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Gotthelf is a very smart man. He rarely devotes a weekly article to non-market subjects.
Prepared by Philip Gotthelf
Now, the game has significantly changed with Russia moving toward capitalism along with China. The West is now being seriously challenged. As Candidate Trump puts it, “China is killing us, Mexico is killing us, Japan is killing us…” etc.
In the eco-political game, the former Soviet Union was a big player. From 1956 through the dissolution of the USSR, Moscow was aligned with the Arab states while Israel was loosely protected by the U.S. and Western Europe.
In Russia’s transition after the USSR reorganization into the Commonwealth, foreign policy constituted retaining control over former Soviet territory states. There was no time or resources for external meddling. The Middle East held less intrigue because Russia has control over the largest energy resources and can maintain self-sufficiency.
Russia was content to allow OPEC to dictate prices through quotas, leaving Moscow to negotiate sales outside of OPEC’s reach. To be sure, there has been a polite understanding, but OPEC members cheat and Russia is not one for honoring a contract or holding to an understanding. Fast forward to 2005 and the Energy Sector happens upon two game-changing technologies; “fracking” and horizontal drilling. Suddenly, oil is gushing, disrupting market dynamics.
The speed of this phenomenon has truly been unprecedented and outstanding. Even CDs and digital photography took longer to implement than the metamorphosis of energy production. Add tar sand processing to fracking and horizontal drilling if you want the more complete picture. Governments of Russia and OPEC members were stunned… and remain in suspension.
The second Green Movement born out of the Al Gore Effect has also accelerated beyond expectation. Thus, there is a double whammy of monumental proportions… more oil and natural gas, less proportional usage.
No doubt, global energy demand is growing by virtue of population and modernization. The pace of this growth has been moderated by conservation efforts and environmental interventions.
Understandably, I have kept up with models for energy production and consumption so that my prognostications can have reasonable factual support. So far, my forecasts have been notably accurate. As far back as the dissolution of the Soviet Union I predicted a huge surge in energy production and provided strong evidence to refute the Peak Oil models. I have argued with political scientists and economists about the direction of energy markets relative to consumption and production trends. In every instance, my assessments have been correct because I eliminate subjective bias.
This brings me to Russia’s unintended consequences in intervening against ISIS. As mentioned in previous SPECIAL REPORTS, Moscow presides over a large Muslim population. Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and other states are predominantly Muslim. Russia has been dealing with its own form of Islamic extremism from nation states like Chechnya and the Balkans. 99% of the U.S. population hasn’t a clue about this Russian demographic dynamic. Unfortunately, it looks like at least 90% of the U.S. leadership and all of our media hasn’t a clue, either. In contrast, Putin is an extraordinarily astute statesman and a keen political strategist. His KGB background combines with a clear perspective of the Islamic threat. His position is far more complex and sensitive and his goals are significantly more pressing.
Unlike President Obama who refuses to even acknowledge Islamic extremism, Putin understands that a theo-political movement is a direct threat to the entire Commonwealth of Independent States. His members are armed with nuclear capabilities that were exclusively controlled by Moscow, but are now in the hands of respective state leaders. ISIS is not simply a political movement to gain economic equality or obtain voting rights. This is not the same as the Polish move for independence or Czech Republic’s “Velvet Revolution.” ISIS wants to galvanize Muslims globally to form an all-encompassing caliphate.
President Obama’s assessment that ISIS represented the “JV” is somewhat shocking when considering his own background. Obama’s birth father was Muslim as was his step father. He spent time in Indonesia and attended a Muslim public school. President Obama is intimately familiar with the Koran and its ancillary teachings. He is well aware of the philosophical roots of a caliphate and even called attention to atrocities committed by Christians against Muslims during the Crusades. President Obama seems to think that the Middle East represents a localized fight and the potential for encroachment into North America is minimal.
Putin has Islam at his doorstep… if not in his living room. His focus is on stopping the spread of the radical agenda and movement. It is likely that Putin’s KGB has reported facts that Obama feels are unrelated to U.S. interests. Consider the recent CBS 60 Minutes interview Obama had with Steve Kroft during which our President expressed that his proactive move against “Climate Change” was a better indication of leadership than Putin’s intervention on behalf of Syria’s President Bashar-Al Assad. Obama appears completely unconcerned about the existential threat to Russia posed by radical Islam and a movement like ISIS.
This is evidenced by the apparent terror attack on the Russian airliner that killed 224 civilians. According to the U.K. Secret Intelligent Service known as MI6, all evidence points to a bomb that was either in luggage or planted by an inside worker. This is a clear message that ISIS has an extended reach that has already infiltrated Russian infrastructure. The U.S. Muslim population is roughly 2.8 million. In Russia proper, the Muslim population is over 18 million. Throughout the states, it is many multiples of that.
