Axis Of Logic
As The World Burns
By Michael C. Ruppert, Editor, Publisher
Dec 13, 2004, 11:24
But when the run on the dollar begins, OPEC will inevitably at some point switch its pricing to the Euro, which the entire world is wrangling - much to Europe's chagrin - into not only a safe-haven currency, but a profitable one. The next house is being built before the old one is abandoned. When the run on the dollar begins, it will be as if the rest of the world declared war on the United States of America by launching a missile, dropping a bomb, or landing an army at Bethany Beach, Delaware. That this will lead ultimately to widespread global warfare seems certain. This is exactly the way the administration is setting it up to appear to the American people. Think of 9/11 times fifty.
The rest of the world is merely defending itself with non-violent means - for the moment. But it will be portrayed as an attack upon the US. "Why?" George Bush will ask, rhetorically. "They hate us because of our freedom."
And, barring a miracle, the end results will be exactly the same as from a physical attack: devastation so complete and unthinkable - magnified by the brutal impacts of Peak Oil - that only a few will even try to prepare for it. That is sad because preparation will make all the difference (barring luck or divine intervention) in who survives and to what extent they remain intact and functioning afterwards.
Run on the Dollar Imminent - The American People and Economy Will Be Among the First Casualties
The World Draws a Line in the Sand Around Iran - There will be No Invasion
Ukraine Possible Sarajevo for Global Conflict; Africa Ready to Explode in Proxy Wars; Latin America Heats
US Strategic Abandonment of the Korean Peninsula Inevitable; Taiwan Likely
Permanent Blackouts in Industrialized Nations Possible by 2008
John Lennon wrote, "Life is what happens while you're busy making other plans."
Since the US general election, while many in the US and around the world have been recovering from a gut shot which left them gasping for breath, an "asymmetrical" mobilization for global conflict has begun at warp speed. While many of the world's citizens and nations were unprepared for a second-straight US presidential election theft, it is obvious that many of the world's more powerful governments were anticipating and preparing for it for some time. They had their track shoes on and were in the starting blocks on November 3rd. There is no other explanation for the pace at which economic, political, military and energy events have moved around the world in the three weeks since November 2nd. The end of the world "as we know it" is very close. There may be nothing that can be done to prevent it and only little that will soften its impact. This places even greater importance on what FTW has been advocating for many years: personal and community preparedness.
This article constitutes FTW's third-ever economic warning to its subscribers. The first, published on September 9, 2001 was followed two days later by the "attacks" on the World Trade Center and Pentagon. The second was on July 8, 2002 just before a precipitous drop in the Dow of more than 1400 points and the wiping out of more than a trillion dollars of shareholder equity, especially from pension funds.
One key to grasping the interrelatedness of these developments is to understand that dramatic economic collapse, especially in the case of a super power or an Empire, has historically created a power vacuum which has resulted in war. If, as von Clausewitz said, "war is a continuation of politics by other means," then we must also admit that politics is a continuation of economics; and economics is a continuation of energy. All economics (at least in this world) is founded upon energy, whether it is hydrocarbon energy or physical labor (food calories). There are 10 calories of hydrocarbon energy in every calorie of food consumed.
Energy is the ability to do work; it is, in effect, the ability to survive. Energy is economics. Now, economic warfare several orders of magnitude above that which has occurred since 9/11 is underway. As much of the world hoped it would soon be dealing with a Kerry presidency that might have provided a partner still worth working with, it refrained from making economic moves that might permanently damage the US.
There was no point in destroying the US economy until it became clear that the election was rigged and the neocons had been moving ahead with a hostile agenda all along. For the world, November 2nd represented yet another Rubicon: there is no longer any hope of "peaceful coexistence" with the American Empire. Ultimately this conflict must become a physical one.
