      Know your neighbours and form associations. Have a local source of food as the stores will be out of stock in 24hours.

  17. Pat Flannery

    In case anybody is interested (ICAII) here is a Wall Street Journal article about the growing US trend towards urban revitalization in which my town San Diego has been a leader.

    There may be some lessons for Irish cities here. In America sprawl is out and urban infill is in. It may be that American-style redevelopment of inner cities is the answer to overpriced, polluting and corruption-generating greenfield construction around Ireland’s major urban areas.

    I am sure that many of those commuting to jobs in Galway would gladly swap a 10th story apartment in Salthill for their dreary semi in that estate in the burbs and thus avoid their daily torture at Claregalway traffic lights for example. ICAII

    http://www.wsj.com/articles/san-diegos-downtown-gets-the-big-city-treatment-1452178518

    • I’m reading it Pat, very interesting.

      I wish they’d write better English at times though:

      “with millennial and Gen X buyers and renters, as well as empty-nester baby boomers”

      Excruciating prose.

    • Sideshow Bob

      Pat,

      Irish cities have already gone through their redevelopment phase. There were city-by-city regeneration schemes in place from the 1990s on-wards across Ireland. Then, and right up-to the bust, in all cities development was characterized by the use of tax-incentives promoting everything, resulting in particular in non-owner occupier, and consequently, shoe-box sized apartments in low-rise (max.4 storey) infill developments and redevelopments. And this card was completely overplayed everywhere, again and again. At this point we have `missed the boat´ on creating sustainable, high density cities with a scaled urban grain. There are high non-owner occupation of dwelling levels present in Irish city centres resulting in a half transient population of students, emigrants, other renters, allied to a few trend breaking new owner occupiers and of course, the original pre-development residents. Also, there are large swathes of designated conservation areas in the centers of Irish cities, much of it undeserving of such protection, and combining this with the inevitable presence of sub-par infill development as outlined above, an almost unmovable pair of synergistic chokes on any future potential urban development in Irish cities has been created. The centers of towns across the country are dying on their feet for similarly stifling planning reasons, this aside from macro or micro-economic issues that are present. Also important in the back ground, and seldom addressed, is the issue strong property rights based in unreformed land law, largely with pre-urban 12th century origins, which is also stifes practically any modern development. As it stands, and the defunct non-functioning construction industry notwithstanding, there is little hope of this low-density, car orientated, urban paradigm of sprawl ever being reversed. The `Celtic Tiger´ era was a giant missed opportunity to change this and kick on with the development of real cities, and, we missed it completely.

      Of the few residual large site have owners that for economic reasons or otherwise, won´t be giving them up easily. You pointed to Galway for example; most of the central zone from the Corrib westwards is owned by the Church and has religious / educational / healthcare zoning and presently cannot be easily redeveloped with the intensity of development that Galway would need to become a true city, as opposed to the over-sized sprawling town that it is. And as for 10-storey `skyscrapers´ in Salthill you must be ´aving a larf!. What would the locals say about their precious views of the Burren from their first storey box room windows? The place in NIMBY central for any normal, 3-storey development, never mind `skyscrapers´. As for travel times, the idiotic contraflow system around Eyre Square is a bottleneck strangling Galway´s traffic flow at it´s very throat. Galway seems destined to have ridiculous traffic problems relative to its size, and for ever, as it stands. Moronic planning begets stultifying results, I would say.

      Limerick would be a good contrast to Galway, actually. It is similarly sized, with a more significant and denser redevelopment at the heart of the city and a sane functioning traffic flow system. Much more successful as a city, I think, if less trendy and up its own hole.

      In Dublin, there is little available building land for large-scaled, denser, and probably upward, re-development. A good example there would be the Guinness Brewery site in the Liberties, which is extensive, already built up in places and very central but it has too much functioning plant to make the sale and redevelopment of the site, and the rebuilding of the Brewery elsewhere, a viable proposition for Guinness. Oh, that and it isn´t fashionable with all of those `Corpo´ flats nearby.