Putin must crush the ISIS infrastructure and squelch the messaging. The downing of the airliner is a hint of the potential threat. I can say with reasonable assurance the Putin will not conduct his war with any political correctness or constraint. He will have little concern for collateral damage in his efforts to purge ISIS. By the same measure, ISIS specifically targets civilians as do all radical Islamic movements. As Israel is currently experiencing, lone wolf attacks are targeting citizens. But, the term “lone wolf” is a misnomer. True, these are independent attackers. Still, the messaging comes from the central radical Islamic theme.
Media commentary only covers the incidents such as the bombing of the airliner. There is no in-depth analysis of the Putin position. Even in the aftermath of Steve Kroft’s interview, no news organization has researched and/or reported on the more distinct Russia dilemma. If Uzbekistan suddenly radicalizes, it could turn its nuclear arsenal against Moscow. This is true for any Muslim dominant state within the C.I.S. So, if you’re looking for a World War III scenario, there you have it!
The goal of Radical Islam is to eliminate all but about 100,000 “true descendants” of Judah (Jews) who will, of course, convert to Islam and all other religions… approximately 5.8 billion people. All that is to remain are the “believers,” 1.2 billion, and 100,000 Jews who can prove their lineage and are willing to convert. In effect, the purge embraces global chaos. Lest there be any doubt, simply visit radical Islamic websites. This is clearly expressed. (Caution is in order. If you do visit radical Islamic websites, you may receive a visit from Federal law enforcement!)
Interestingly, U.S. foreign policy plays into Islamic chaos by stepping back and inviting or tolerating conflict among Islamic factions like the Sunni and Shiite. It is called leading from behind. ISIS leads by example. The calculated beheading of Coptic Christians on a Libyan beach has been called “indiscriminate.” Far from indiscriminate, the intent is to breed contempt for all Christians. The message is that it is okay to kill Christians. Putin recognizes this. Imagine if just a fraction of Western European Muslims decided to carry out attacks similar to what is occurring in Israel. Less than 1,000 perpetrators could wreak havoc upon all of the European Union members. It took half the Paris police force and thousands of military personnel to hunt down two brothers who murdered eleven of the Charlie Hedbro staff.
In New York State, it took hundreds of police and law enforcement agencies more than 20 days to kill and capture just two escaped convicts. The manhunt cost millions of dollars. Imagine trying to hunt down 1,000 or 5,000 “lone wolf” radical Islamists in fifty states! It would be chaos, indeed. Now, consider Putin’s challenge with tens of millions of Muslims within his own borders.
Back in 2002, I called attention to the enormous exposure posed by allowing Bridge to be acquired by a foreign entity. I pointed out that the industry had been reduced to three key players; Reuters (Thomson-Reuters), Dow Jones, and Bloomberg. That means that the entire world’s financial news emanates from two foreign controlled entities, i.e. Reuters and Dow Jones, and one U.S. entity, Bloomberg. (Dow Jones is controlled by Rupert Murdock’s News Corp, a U.K. entity.)
Picture the following: a radicalized employee of Reuter’s gains access to the news feed and disseminates a false story about some major market moving event. The story immediately generates a global flash crash of monumental proportions. The plan is coordinated through ISIS or some other terror group that has an international organization of investors who short the market(s). As the global financial system spirals out of control, ISIS launches a series of cyber attacks to keep the momentum building.
Sounds like a far-fetched movie script? Okay, even if it’s a movie script, look what North Korea did to Sony Pictures for their spoof about assassinating their leader. Our reliance upon information and information delivery systems has grown to create systemic and even existential risks. Like the attacks of 9/11/2001, we never seem to know the true exposure until it is too late. From 9/11 to the Boston Marathon bombing, excuses come after the fact. It is time we tried to put Putin’s behavior into its proper context before it is too late!
November 5, 2015
Philip Gotthelf
Commodity Futures Forecast
P.O. Box 566, Closter, New Jersey
201-784-1235
www.commodex.com
COMMODITY FUTURES FORECAST
WEEKLY REPORT
WEEKLY REPORT
Prepared by Philip Gotthelf
Russia’s Unintended Consequences
(November 5, 2015) As I have frequently pointed out, Russia’s influence spans eleven time zones and encompasses Euro-Asia’s largest assortment of natural resources. The Commonwealth of Independent States could easily create its own oligopoly over oil, forest products, strategic metals, and even water if Russia consolidated its member states into a more capitalistic and democratic eco-political structure. The fact that the former Soviet Union remained “communist” for so many decades is nothing short of a miracle for Western nations that had more progressive economic systems and internal structures. Now, the game has significantly changed with Russia moving toward capitalism along with China. The West is now being seriously challenged. As Candidate Trump puts it, “China is killing us, Mexico is killing us, Japan is killing us…” etc.