This apparently was what the neocons wanted to make clear as well. This is what they intend (it was what they meant by the phrase "nothing will stop us," repeated four times in Bush's RNC speech). They also wanted it understood that the Empire would willingly sacrifice its own people in a test of wills much as the Soviet Union did in World War II. As such, only the global elites, defined by money and power rather than nationality, stand to benefit in the short term. Indeed, given the nuclear threat involved, it is now debatable whether there will even be much of a long term (twenty years hence) to prognosticate about.
An all-out run on the dollar is imminent and from the moment that begins we will be living in a whole new ruthless and unforgiving world. The best way to weaken the American military before fighting it is to eliminate as much of its funding as possible.
If my warning seems hyperbolic to you, then consider just one statement made by someone whose job it is to avoid hyperbole.
On November 23rd the Boston Herald reported on a shocking statement made by Stephen Roach, the chief economist for investment banking giant Morgan Stanley. "Roach met selected groups of fund managers downtown last week, including a group at Fidelity. His prediction: America has no better than a 10 per cent chance of avoiding economic "Armageddon."
Press were not allowed into the meetings. But the Herald has obtained a copy of Roach's presentation. A stunned source who was at one meeting said, "it struck me how extreme he was - much more, it seemed to me, than in public." Roach sees a 30 percent chance of a slump soon and a 60 per cent chance that "we'll muddle through for a while and delay the eventual Armageddon."
The core of Roach's analysis is the simple fact that, in order to keep the US economy afloat and maintain even moderate faith in the dollar, it must secure $2.8 billion dollars a day in foreign direct investment (FDI), largely through the purchase of Treasury notes to service its bubble economy. Other sources have placed the required FDI at $4 billion per day.
What is the sense of this as the Bush administration raised the US debt ceiling by 800 billion on November 19th and continues to pull the rug out from under the dollar while at the same time cutting taxes and increasing spending? There were warning signs that these wellpublicized moves were dangerous for Americans and their wallets more than two months ago when, on September 9th, the routine daily T-Bill auction at the US Treasury opened and no one showed up to buy. Marshall Auerback - one of FTW's favorite economic analysts - writing for Prudent Bear (www.prudentbear.com) on Nov 16th reported:
Suppose they had a bond auction and everybody stayed home? We had a variant on that theme a few months ago. During a routine sale of U.S. Treasury bonds in early September, one of the essential pillars holding up the economy suddenly disappeared. Foreigners, who had hitherto been regularly buying nearly half of all debt issued by the U.S. government stayed home on September 9th.
"Thoughts of panic flickered out there," said Sadakichi Robbins, head of global fixed-income trading at Bank Julius Baer. To be sure, the foreigners returned in force at the next Treasury auction, and Sept. 9 was quickly dismissed as an aberration.
But the episode demonstrated something we have repeated on these pages ad nauseum: the extent to which the US remains dependent on the kindness of strangers in terms of sustaining its very way of life. We have posited the notion that a buyers' strike, a foreign creditors' revulsion, could arrive as a sudden thunderclap of financial crisis--spiking interest rates, swooning stock market and crashing home prices, a scenario which will not seem so absurd if we have a few more days like September 9th.
In the midst of these developments - common knowledge in Wall Street's boardrooms - Reuters reported on November 15th that bonuses for Wall Street executives were set to jump by 10% to 15% this year. Almost simultaneously, the New York Times reported on November 21st, "Soaring Interest Compounds Credit Card Pain for Millions." The latter story revealed that in recent months credit card companies have unilaterally increased (in some cases doubled) interest rates on credit card debt without notice. The net result has been drastic increases in minimum monthly payments and interest rates that have soared in some states to as high as 28%. What would you do if your monthly minimum on one card went from $460 to $780 dollars?
Most Americans today cannot dig out from that kind of debt and this is a sure indicator that the weight of a major economic meltdown will be placed on the shoulders of consumers instead of corporations - at first. Consumers will never be able to dig out when the economy collapses. As Catherine Austin Fitts points out, lenders have an obligation to exercise diligence to see that borrowers are able to repay loans before making them.
