Wednesday 22 May 2019

Dmitry Orlov: World Ready for US Collapse

World Ready for US Collapse as Empire Hemorrhages Gold, Oil and Credibility

Dmitry Orlov

21 May, 2019

Some ironies are just too precious to pass by. The 2016 US presidential elections gave us Donald Trump, a reality TV star whose famous tag line from his show “The Apprentice” was “You are fired!” Focus on this tag line; it is all that is important to this story. Some Trump Derangement Disorder sufferers might disagree. This is because they are laboring under certain misapprehensions: that the US is a democracy; or that it matters who is president. It isn’t and it doesn’t. By this point, the choice of president matters as much as the choice of conductor for the band that plays aboard a ship as it vanishes beneath the waves.

I have made these points continuously since before Trump got into office. Whether or not you think that Trump was actually elected, he did get in somehow, and there are reasons to believe that this had something to do with his wonderfully refreshing “You are fired!” tag line. It’s a fair guess that what motivated people to vote for him was their ardent wish that somebody would come along and fire all of the miscreants that infest Washington, DC and surrounding areas. Alas, that he couldn’t do. Figurehead leaders are never granted the authority to dismantle the political establishments that install them. But that is not to say that it can’t be done at all.

What happened instead was that the political establishment spent two years thrashing about in search of a reason to say “You are fired!” to Trump but has been unable to find one, and so Trump remains in office, although to say that he “remains in power” would be to invite sardonic laughter from anyone who knows what real political power smells like.

The System Fails to Depose Trump

Trump is but a prisoner in the White House, just like his predecessor was. Ironically, the quest for Trump’s impeachment has been fruitless as far as firing him, but most fruitful in terms of enhancing his ability to not only fire lots of establishment figures but perhaps even send them to jail—with the help of the Justice Department—and his character traits of extreme rancor, spitefulness and vindictiveness should be most conducive toward that end, making for a fun spectacle. His numerous enemies and detractors may yet look back wistfully on the halcyon days when they could lambaste him with impunity.

The quest to stop Trump started well before the election, with Obama and the Clintons collaborating on misusing federal resources to dig up dirt on Trump; specifically, evidence of “Russian collusion”… and they couldn’t find any. They did manage to find some “Russian meddling” (in the form of Facebook clickbait ads) but the evidence they dug up was too ridiculous to show in court. Too bad they didn’t look for Ukrainian collusion and meddling, or Israeli collusion and meddling, or Saudi collusion and meddling, because then they would have found plenty—enough to not only knock Hillary Clinton out of the running but also to lock her up. It would have been a constructive, useful exercise for them to go look for Ukrainian political meddling, but as I’ve explained before the American modus operandi is quite the opposite, and it compelled them to go after Russia instead.

Trump is still on the throne, but does he wield any power?

In any case, the complete failure of Mueller’s team to find anything actionable against Trump has left him grasping at straws, and the one straw he seized upon was the vague possibility of accusing Trump of obstructing justice, based on 18 U.S.C. § 1512(c)(2), which specifies that someone is guilty of obstruction as follows: “…obstructs, influences or impedes any official proceeding, or attempts to do so.” Apparently, a neuron snapped inside poor Mueller’s head making him think that his own investigation was an “official proceeding,” although if you look up this term you’ll find that it relates to things happening inside courtrooms, with one or more judges presiding, and to launch such a proceeding requires evidence that a crime has been committed. If there is no crime, then there is no proceeding, and nothing to obstruct, influence or impede.

There ensued a sort of bureaucratic danse macabre. Normally, the Attorney General has the authority to provide guidance on such questions, and AG Jeff Sessions could have told Mueller that 18 U.S.C. § 1512(c)(2) is only relevant to court proceedings and that would have been it. But Sessions had the unfortunate luck of having had a casual chat with the amiable and roly-poly Russian ambassador Sergey Kislyak.

Sergey Kislyak

By virtue of this little chat Sessions contaminated his precious bodily fluids (just breathing the same air as a Russian can be politically fatal, you know) and was forced to recuse himself from Mueller’s investigation. Trump’s legal team then reached out to William Barr, a former AG, and asked him to chime in. Barr wrote a memo clarifying the issue and sent it to deputy AG Rod Rosenstein, who remained as second-in-command at the Justice Department after Sessions’ recusal, and who should have read it, understood it and acted on it, terminating Mueller’s investigation, but somehow he didn’t.