In the eco-political game, the former Soviet Union was a big player. From 1956 through the dissolution of the USSR, Moscow was aligned with the Arab states while Israel was loosely protected by the U.S. and Western Europe.
In Russia’s transition after the USSR reorganization into the Commonwealth, foreign policy constituted retaining control over former Soviet territory states. There was no time or resources for external meddling. The Middle East held less intrigue because Russia has control over the largest energy resources and can maintain self-sufficiency.
Russia was content to allow OPEC to dictate prices through quotas, leaving Moscow to negotiate sales outside of OPEC’s reach. To be sure, there has been a polite understanding, but OPEC members cheat and Russia is not one for honoring a contract or holding to an understanding. Fast forward to 2005 and the Energy Sector happens upon two game-changing technologies; “fracking” and horizontal drilling. Suddenly, oil is gushing, disrupting market dynamics.
The speed of this phenomenon has truly been unprecedented and outstanding. Even CDs and digital photography took longer to implement than the metamorphosis of energy production. Add tar sand processing to fracking and horizontal drilling if you want the more complete picture. Governments of Russia and OPEC members were stunned… and remain in suspension.
The second Green Movement born out of the Al Gore Effect has also accelerated beyond expectation. Thus, there is a double whammy of monumental proportions… more oil and natural gas, less proportional usage.
No doubt, global energy demand is growing by virtue of population and modernization. The pace of this growth has been moderated by conservation efforts and environmental interventions.
Understandably, I have kept up with models for energy production and consumption so that my prognostications can have reasonable factual support. So far, my forecasts have been notably accurate. As far back as the dissolution of the Soviet Union I predicted a huge surge in energy production and provided strong evidence to refute the Peak Oil models. I have argued with political scientists and economists about the direction of energy markets relative to consumption and production trends. In every instance, my assessments have been correct because I eliminate subjective bias.
This brings me to Russia’s unintended consequences in intervening against ISIS. As mentioned in previous SPECIAL REPORTS, Moscow presides over a large Muslim population. Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and other states are predominantly Muslim. Russia has been dealing with its own form of Islamic extremism from nation states like Chechnya and the Balkans. 99% of the U.S. population hasn’t a clue about this Russian demographic dynamic. Unfortunately, it looks like at least 90% of the U.S. leadership and all of our media hasn’t a clue, either. In contrast, Putin is an extraordinarily astute statesman and a keen political strategist. His KGB background combines with a clear perspective of the Islamic threat. His position is far more complex and sensitive and his goals are significantly more pressing.
Unlike President Obama who refuses to even acknowledge Islamic extremism, Putin understands that a theo-political movement is a direct threat to the entire Commonwealth of Independent States. His members are armed with nuclear capabilities that were exclusively controlled by Moscow, but are now in the hands of respective state leaders. ISIS is not simply a political movement to gain economic equality or obtain voting rights. This is not the same as the Polish move for independence or Czech Republic’s “Velvet Revolution.” ISIS wants to galvanize Muslims globally to form an all-encompassing caliphate.
President Obama’s assessment that ISIS represented the “JV” is somewhat shocking when considering his own background. Obama’s birth father was Muslim as was his step father. He spent time in Indonesia and attended a Muslim public school. President Obama is intimately familiar with the Koran and its ancillary teachings. He is well aware of the philosophical roots of a caliphate and even called attention to atrocities committed by Christians against Muslims during the Crusades. President Obama seems to think that the Middle East represents a localized fight and the potential for encroachment into North America is minimal.
Putin has Islam at his doorstep… if not in his living room. His focus is on stopping the spread of the radical agenda and movement. It is likely that Putin’s KGB has reported facts that Obama feels are unrelated to U.S. interests. Consider the recent CBS 60 Minutes interview Obama had with Steve Kroft during which our President expressed that his proactive move against “Climate Change” was a better indication of leadership than Putin’s intervention on behalf of Syria’s President Bashar-Al Assad. Obama appears completely unconcerned about the existential threat to Russia posed by radical Islam and a movement like ISIS.
This is evidenced by the apparent terror attack on the Russian airliner that killed 224 civilians. According to the U.K. Secret Intelligent Service known as MI6, all evidence points to a bomb that was either in luggage or planted by an inside worker. This is a clear message that ISIS has an extended reach that has already infiltrated Russian infrastructure. The U.S. Muslim population is roughly 2.8 million. In Russia proper, the Muslim population is over 18 million. Throughout the states, it is many multiples of that.