What is happening is that lenders are at one and the same time encouraging people to borrow while systematically undermining - universally - their ability to repay those loans. Americans are still being encouraged to borrow and spend when they should be being warned to cut back and decrease debt. The main reason is because soon - in the blink of an eye - the world is going to stop underwriting this binge-bubble economy and there will be no safety net for those weighed down by debt. Why? It's called a wealth transfer. It happened in the Great Depression and FTW described it thoroughly in its analysis of the crack cocaine epidemic in South Central LA in the 1980s. The trillions stolen from the US Treasury, looted by stock manipulations and derivative-based investment bubbles, will be available to buy back our devalued assets at pennies on the dollar after the collapse. This is the sickness of America's (and the world's) governing economic paradigm. This is also a sickness that is rushing the world toward the kind of war that spreads beyond human control very rapidly: World War I on steroids and amphetamines.
PRELUDE TO WAR - Dumping the Dollar
According to a Plan - Iran in a Bubble
What has happened since November 2nd is that the entire world has been telegraphing a clear intent to stop providing America with its FDI subsidy. What has also been telegraphed is the administration's encouragement of this. The dollar will have to crash. But when? How far?
The rest of the world has realized that military confrontation with the US is not practical. Yes, it is true that the US military cannot wage a global war on many fronts. It is having a hard enough time holding its own in Iraq and Afghanistan. There will be no invasion of Iran. China has just signed a $200 billion investment agreement with its government (Asia Times, Nov. 6th). India, Germany and Russia are signing oil and gas deals with Iran hand over fist. This is global insurance for Iran, which plans to open an oil futures trading bourse priced in Euros in 2005.
The US (Britain and Israel) cannot afford to attack hundreds of billions of dollars in Chinese, Russian, Indian, German and other foreign investments. It will not. There are as yet no volunteers from among the other nations to suffer the carnage necessary to break the US military's back in an open firefight. But there are nonviolent ways to fight the Empire which are in fact precursors to military confrontations. At some point the Empire will resort to what it knows, maybe in the Ukraine, maybe in Africa, maybe in Latin America. At some point after that, unless something is done, the safeties will come off nuclear and biological weapons. The unthinkable will become a rational option.
All of that may take less than a year. In the meantime the trick for the rest of the world is how to get out of the dollar before it plummets and thus protect foreign currency holdings.
Catch 22? Maybe not. Many countries are now signaling that they are willing to take a little shot in order to give the US a very big one. That's what November 2nd told Wall Street, the Treasury and the Fed. And - according to a November 29th AP story reprinted in Forbes - China's Central Bank has now moved in to try and manage the dollar's decline by buying and selling them through its four largest banks. The likely intent is to allow all the other nations aligning with this plan to get out safely with minimal losses. Only China has currency reserves (approximately US $175 billion) and an economy big enough (even as Peak Oil is just beginning to hit home) to underwrite the switch and make it palatable to those taking the risk. It appears that since November 2nd the rest of the world feels it has much less to lose. They are correct. The oil and gas supplied by Iran are essential to the survival of many countries.
But China is also facing increasingly frequent blackouts due to energy shortages. If it is going to move on the dollar it must move before its economy slows and the US, Koreans, Europe, Japan, Canada, and the rest of the industrialized world start to shut down their factories there and withdraw their investments. In short, China must strike at the dollar while China stands a chance of winning. It will never have a better opportunity than right now.
The following story excerpts from Britain's Telegraph paint the picture.
Tension rises as China scours the globe for energy
By Richard Spencer
China's insatiable demand for energy is prompting fears of financial and diplomatic collisions around the globe as it seeks reliable supplies of oil from as far away as Brazil and Sudan. An intrusion into Japanese territorial waters by a Chinese nuclear submarine last week and a trade deal with Brazil are the latest apparently unconnected consequences of China's soaring economic growth.
The connection, however, lies in an order issued last year by President Hu Jintao to seek secure oil supplies abroad - preferably ones which could not be stopped by America in case of conflict over Taiwan.