    • That is good stuff Pat
      Combined with roof top gardens and urban farming city life would radically improve.

      • Pat Flannery

        Hi Tony. Funny you should mention rooftops. I was at a real estate seminar the other day (even though I’m retired, just can’t break the habit) where a guy outlined the growing awareness of rooftops as valuable real estate.

        He listed the many revenue earning capabilities of rooftops and why architects are shortchanging their clients if they don’t design for rooftops accordingly. He dealt with urban farming as you suggested as well as platforms for advanced telecommunications such as optical networks that leave fiber optics in the shade in a campus setting as all downtowns are.

        Are you back from Kiwiland?

        • Not till 23rd.
          Currently near Bay of islands.
          Mix weather. Lots of rain but fine last three bays.
          Very enjoyable though
          Best, Tony

          • Pat Flannery

            Have one for me in old “Johnny Johnston’s Grog Shop” better known today as the Duke of Marlborough in the little town of Russell on the Bay of Islands. One of the loveliest places on earth.

            Make sure you walk up Flagpole Hill behind “The Duke” and think of Hone Heke the Maori chief who kept cutting down the hated British flagpole. And of course visit Waitangi where the British signed the (false) Treaty with the Maori that created New Zealand in 1840.

            I had a half Maori girlfriend from Whakapara (nearby, which I’m sure by now you know is pronounced Vakapara like Vangarei). I had several long visits to that area, sometimes for months at a time, so I know the Northland very well. Enjoy.

          • Pat
            Passed by the Duke, went to the flag pole, read the Waitangi details,(perfidious Alban comes to mind)noted the different meanings in the Mouri and English editions, spent time in Russell and Paihia, an afternoon in Taupo Bay.
            Beautiful places.
            Pissing down again today as we head to overnight in Auckland.

          • Pat Flannery

            Great Tony. You can come home now.

  18. Pat Flannery

    Hi Adam. Watch the video at the beginning. It gives a fair image of our town.

    I have been heavily involved in the politics of downtown development for many years and know all the players. I think we did a halfway decent job in San Diego and have been widely copied.

    Our problem is/was that we ran out of land. We have Tijuana to the south the Pacific Ocean to the west, Marine Camp Pendelton and Orange County to the north and a range of 6,000 foot mountains to the east.

    Yes they don’t require a command of English anymore to be a journalist even a WSJ journalist.

    • Sideshow Bob

      One question if I may, Pat; was there a real attempt to include a social/affordable housing element? (I saw a lot of mentions of high-end condos and upwardly spiraling property values in the article).

  19. Pat Flannery

    Sideshow Bob: Wow! You sure know your urban planning. I would like to talk with you sometime when I get back. Perhaps we can convince Alan Kelly and Paudie Coffey that they don’t need to bend over for the developers every time.

    As for San Diego and affordable housing, we have a 25% low to moderate income inclusionary rule for a housing project to qualify for redevelopment tax benefits. It is not perfect but it works.

    The idea is that there is little point in housing only high income professionals without somewhere for their housecleaners and maintenance workers to live. The same applies to the hospitality industry. The hotels and restaurants need their workforce to be able to live downtown or close to downtown and to be able to use public transport.

    The result was that a whole new set of “low/mod” housing developers emerged to complement the “market” developers. We had the usual endless rants by the free enterprise crowd crying socialism but somehow over many years of political push-pull we managed to accomplish some measure of balance. Unfortunately there seems to be very little balance in Ireland. For many years it has been the Wild West for developers but hopefully not irreversible. Like everything else capitalism needs to be tweaked.

    • Sideshow Bob

      Thank you for the detailed reply, Pat.

      I started with the intention of making a small reply but the desire to vent meant it kept coming!

