Over the last month a cascade of news confirmed the consistent incompetence of the Biden Administration and a world power shift.
Banks fail and Clueless Janet gives a speech identifying the main international financial problems as racism, abortion, and climate change. More banks fail and Janet gives another speech saying it was caused by a failure of the regulatory system which she was instrumental in establishing but it is not her fault; we need more regulations.
Credit Suisse fails. The Saudis are the largest shareholder. They, and other Gulf Arab investors, who own 25% of Credit Suisse because of recent investments to prop it up, hate to lose their investment so propose a takeover plan to save it. They are stiffed by the Swiss government which will only accept a “Swiss solution.”
Joey gets a series of fist bumps from the Saudi Crown Prince. Right to the gut. But Joey does not seem to know it. First, the Saudis accept a detente with Iran brokered by China. This does not make them pals, they have been enemies for centuries. But it does mean they will not actively shoot at each other and will work together on common problems - such as increasing the oil price. Then, the Saudis announce they are joining the Chinese-led Shanghai Cooperation Organization (SCO) and BRICS, both organizations dominated by China which offer international financial options to supplement China’s Belt and Road system.
The SCO has 21 full members and affiliates waiting to become members. BRICS has 14 members and affiliates. Some are also SCO members. Other Arab countries and OPEC members can be expected to follow the Saudi lead to join these groups.
These moves by the Saudis not only re-align the power structure of the Middle East but of the world. China is now dominant not only in the Middle East, but also Central Asia, Latin America, and Africa and has a “no limits” partnership with Russia.
Most of the world does not care about the “U.S.-led International World Order.” China is knocking it down before our eyes. Most of the world does not care about Ukraine. Most of the world does not care about U.S. or European sanctions on Russia, Iran, Venezuela, or anybody else. Even Japan has broken away from the Order and is now buying Russian oil above the “price cap” established by the U.S. and Europe.
These are profound changes. The U.S. Administration seems unaware.
After establishing this power re-alignment, the Saudis, Russia, and OPEC announced they would extend last October’s production cuts to the end of the year and add another million-barrel-per-day cut as well. Oil prices jumped back up into the 80s. Joey said this was “inadvisable.” Of course, no one was listening. Most people do not listen to the babblings of a fool.
All this seems less a repudiation of U.S. leadership than a recognition that the current U.S. Administration is incapable of leading anything – much less the Free World. Its president has to be led off the stage after a poorly-delivered speech which makes no sense to anyone but him. The Diversity Cabinet is unanimously incompetent. The Secretary of Energy is silent about these events - which profoundly affect energy markets and supplies. These events mark a massive failure of our foreign policy and the Secretary of State seems not to notice. The Secretary of Defense faded away a couple of years ago and hasn’t been seen or heard since.
China is winning the competition for world dominance. It is winning not because it has a strong economy, financial system, or an attractive social system. It does not. China is in bad shape economically, demographically, and financially. It is winning because it has a strong leader. It is facing an opponent with a society trying to figure out what gender it is.
The U.S. is left with a few reluctant floundering allies, mostly in Europe and they are also in terrible shape. Many of them are finding that willy-nilly subsidies for renewable energy and mandates against fossil fuels are either unaffordable or leaving them unemployed and freezing in the dark. Policy according to teenage hysteria.
New estimates for future oil demand are out. Despite the economic damage caused by climate mandates, various OPEC, EIA, IEA, and Goldman forecasts estimate world oil demand will increase between 2.0 and 2.3 million barrels per day (mb/d) in 2023. Oil is still a major component of the world economy. Thankfully, many projects for new supplies have been announced recently.
Years ago, British Petroleum was government owned. It was a rather stodgy unimaginative company surviving on what was left of the Empire.
But then BP was privatized, bought several U.S. major integrated companies, and grew into an aggressive international oil company. Recently, however, British government mandates against fossil fuels, as in Europe, crippled BP and other energy companies and distorted their business. They caused a major energy shortage, exorbitant costs, and a crisis in the British economy.
Yet roughly half of the British people think a re-nationalization of the energy business will fix the problem.
And, with all the obvious failures of the Biden Administration it still has about 40% support of the American public. Go figure. Is this because the public does not know or understand what is happening or is it Stockholm Syndrome? Whatever the reason, it demonstrates how democracy will eventually vote for its own destruction.