The submarine incident was put down to a "technical error" by the Chinese government, which apologised to Japan.
But even before the incident the People's Daily, the government mouthpiece, had commented that competition over the East China Sea between the two countries was "only a prelude of the game between China and Japan in the arena of international energy."
The Brazil trade deal included funding for a joint oil-drilling and pipeline programme at a cost that experts said would add up to three times the cost of simply buying oil on the market. The West, however, has paid little attention to these developments. For the United States and Europe are far more concerned with the even more sensitive issues of China's relations with "pariah states."
In September, China threatened to veto any move to impose sanctions on Sudan over the atrocities in Darfur. It has invested $3 billion in the African country's oil industry, which supplies it with seven per cent of its needs.
Then, this month, it said that it opposed moves to refer Iran's nuclear stand-off with the International Atomic Energy Agency to the United Nations Security Council.
A week before, China's second biggest state oil firm had signed a $70 billion deal for oilfield and natural gas development with Iran, which already supplies 13 per cent of China's needs. China has its own reserves of oil and natural gas and once was a net oil exporter. But as its economy has expanded by an average of nine per cent per year for the last two decades, so has its demand for energy.
Its projected demand, boosted by a huge rise in natives to polluting coal for electricity generation, has contributed to the surge in the price of oil this year.
Shortages are already leading to power cuts in the big cities.
Since President Hu ordered state-owned oil firms to "go abroad" to ensure supply, they have begun drilling for gas in the East China Sea, just west of the line that Japan regards as its border. Japan protested, to no avail, that the project should be a joint one.
The two are also set to clash over Russia's oil wealth. China is furious that Japan has outbid it in their battle to determine the route of the pipeline that Russia intends to build to the Far East. Japan favoured a route to the sea, enabling oil to be shipped to both Japan and China. China wanted an overland route through its own territory, which would give it ultimate control if hostilities broke out.
Increasingly, analysts are saying that China's efforts have gone beyond what is safe or even in its own interests.
Claude Mandil, the executive director of the International Energy Agency in Paris, said the reserves in the East China Sea were hardly worth the trouble.
"Nobody thinks that there will be a lot of oil and gas in this part of the world," he said... "If China's economy falters, which, in my view, appears increasingly likely, then commodity prices will plummet, and with them, the value of the assets that produce them," Jason Kindopp, Eurasia's lead China analyst, said.
"Beijing may end up in an early 1990s Japan situation, where it is forced to sell recently purchased overseas assets for a fraction of what it paid for them."
China's wider aggression to secure oil and gas was the greatest threat to its international standing in the next decade.
"Sudan is the primary example," he said.
"It marks the first time in recent years that China has promised to wield its veto power in the UN Security Council against a petition initiated by the United States and backed by France and Great Britain."
According to Bloomberg on November 12th, China has just signed a $10 billion investment deal with Brazil to finance everything from factories to forestry, to ports to railroads, to energy prospecting. The key is not so much the assets; it's the combined economic power moving into a new power block and away from the US. For three years FTW has been writing that China would be the endgame in the struggle for oil. If we were correct when we wrote that then the end game has arrived much sooner than we expected. The impacts of Peak Oil are magnified as they move through a complex, interdependent system of economic, political and military competition. In warfare (and that's what this is) the rule when both enemies are trying to take the same objective is that if you can't get it, you must deny it to your opponent also.
IF I CAN'T HAVE IT
In other words, "If I can't have it then nobody can." What a magnificent statement of the current evolutionary state of mankind. Were the human race to have a tombstone, this might make an appropriate epitaph.
