Tag Archives: political economy

Yes, He Can

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Since Russia President Vladimir Putin—the man then-Presidential candidate Joe Biden (D) bragged was so afraid of him—invaded Ukraine, oil prices have gone up to levels not seen since the Obama years, even beyond the inflation levels Biden-Harris’ current war on our energy industry had already driven them: $105/barrel. Biden-Harris proclaimed last Thursday,

I know this is hard and that Americans are already hurting. I will do everything in my power to limit the pain the American people are feeling at the gas pump.

Jason Furman, one of ex-President Barack Obama’s (D) economic minions, claims—and he’s actually serious—

This is a world price and the president is largely powerless to do much[.]

Both men are being cynically disingenuous; Biden-Harris’ dissembling, though, given his position in our current government and on the world’s stage, is especially pernicious.

Our President actually could do quite a bit about oil prices for our nation and for our friends and allies; he could do quite a bit about energy prices generally, were he not in thrall to the “green” extreme Left.

He could, for instance, reopen the Keystone XL pipeline and work to get Canada to reopen oil flows from its end.

He could get out of the way of drilling leases on Federal land.

He could get out of the way of fracking for domestic oil and natural gas.

He could get out of the way of American exports of oil and liquid natural gas to Europe.

He could rescind the myriad anti-hydrocarbon regulations he enacted via Executive Order or that he had his several Cabinets enact through rules.

The list is really quite extensive.

Biden-Harris has moved to release oil from our strategic reserve, but that’s merely insulting in its puniness and in its use to distract from energy price inflation.

Instead, Biden-Harris is allowing energy prices, especially those for oil and natural gas, to rise rapidly, and that benefits no one more than it benefits Russia, which needs high oil prices to support its budget—especially during its assault on Ukraine.

I-Bonds

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For a partial solution to our nation’s high and growing inflation rate, Joshua Rauh and Kevin Warsh propose increasing the existing cap on I-Bonds that Treasury issues. Under the present cap, Americans are barred from buying more than $10,000 of I-Bonds per year plus committing up to $5,000 of a year’s tax refund to such purchases. Rauh and Warsh want to raise those caps.

However, the connection between this and inflation mitigation is at best tenuous. Selling more I-Bonds only gives the Federal government more money to spend, which is inflationary; it increases the interest payments that must be made annually, which is government spending and so inflationary; and it increases the national debt, which is future inflation.

It’s no solution at all.

Furthermore, given the Biden-Harris administration’s penchant for ever more, and acceleratingly more spending—and that of their cronies, the Progressive-Democratic Party in control of both the House and Senate—it’s not clear to me how raising, or even eliminating, the cap on I-Bond purchases by us citiens would have any material inflation-mitigating outcome.

On a larger matter regarding I-Bonds; TIPS; and other Treasury Bonds, and Bills, and Notes in general—I’m not sure why anyone would want to lend any money at all to a Biden-Harris-led US government. Maybe we should stop lending, and stop rolling existing loans. Collect on the bonds instead, and invest the proceeds in productive endeavors, like, say, the private economy where us average Americans conduct our commerce through our mom-and-pop enterprises and our businesses, small, medium, and large.

Meek

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Not merely weak. That’s the response of the US and Europe to Russian President Vladimir Putin’s invasion of Ukraine.

The coordinated US and European actions fall short of the package of sanctions threatened by the administration if Moscow launched a full-scale invasion of Ukraine

Never mind that there is no such thing as a less-than full-scale invasion of a sovereign nation. Either a hostile nation invades, or it does not. And Russia has invaded Ukraine.

Nor is it a surprise that the Biden-Harris administration’s threats of serious sanctions far exceeded Biden-Harris’ actions. The highly (self-)touted 40-year foreign policy expert is too timorous to act seriously in the face of a serious enemy. Former SecDef Robert Gates’ characterization of Biden’s foreign policy chops are proven still accurate eight years later. Only today, Biden-Harris’ failure is exceedingly dangerous for our nation, for our friends, for our allies.

That package of wrist-slaps and virtue-signals consists of

  • blacklisting two major banks and
  • halting the Nord Stream 2 natural gas pipeline

That second is a misrepresentation of what’s been done. All Germany is doing is “delaying” certification of Nordstream 2.

Other parts of the package include

  • Prime Minister Fumio Kishida said Japan, like the US, would ban the trade of new Russian sovereign debt
  • sanction individuals connected to the breakaway regions.
  • Prime Minister Scott Morrison said Australia would impose travel bans
  • [impose] targeted financial sanctions on eight members of Russia’s Security Council
  • Canada said its sanctions would target state-backed Russian lenders
  • ban Canadians from buying sovereign Russian debt.