      Regarding Alan Kelly, etc, one of the actual problems for the likes of him is that there aren´t many developers left for them to bend over for. The top-end of the industry has been decimated and has simply not returned. To give you an idea; as far as I can see, nationwide, there is ready to go planning permission for as little 15,000 residential units only as it stands, and about 30% of that is for one-off housing. Planning permission applications have been been running at 7 or 8 K a year for a few years now and the boom era ones have largely expired. There is precious little out there in the pipeline, development-wise, on paper at least.

      It is very interesting to hear about the affordable housing situation element viz-a-viz the general urban redevelopment there in San Diego. I had looked up some sites but couldn´t follow the story exactly from them so cheers for that.

      Sure, about getting in contact, I will drop you a line via your blog in the coming days.

      • Pat Flannery

        Sideshow Bob, I am looking forward to talking with you about Irish planning or the lack thereof. BTW my “Blog of San Diego” is getting a bit out of date since I retired in 2010. But I keep it up there as a lot of people particularly journalists like to refer to it for original documents which is what I was known for.

        It sounds like Ireland does not have a history of planning that everything was left to chance and to the human greed of developers, most of whom have now gone bust. Is urban planning even discussed by the media or by the politicians? It should be a prime issue in the upcoming general election but it sounds like the politicians know nothing about it. It seems that when they think of “planning” they think only of political contributions aka the brown envelope.

  20. redriversix

    Saudi Arabia is a dictatorship……

    But they have oil..so its cool… they fund Isis , supplying arms and fashion advice.

    Al queda , set up by the C.I.A , is / was / are also funded by Saudi Arabia .But in the nineties and early Noughties , Saudi Arabia owned 37% of U.S debt , so that was okay.

    The hijackers on 9/11 where mostly Saudi , Mohammad Atta was Egyptian if i remember correctly.[ he was the guy who's fireproof passport was found in the rumble of the twin towers buy a diligent F.B.I guy ]……but…sure you cant attack Saudi..that would be mad.!!!

    In 71 a deal was done with Saudi that America would import more Oil,,and produce less Oil if Saudi bought U.S Treasure debt.

    Remember , all of the bin Laden family were on the only private flight allowed to leave the U.S after 9/11 [ the day after ]

    The pet name for the saudi ambassador to America was Bandahar “Bush” , due to his close relationship with the family of the same name.

    I.S.I, the Pakistan Secret service service paid 100,000 U.S dollars into Atta’s Bank Account.

    Although Saudi Issued its first Government bond several weeks ago which was oversubscribed , i doubt very much if they are or will go bust , unless it suits the U.S

    Saudi is pumping more Oil than ever in a attempt to close down the fracking industry across the World as they are obviously seen as competition. . It is common knowledge that a lot of these companies will go bust this year due to oil prices , according to the experts [?]

    If you think , these Proxy Wars are based on religion , in Yemen , Iran etc you are misinformed , these Wars are based on destabilising the region , obviously their are Religious undertones , but that is just a known benefit and a easy subject for the Media to write about and less controversial.

    As i said earlier , ISIS is funded by Saudi. also , Britain & America sell weapons to Saudi which are used in Yemen.

    The American’s fund & train the M.E.K in Iran , they are a anti-Iranian Govt Army [terror] ? group and operate as a Guerilla force out of the Mountains close to the Iraq border.

    As you know the West forgave Iran and welcomed them back into the international fold..this was a business plan to then forment , allow ,encourage operations which would ultimately try and encourage Arab neighbors’s to turn against each other , with the blessing of the U.S Govt , hanging a Iranian cleric was a start.

    Bahrain was the second country to support Saudi in its embargo against Iran. [ The U.S FITH FLEET Is stationed in Bahrain ]

    The reason why the West [ the U.S ] decided not to attack Syria [ see Iraq , Afghanistan ] is because Russia has only 1 base outside of the former U.S.S.R and that is the deep water port of Tartus in Syria.This is owned & operated by Russia [ U.S.S.R ] since 1971 .