The signs are unmistakable that a rapid move away from the dollar is underway as other currencies like the Euro, the Yen and the Yuan show increasing strength. The Euro is becoming a hostage currency which the EU wants to weaken so as not to be priced out of the world exports markets. But I would not be surprised if strategic European thinkers - knowing that the Euro (either singly or in a basket with other currencies) is destined to become the currency of energy - are quietly supporting these moves. Every region is going to take some lumps here. The questions are when, where and how bad? Rumors are again surfacing of the possible birth of an Islamic gold dinar. The dinar is a double whammy as globally the lid is being ripped off a decades-long conspiracy to suppress the price of gold. Gold has hit 16 year highs recently of over $455 per once. Central banks, including the Fed, may soon be forced to reveal how much gold they have, or don't have. They will do anything to avoid disclosing where it went and why it isn't there. When that happens, the world - especially the American people - might be in for a real shock as we learn the truth about where "our" gold isn't. The collapse deepens. Tens of millions of unemployed, especially the young, might face a choice between starvation and enlistment in the military. Maybe we won't need a draft after all. Maybe that's why both Bush and Kerry were so certain about it.
New and previously unthinkable economic and military alliances are rapidly emerging as geostrategic fault lines (e.g. the Ukraine) portend massive earthquakes, and as the US Federal Reserve has basically indicated that it will make no effort to support a dollar which is now beginning a freefall. That does not mean that there will not be corrections as the dollar occasionally bucks the trend, but the trend must ultimately prove to be mightier than the dollar because of American debt. Once a revolt like this is unleashed there is no turning back. The world will have to destroy America or be destroyed itself. The battle to control oil reserves continues. Oil is money. Money is valueless without oil.
Russia, China, India, Brazil, and now Venezuela
The first task is for the world's major economic players to begin divesting dollars before they crash even further. Russia, Indonesia, Japan, Mexico and India have already begun such moves. The Financial Times reported on November 26th that mere whispers in China that its central bank might approve dollar (T-Bill) sales caused a near panic in financial markets until the rumor - an obvious trial balloon - was denied. The moment China starts selling dollars the rest of the world will crash down the doors of the bank to get rid of theirs as quickly as possible. The run on the dollar will be short, bloody and catastrophic.
Chinese Whispers Frighten Currency Markets
By Chris Giles
Financial Times London Friday, November 26, 2004 The dollar fell to new lows on Friday on rumours that China might shift some of its currency reserves away from the greenback, highlighting the dollar-related jitters in financial markets. The fragility in currency and bond markets has centered on fears that Asian central banks might dump US assets to avoid large losses as the dollar's value falls. The markets' nerves were highlighted by Friday's investor reaction to a report, later retracted, that China's central bank was offloading US Treasury bonds. On Tuesday, the first deputy chairman of the Russian central bank said it might increase the proportion of its reserves held in euros. Investors have taken the comments as a signal that the Chinese and Japanese central banks might also be considering their asset holdings. If either began to shift into European or Asian assets, the dollar would plunge.
The bubble of protection surrounding Iran just gets bigger and stronger. It is obvious that the entire world is drawing a line in the sand over Iran beyond which the Empire knows it faces a fight to the death. Yet, in every public posturing the Cheney-Bush dynasty has made it clear that this fight is exactly what it wants, is seeking, and is prepared for.
Iran, Venezuela discuss oil price in Tehran
LONDON, Nov 29 (IranMania) - Venezuelan President Hugo Chavez arrived in Tehran Sunday for two days of high level talks, with discussions including the oil price ahead of next month's OPEC meeting, according to AFP. "The topics of discussion will include oil relations between the two countries in OPEC and defending the oil price," Chavez told reporters in brief comments before he sat down for a meeting with Iranian President Mohammad Khatami. Chavez, who is heading a high-level political and economic delegation, gave no further details. OPEC has signaled it will stick with the dollar and there is a motive for this consistent with the dollar's ultimate demise. The Sydney Morning Herald reported on November 25th that OPEC president Purnomo Yusgiantoro has announced that OPEC will continue pricing oil in dollars because dollar denominated oil allows less affluent countries to arbitrage stronger currencies (i.e. the Euro) before converting to weaker dollars for oil purchases. While this will nominally hurt oil exporters like Saudi Arabia, Venezuela, Iraq and Iran in the short term, it will also be a way of sharing the already enormous wealth transfer underway as oil hovers near $50 a barrel with less powerful nations and binding them into the new block. It is OPEC actually taking care of the rest of the world (for a while) and whether it is for altruistic or Machiavellian purposes makes little difference. An Empire that cannot protect its vassal and tributary states is no longer an Empire but a carcass ripe for picking. This is how the world is beginning to see the United States from a geostrategic standpoint.