“You can’t come here.” Yeah, that’ll show Putin and his cronies. Pretending that sanctioning a few individuals—who’ve also already moved their money—is a serious action is insulting to the rest of us. The sovereign debt bit could be serious, except that Putin has his BFF and…mentor…People’s Republic of China President Xi Jinping backing him economically. The sovereign debt bit is necessary, but it’s far from sufficient.

And this risible move, planned for some time in the future:

The Biden administration plans to impose sanctions on the company constructing the Nord Stream 2 pipeline….

To what end, I have to wonder? The pipeline’s construction is completed, and the pipeline has moved into Germany’s certification stage.

No one is contemplating cutting Russia off altogether from western funds, which would push him into complete dependency on Xi’s good offices. No one contemplating even sanctioning Putin.

No one is contemplating shipping offensive weapons to Ukraine so that nation would have a chance, not of merely holding on, but actually defeating Putin’s invasion and driving the Russians back out of Ukraine altogether. No one is contemplating even sending Ukraine sufficient defensive arms that they even can hold on. Germany is, though, still actively interfering with any arms shipments at all for Ukraine.

Indeed,

A key calculation among officials on both sides of the Atlantic is how hard to hit if Russia occupies parts of eastern Ukraine beyond the separatist-held areas and to what extent to maintain some deterrence in case Moscow moves to take the rest of the country[.]

It’s a simple calculation, really, or should be. Hit Russia without limit economically and politically, and ready our respective military establishments. We should have learned from Vietnam that gradual, or graduated, response is the path to ultimate and bloody defeat. Hit Russia now, faster than Putin can respond. Putin, as noted above, has already invaded Ukraine; now he must be driven out altogether.

And: Russia has already invaded Ukraine, there is nothing left to deter.

And, and: Putin said quite clearly what his goals were in his Monday night address to his nation. Those goals include that Ukraine isn’t a nation, it’s a part of Russia, and he means to “recover” it. His larger goal is to reconstitute the 20th century Russian empire of SSRs orbiting the Russian SSR along with the client states beyond the SSRs. Why is it, also, that western managers (we don’t have any actual leaders today) continue to turn deaf ears to what our enemies say when they tell us what they’re going to do? Germany, especially, should be attending to that larger statement of Putin’s: one of the client states Putin means to recover is the German Democratic Republic—East Germany.

Instead, the goal of today’s western nation managers seems to be to ensnare Putin in a Ukrainian quagmire, to bleed Ukrainian men and women—and children as inevitable “collateral damage”—in the effort while the rest of these nations sit in the Coliseum seats, cheering.

Using the Power Ceded to Them

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OPEC once again has rejected pleas to increase oil production in the face of rising oil prices.

Ministers of Arab oil-producing countries gathered in Saudi Arabia on Sunday, refusing pressure for OPEC+ to increase production again amid coronavirus pandemic recovery efforts and as a potential war looms in Europe.

And

On Sunday, Saudi energy minister Prince Abdulaziz bin Salman told an industry conference in Riyadh how the pandemic and recovery efforts have “taught us the value of caution,” Reuters reported.

Bin Salman and his OPEC counterparts also have learned another thing: the value of supporting Russia—the major OPEC ally that adds the ‘+’ to OPEC—rather than a timid and irresolute Progressive-Democrat American administration.

Bin Salman and his OPEC counterparts also have been reminded of OPEC’s economic power as the world’s major oil producer, a power the organization also wielded against the US in the ’70s when we really were dependent on Middle East oil for our economy.

The difference today, of course, is that we have no need to be dependent on others—not OPEC, not an enemy nation oil and natural gas exporter—for our economic independence (which means our political independence, also). Our current dependency is solely the work of President Joe Biden (D) via his active war on our energy production industry and his surrender to Russia on Nordstream 2 after Russian President Vladimir Putin’s minions shut down Colonial Pipeline as a demonstration of things to come if Biden didn’t yield.

That and maybe Something Else

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Fracking-based energy production is not expanding at anything like a useful rate, even as oil approaches $100/barrel, which only benefits Russia while harming us American consumers.

America’s largest frackers are reporting huge profits but plan to keep oil production in low gear this year, adhering to an agreement with Wall Street, even as prices approach the $100-a-barrel mark for the first time since 2014.

That “agreement” consists of

commitments they made to limit production and return more cash to shareholders, an effort to win back investors who fled the industry after years of poor returns.

That’s certainly a factor. However, even as President Joe Biden (D) claims he wants these producers to produce more in the face of those rising costs, he’s also spending far more energy begging OPEC—and Russia!—to produce more.

There’s another factor that may be strongly informing these producers’ decisions, though.

Maybe these producers just don’t trust Biden, given his openly declared war on our hydrocarbon energy industry—on the frackers—and Biden’s refusal to undo all—any—of his anti-carbon regulations and his other bars aimed explicitly at limiting oil, natural gas, and coal production.

Maybe they think Biden would only resume his war against them once the present energy and resulting inflation crises pass.

They wouldn’t be far wrong.