The denouement of this bureaucratic danse macabre played out as follows. After the midterm elections Trump said “You’re fired!” to Jeff Sessions and William Barr was confirmed as AG. Barr then said “You’re fired!” to both Rod Rosenstein and Robert Mueller for being unpardonably dense. Barr also made it clear that he plans to leave no stone unturned in investigating this fantastic instance of misuse of official resources and prosecutorial misconduct. This will be fun to watch, if you have nothing more important to pay attention to, but I suspect that the phrase “You’re fired!” will continue to bounce around the halls of Washington like a rubber grenade for a good long time. There are, however, things to pay attention to that are far more important.

A World Re-Aligning

There is a lot happening in the world all at once right now. The entire planet is rapidly reconfiguring itself. The world is begging for a new, post-capitalist, post-industrial order to be born, but the overabundance of natural resources that have made previous such revolutions possible (coal for the age of steam, oil for the current oil age) simply no longer exist. All that remains is optimizations, enhancements and reconfigurations of the existing order of things, cutting out that which is most harmful and most dysfunctional. To this end, Western European nations are attempting to reclaim the sovereignty they ceded to the United States and the European Union while Eurasia is coming together to form a massive economic and security conglomerate centered on China and Russia. Both are playing for time, because redirecting trade and financial flows away from the US is quite a process.

The world’s central banks are doing their best to get rid of their US dollar reserves and to buy gold, which, as of this April, they are allowed to consider a risk-free financial asset. Many people now expect gold to go up as a result, but that expectation is based on an illusion. Think of gold as a lighthouse and of fiat currencies as sinking ships: those aboard them may look around and decide that the lighthouse is going up, but that’s just an optical illusion. The purchasing power of fiat currencies is sure to fall (some more than others).

The purchasing power of gold will seem to increase, but that will also be an illusion: it will appear to rise against the backdrop of crashing markets, in real estate and physical plant especially. But overall the purchasing power of gold will drop too, because the future purchasing power of any financial asset is determined by just one thing: energy, fossil fuel energy in particular, and energy from crude oil above all. Without energy, nothing within an economy moves, unless it is an agrarian economy based on fodder and animal muscle power.

A particularly interesting piece to the gold story is that it may turn out that much of the gold supposedly stored in the US may in fact be missing. Since Nixon closed the “gold window” in 1971, ending the convertibility of US dollar for gold bullion, and until recently the US dollar has been able to retain its position as a global reserve currency by an act of sheer financial levitation, but that bit of magic may have actually been sleight of hand: behind-the-scenes gold sales to the largest US creditors. When various countries, Germany in particular, have attempted to repatriate their gold, which they had entrusted to the US, they were rebuffed, and when they did succeed, the gold that was returned wasn’t the same gold, and it took a long time. The US hunger for gold has forced it to conduct rather unseemly heists, stealing the gold reserves of Iraq, Libya and the Ukraine. Thus, when the time comes for the US to defend its currency by employing its hoard of gold, it may turn out that the cupboard is bare.

Gold is becoming increasingly important, but energy is more important still, and always will be. After being pushed into the background for a few years, questions of energy supply and energy security are once again becoming front and center. Peak Oil turns out to not be dead after all; it was just postponed by a few years by virtue of the US burning through a huge pile of retirement savings while exploiting shale oil.

But now most of the sweet spots have been tapped already and diminishing returns on continued frantic drilling are being added to the fracking industry’s permanently dismal financial returns. In the meantime, Russia has built several natural gas liquefaction plants, a new oil pipeline to China and two new gas pipelines to Turkey and Germany, and to Western Europe beyond, which will circumvent the Ukraine, reducing its value as a geopolitical asset to zero.