When the run on the dollar begins, OPEC will inevitably at some point switch its pricing to the Euro, which the entire world is wrangling - much to Europe's chagrin - into not only a safe-haven currency, but a profitable one. The next house is being built before the old one is abandoned. When the run on the dollar begins, it will be as if the rest of the world declared war on the United States of America by launching a missile, dropping a bomb, or landing an army at Bethany Beach, Delaware. That this will lead ultimately to widespread global warfare seems certain. This is exactly the way the administration is setting it up to appear to the American people. Think of 9/11 times fifty. The rest of the world is merely defending itself with nonviolent means - for the moment. But it will be portrayed as an attack upon the US. "Why?" George Bush will ask, rhetorically. "They hate us because of our freedom." And, barring a miracle, the end results will be exactly the same as from a physical attack: devastation so complete and unthinkable - magnified by the brutal impacts of Peak Oil - that only a few will even try to prepare for it. That is sad because preparation will make all the difference (barring luck or divine intervention) in who survives and to what extent they remain intact and functioning afterwards. Berlin and Dresden at the very end of World War II, Stalingrad in 1942, and the cities of Hiroshima and Nagasaki, are the only earthly landscapes I can imagine which might be worse. This time however, most of the buildings will remain standing, empty and decayed; possibly the self-created tombstones of an ultimately selfdestructive species. This is the horror of Peak Oil that I and many other researchers have foreseen and warned about for so long - some, like Richard Duncan (below) for much longer than others. At some point however, likely within the next year, the all-out run on the dollar will take place and then the financial embers will burst into flames, perhaps even military confrontation. The latter will likely begin as "lowintensity" surrogate conflicts in Africa, Saudi Arabia, Eastern Europe and South America before the almost certain eruption of large-scale military conflict. Some of us can and will prepare to one degree or another for this. FTW's main obligation and commitment to our subscribers is to provide them with information that makes them better informed, safer, more prepared and aware of what is really going on around them. For the eighty-one months that we have been publishing I can safely say that nothing we have ever published is as urgent or as clear as the warning we publish in this article. Things have changed. No longer can I or FTW invest long periods of time to write the detailed and lengthy analyses which have become our hallmark. The world is changing too fast for that. There is only time to make you aware of patterns and breaking news stories in a way that no other publication is doing. Raising our vision a little higher, and looking further down the road, the best service we can provide you is to focus more on breaking news and to integrate fast-breaking developments into what we hope is the map we have successfully drawn for you over almost seven years.
PEAK OIL IN OVERDRIVE - THE OLDUVAI CLIFF APPROACHES
Within two weeks of the publication of this warning, legendary oil geologist Richard Duncan will publish a new paper titled The Olduvai Cliff Event: ca. 2007 after a peer review of Duncan's work is completed. FTW will bring that paper to you as soon as it becomes available. Excerpts from that paper read as follows: The Olduvai theory states that the lifeexpectancy of Industrial Civilization, defined in terms of world energy use per capita ("e"), is less than or equal to 100 years. History: We know that the peak of "e" [per capita hydrocarbon production] occurred in 1979 and that "e" declined from 1979 to 1999 (the 'slope'). Future: The Olduvai theory predicts that "e" will decline even faster from 2000 to the so-named 'cliff event' (the 'slide'). A previous study put the 'cliff event' in year 2012 (Duncan, 2001). However, it now appears that 2012 was too optimistic. The following study indicates that the 'cliff event' will occur about 5 years earlier than 2012 due to an epidemic of 'rolling blackouts' that have already begun in the US. This 'electrical epidemic' spreads nationwide, then worldwide, and by ca. 2007 most of the blackouts are permanent. The 'modern way of life' is history by ca. 2025. [emphasis added] Postulate 2 of the Olduvai theory states, "Energy production per capita (e) will decline exponentially from the cliff event circa 2008 to 2030." If that is true, then the population in the world's industrial nations, we argue, will go from about 3.3 billion in 2008 to about 0.9 billion in 2030, a net die-off of about 300,000 people per day in the 22 years from 2008 to 2030. [emphasis added].