    In contrast , America has 137 military bases across the World.

    The reason Iran was not invaded was because , A/ Its 5 times bigger than France , B/ the U.S Military was in need of being built up again after several years of fighting

    If you think these Wars [ on terror ] being fought by America are about freedom , democracy and the safety of all the peace loving western nations .. your nuts , lala, gone fishing , stoned , drunk , in need of medical attention etc etc.. its about Money , share prices ,, resources , commodities and
    control. [ Empire building ] ?

    In 2000 , their where almost 1200 Terrorist attacks across the World , In 2013 , their was almost 13,000.

    War on Terror ? Horseshit……

    America needed a ” New Pearl Harbor” to carry out their plans and they got it in 9/11

    Who could be justified to Attack , Maybe North Korea..? ah….but wait ..they have Weapons of mass destruction….are you mad !!! ??? cant attack them.

    Rwanda…1992 or 94 ? 1 million people butchered in 6 months…..”WE MUST RIDE IN AND SAVE THESE PEOPLE AND BRING DEMOCRACY”…..what , ? resources..mmmmm not sure , asthma ? nah fuck it…no money there , send in the U.N to ” observe and report”

    After the attacks in Paris on Nov 13th , lockheed Martin , a weapons manufacturer , their shares went up 33%.

    France is still fucking around in Algeria….you know , Maybe .. just Maybe..if we , the West stopped attacking Arab Countries , killing civilians etc they may not attack us.?

    What if the West punished Israel for U.N Violations…it has broken several for years and not a finger lifted…Why ? I am not anti- Semitic…i don’t care what fairy godmother or deity Israel or any Country follows.

    Organised religion is hokum…..it is for people who are afraid of Hell , spirituality is for people who have been there…..you know what Hell is ? its a small town in Michigan.

    For the record, i love [ or loved America] grew up in a house with a picture of the pope and JFK on the wall, have visited numerous times and have relatives there..

    But America is lost..and has been since the end of Eisenhower’s Presidency and financially lost since 71 and the end [ or beginning ] of the Vietnam war…remember that holocaust..?

    58,000 dead American kids , 3.5 million dead vietnamese…for what…? “Reds under the bed”….?

    As for our recovery ?????

    In a War ridden World ? cheap oil…..stock markets that are manipulated ?….gimme a break

    Debt based economies ?

    As a people , we are chattel..as a country..we are a commodity..as a world..we are screwed…but hey ???? !!!!

    nobody really cares..shit happens, history repeats…Politicians lie…and we watch the Kardashians.

    Next Government ? Fine Gael/ Fianna fail coalition…. next F.G Leader ? Simon Coveney

    Have a nice day

    RR6

    Barry

    • Greetings RR 6
      The only thing you left out is that it is all funded by central bank unlimited funds.

      Fire the central bankers and make fractional reserve banking a hanging crime.

  21. redriversix

    Please find below a academic report underlining my opinion on religion…

    https://youtu.be/8r-e2NDSTuE

    Thank you.

    RR6

  22. Chinese market only fell 7% as the government closed the exchange. This has happened more than once.

    Yesterday it was revealed that the reason Kadaffi was murdered was because he threatened the monetary system by proposing an Islamic gold dinar be used as a pan African currency
    The disclosure was revealed in Gillian’s emails.

    Just as I have been telling you for years. Same reason that rid us of Saddam. Never mind the .order of JFK after his idea to issue silver backed treasuries.
    It’s all about the power to control the money. It gives the power to control the world.

  23. Seems that from Gold Corp to Grez the best place to be is gold and silver.
    Most of the rest of the world agree and then the grandparents had land for food. The three Gee’s are followed by some in the US. Gold,Guns,and Grub.

  24. As far as world turmoil is concerned. Follow the money not the religions.
    It is all part of the chaos created by the power monger elites to destroy all the stable government and replace with a new world order dictatorship.

    Resistance is futile, said the Borg.

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