A desperate ploy by the US to seize control of Venezuela’s oil fields has backfired in a most embarrassing fashion; there, recent developments have brought up an important question: What if the US threw a color revolution but nobody came? As I had predicted would happen six years ago in my book The Five Stages of Collapse the Color Revolution Syndicate has steadily lost its mojo. In spite of all the bluster by various Washington foreign policy has-beens, a US military intervention in Venezuela is unthinkable: Venezuela’s Russian S-300 air defense systems effectively make it a no-fly zone for US planes. Meanwhile, the US, having cut itself off from Venezuela’s oil using its own sanctions, has been forced to resort to importing Russian oil. (For now, but not for much longer, the US has a glut of low-quality light crude from fracking, but it’s useless for making diesel and other distillates unless it is blended with heavier grades of crude, which have to be imported.)

Meanwhile, Russia and Belarus have been staging a noisy lover’s quarrel over Russian oil exports to Europe, much of which go through a Belarussian pipeline. Russia and Belarus—or Byelorussia, or White Russia—are not exactly distinct entities in most ways, and when they fight the bystanders should discount the foul language and instead look out for flying pots and cutlery. The result of this family spat is that White Russia will no longer supply the Ukraine with products distilled from Russian oil. Another odd development is that the Russian oil being piped to White Russia, and from thence to the EU, has become mysteriously contaminated and the flow has been stopped until the situation is resolved, causing a bit of a panic in Europe.

The US volunteered to unseal its Strategic Petroleum Reserve to compensate, but then, in another bizarre twist, some of that oil too has turned out to have gone foul. More foul yet, the US has imposed unilateral sanctions on Iran, threatening anyone who imports Iranian oil, bringing up another important question: What is the US imposes unilateral sanctions on the whole world, and everybody just yawns?

Financially ruinous and generally nonsensical schemes such as tar sands, shale oil and industrial-scale photovoltaics, wind generation and electric cars will only accelerate the process of sorting nations into energy haves and energy have-nots, with the have-nots wiping themselves out sooner rather than later. Leaving aside various fictional and notional schemes (nuclear fusion, space mirrors, etc.) and focusing just on the technologies that already exist, there is only one way to maintain industrial civilization, and that is nuclear, based on Uranium 235 (which is scarce) and Plutonium 239 produced from Uranium 238 (of which there is enough to last for thousands of years) using fast neutron reactors. If you don’t like this choice, then your other choice is to go completely agrarian, with significantly reduced population densities and no urban centers of any size.

And if you do like this choice, then you have few alternatives other than to go with the world’s main purveyor of nuclear technology (VVER-series light water reactors, BN-series fast neutron breeder reactors and closed nuclear fuel cycle technology) which happens to be Russia’s state-owned conglomerate Rosatom.

It owns over a third of the world nuclear energy market and has a portfolio of international projects stretching far into the future that includes as much as 80% of the reactors that are going to be built. The US hasn’t been able to complete a nuclear reactor in decades, the Europeans managed to get just one new reactor on line (in China) while Japan’s nuclear program has been in disarray ever since Fukushima and Toshiba’s financially disastrous acquisition of Westinghouse. The only other contenders are South Korea and China. Again, if you don’t like nuclear—for whatever reason—then you can always just buy yourself some pasture and some hayfields and start breeding donkeys.

Americans are not ready for what's coming

This may seem like shocking news to someone who’s been exposed solely to mass media in the US and other Anglophone countries or in the EU. Well, it may be shocking, but it’s definitely not news: none of these developments is particularly new, and none of them is unforeseen. The high level of denial of all of the above issues in Washington, which has been ground zero in a powerful explosion of unreality, and in Western media generally, is also unsurprising; nor is it helpful. Upon finding these things out for yourself, you may be tempted to shout about them from rooftops.

This, I dare say, would be inadvisable. The proper thing to do with people who insist on remaining in denial is to humor them, to run out the clock on any games they try to play with you, and then to politely bid them adieu. Indeed, this is what we are seeing: nobody particularly wants to negotiate with US officials but they do so anyway because, as every crisis negotiator knows, it is essential to keep talking, even if simply to stall for time. While they are talking the hostages—to Wall Street, to the Pentagon, to US Treasury and Federal Reserve—are quietly being evacuated. Time is running out for the US, and once it has run out, what we will hear, in a supreme twist of irony, is the whole world telling the US: “You’re fired!”

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