Most Peak Oil advocates will think that this pushing up of the date is perhaps unjustified. I do not and neither does Richard Duncan whom I spoke with by telephone on November 29th. Almost all oil geologists understand and acknowledge that applying technology such as secondary recovery via water injection and horizontal bottle- brush drilling actually accelerates a field's decline by destroying the source rock. The same analogy applies to the ever more intense fight to either wrest oil supplies away from competitors or, failing that, to ensure that competitors cannot gain access to what you are denied. Iraq is a case in point, where the insurgency is routinely blowing up oil infrastructure to keep the US from benefiting from cheap oil. Peak Oil is more than just a geological event. It is rapidly coming to be understood as an economic, political and military event as well [that's why we capitalize it - Editor]. This is the focus that FTW has pioneered, especially in our analysis of September 11th 2001.
It can take ten years to bring a new so-called "mega field" of 500 million barrels (Mb) online. The average is three to five years. Oil discoveries have been in a steady decline since 1964. No new mega fields have been discovered in more than a year and we know which fields are scheduled to come online and when. Previously FTW's Dale Allen Pfeiffer had calculated that by 2007 it was a mathematical certainty - all things remaining equal - that there would be absolute and unavoidable shortfalls of production.
But all things are not equal. Warfare, whether economic or military, destroys production capacity. It either blows up infrastructure, keeps fields from being developed, or robs nations and economies with capital and expertise of the ability to go out and even develop the few small fields remaining to be found.
Once major blackouts start hitting; once the US economy tanks and millions become unemployed; once banks and pension funds fail and the housing market collapses, a cycle will have begun which can only compound itself - thus preventing what would be the "ordinary" development of remaining fields. Human civilization may self-destruct before declining oil would have made it necessary. If the world is engulfed in war then neither the LNG tankers necessary to bring natural gas to the US nor the LNG terminals needed to receive it will be built. There won't be enough capital. There won't be enough remaining expertise. There won't be enough social order to complete even these stopgap measures. If Peak Oil does not destroy civilization, then our chosen course of waging war to get oil most certainly will both accelerate and worsen its impact.
And that is why we - as a species - stand on the brink of a very real Armageddon.
A FLOOD OF BREAKING NEWS
Stories are now breaking so fast that I cannot begin to process them all. FTW is going to have to reorganize and grow because the coverage of breaking news is now more important to you and to us than the detailed analyses and "mapmaking" we have worked so hard at for seven years. The best I can do as I conclude this warning is list some of the other recent developments which have caught my eye and offer a few brief comments. In the context with what I have written above, these developments should reinforce the urgency of this message.
Warnings have recently been issued that Medicare, Medicaid and the Pension Benefit Guaranty Corporation may soon be insolvent (see Crossing the Rubicon). Climate change and the possibility of a climatological collapse have accelerated as the Arctic ice cap is receding faster than anticipated. Publications from the Christian Science Monitor to Al Jazeera are publicizing reports from scientific institutes that the change is accelerating and even causing glaciers to melt in the Himalayas. The savage irony of this is that the oil industry is cheering this on because it will open up a Northwest Passage for shipping which will make it even easier to extract the few hundred million barrels of oil in the Arctic National Wildlife Refuge and open up sea lanes for faster transport of oil from Russia and Norway over the pole.
The Wall Street Journal reported on November 29th that China is acquiring submarines at a breakneck pace and this is causing alarm all over Southwest Pacific. The World Trade organization has just slapped the US with first-ever punitive sanctions that may cost up to $150 million per year for illegally protecting US steel makers from competition.