Putin must crush the ISIS infrastructure and squelch the messaging. The downing of the airliner is a hint of the potential threat. I can say with reasonable assurance the Putin will not conduct his war with any political correctness or constraint. He will have little concern for collateral damage in his efforts to purge ISIS. By the same measure, ISIS specifically targets civilians as do all radical Islamic movements. As Israel is currently experiencing, lone wolf attacks are targeting citizens. But, the term “lone wolf” is a misnomer. True, these are independent attackers. Still, the messaging comes from the central radical Islamic theme.
Media commentary only covers the incidents such as the bombing of the airliner. There is no in-depth analysis of the Putin position. Even in the aftermath of Steve Kroft’s interview, no news organization has researched and/or reported on the more distinct Russia dilemma. If Uzbekistan suddenly radicalizes, it could turn its nuclear arsenal against Moscow. This is true for any Muslim dominant state within the C.I.S. So, if you’re looking for a World War III scenario, there you have it!
For the Love of Chaos
Rooted in the ISIS philosophy is the Islamic concept of chaos. Muslim teachings depict non-believers as being in a state of chaos or confusion. They view Jews as partial descendants of their father Abraham. Only a tiny fraction of the “Jewish race” comes from the House of Judah and carries the bloodline related to the progeny of Ishmael. All other Jews are converts and Christians are converts once removed. Some Muslims believe that the world must be purged of all races that are not the progeny of Abraham. This is where the narrative that Radical Islam embraces Jewish cousins comes from. Unfortunately, Christians are left out of the mix.The goal of Radical Islam is to eliminate all but about 100,000 “true descendants” of Judah (Jews) who will, of course, convert to Islam and all other religions… approximately 5.8 billion people. All that is to remain are the “believers,” 1.2 billion, and 100,000 Jews who can prove their lineage and are willing to convert. In effect, the purge embraces global chaos. Lest there be any doubt, simply visit radical Islamic websites. This is clearly expressed. (Caution is in order. If you do visit radical Islamic websites, you may receive a visit from Federal law enforcement!)
Interestingly, U.S. foreign policy plays into Islamic chaos by stepping back and inviting or tolerating conflict among Islamic factions like the Sunni and Shiite. It is called leading from behind. ISIS leads by example. The calculated beheading of Coptic Christians on a Libyan beach has been called “indiscriminate.” Far from indiscriminate, the intent is to breed contempt for all Christians. The message is that it is okay to kill Christians. Putin recognizes this. Imagine if just a fraction of Western European Muslims decided to carry out attacks similar to what is occurring in Israel. Less than 1,000 perpetrators could wreak havoc upon all of the European Union members. It took half the Paris police force and thousands of military personnel to hunt down two brothers who murdered eleven of the Charlie Hedbro staff.
In New York State, it took hundreds of police and law enforcement agencies more than 20 days to kill and capture just two escaped convicts. The manhunt cost millions of dollars. Imagine trying to hunt down 1,000 or 5,000 “lone wolf” radical Islamists in fifty states! It would be chaos, indeed. Now, consider Putin’s challenge with tens of millions of Muslims within his own borders.
The Cyber Threat
Back in 2001, Bridge Information Systems filed for Chapter 11 bankruptcy. Prior to filing, the company was on a tear to acquire as many financial information systems and resources as possible. They had consumed companies like Knight-Ridder Financial, Commodity Research Bureau, and many other top names. Dow Jones even sold its Telerate division to Bridge in 1998. All told, the Bridge acquisition spree left only a few key players in the electronic financial news and information business. When Bridge went under, they were acquired by Reuters, a British entity.Back in 2002, I called attention to the enormous exposure posed by allowing Bridge to be acquired by a foreign entity. I pointed out that the industry had been reduced to three key players; Reuters (Thomson-Reuters), Dow Jones, and Bloomberg. That means that the entire world’s financial news emanates from two foreign controlled entities, i.e. Reuters and Dow Jones, and one U.S. entity, Bloomberg. (Dow Jones is controlled by Rupert Murdock’s News Corp, a U.K. entity.)
Picture the following: a radicalized employee of Reuter’s gains access to the news feed and disseminates a false story about some major market moving event. The story immediately generates a global flash crash of monumental proportions. The plan is coordinated through ISIS or some other terror group that has an international organization of investors who short the market(s). As the global financial system spirals out of control, ISIS launches a series of cyber attacks to keep the momentum building.
Sounds like a far-fetched movie script? Okay, even if it’s a movie script, look what North Korea did to Sony Pictures for their spoof about assassinating their leader. Our reliance upon information and information delivery systems has grown to create systemic and even existential risks. Like the attacks of 9/11/2001, we never seem to know the true exposure until it is too late. From 9/11 to the Boston Marathon bombing, excuses come after the fact. It is time we tried to put Putin’s behavior into its proper context before it is too late!
November 5, 2015
Philip Gotthelf
Commodity Futures Forecast
P.O. Box 566, Closter, New Jersey
201-784-1235
www.commodex.com
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