Warnings of a bird flu epidemic that could kill seven million people in the next year are being circulated by the WHO and major governments around the world. Russia has announced that it will stop pegging the ruble to the dollar and Russian bonds have just been upgraded to investment grade by major rating agencies like Fitch; Standard and Poor's has announced it may follow suit.
All nuclear weapons research contracts held by the Lawrence Livermore Laboratories and the University of California have just been transferred to the University of Texas.
Housing Bubble -- On Nov. 16, according to the Associated Press, Fannie Mae, currently under investigation for cooked books, admitted a possible $9 billion loss from derivatives as it auditor KPMG refused to sign off on its accounting sheets.
The Association of Southeast Asian nations (ASEAN) is mounting a diplomatic effort against Myanmar (Burma), allegedly over human rights reforms. But this happens just on the heels of an announcement that China is seeking to build a pipeline through Burma to the Indian Ocean to shorten tanker routes and avoid potentially troubled waters in the straits of Malacca and the South China Sea.
Guerilla insurgencies and US military involvement are spreading throughout Latin America as the US is pushing governments there to change their laws and procedures to permit more aggressive suppression of dissent, mislabeled as terrorism.
In Africa investment dollars from a multitude of countries including the US, Europe, China, India and around the world are flooding the continent as political instability, strikes, guerilla revolts and coup attempts have been reported in at least eight countries in the last three months. This will, of necessity, be the subject of an upcoming FTW series.
The Ukraine, a geostrategically vital pivot nation is becoming a battleground between the Bush and Putin regimes as Russia urgently seeks to extend its regional influence into Europe and keep open pipeline routes for Caspian oil to the Black Sea and its vital ports. Without Ukraine in its sphere of influence, Russia will revert to being only an Asian power instead of an Asian and a European power. The dispute over the recent election results by Viktor Yankuovych (pro-Moscow) and Viktor Yushchenko (pro-US) may lead to civil war and partition of the country. Do not be surprised if the Ukrainian conflict leads to a military confrontation between NATO and Moscow. The stakes are that high (watch for a coming article by Larry Chin of the Online Journal on this important subject).
As the US cuts back on troop deployments in South Korea, both halves of the divided peninsula have signaled an interest in reunification. This is a prelude to a strategic US withdrawal from the peninsula for the simple reason the US cannot, in today's world, possibly hope to defend it. The same might also be true for Taiwan if things get dicey. Recent massive US Naval exercises involving seven carrier battle groups not far from Taiwan (Operation Summer Pulse) revealed the importance of a region which includes oil deposits so small that International Energy Agency Chief Claude Mandil basically called them insignificant. How nervous would a US withdrawal from Korea make Japan? Taiwan? At what point will the line be drawn when the nukes come out? These are all questions that need to be answered. I could not help but chuckle when I heard a recent announcement that "small but significant" oil discoveries had recently been made in the Falkland Islands (those grains of sand near Antarctica, for which Britain went to war with Argentina in 1982) and in Bosnia where hundreds of thousands of lives were sacrificed during the 1990s. Coincidence?
Take this to heart as if your welfare depended upon it. Do it as if the crisis was upon you today. These are only immediate steps. FTW is about to undergo a major reorganization so that we may bring you better real-time information and more solutions or options as they become available.
1. Curtail all unnecessary spending.
2. Reduce credit card balances.
3. Get to know and become friends with your neighbors on all sides.
4. Keep (at least) a week's worth of cash and food in your home.
5. Look at your residence and ask yourself what you could do to improve it if there were no heat and no electricity. Start preparing for both. Look at your insulation (if you own), your windows, curtains (a great source of heat loss) and roof.
6. Buy physical gold, not paper gold. I am convinced that we will see gold reach at least $600 per ounce in 2005. It's a great way to hedge against a falling dollar.
These steps may not seem like much on paper. But when the deluge comes they will give you a head start that may save your life.
More to follow
Michael C. Ruppert