Goldtent TA Paradise

GOLDTENT GOODIE

1. Fullgoldcrown says:

   June 22, 2023 - 6:34 pm at 6:34 pm

   Sometimes it is the smallest things that catch your
   attention. In my recent trip to the wilds of western Canada it
   certainly wasn’t the moose I saw in the field next to the road.
   Things like that stick out.
   No, in this business we are constantly focusing the lens through
   which we see this world to see more things in finer detail. We
   hope it’s those subtler observations that will give us a clue as to
   where things are headed.
   So, was there any one small thing I saw in Canada that spoke to
   me about where things were headed? Yes. But it depends on
   your perspective.
   In Alberta, the election of Danielle Smith as Premier is a
   watershed moment for Canada. Before I went to Edmonton I
   thought it was a good first step, but only that. I always knew
   those western provinces were different.
   Today, after having met with them, I feel completely different.
   And it confirmed for me something that has been gnawing at
   the back of my brain for a couple of years now. It’s time I got
   out and saw the world I spend so much time writing about.
   Pass, Shoot…BOOM!
   You can tell a lot about a place by the way they play sports. And
   every good hockey fan knows you want your centermen and
   goalies from Quebec and your wingers from Ontario. But every
   good general manager knows he needs to spend a third or
   fourth round draft pick on a big strapping farm boy from Red
   Deer or Sarnia on defense to punish anyone stupid enough to
   hit the blue line with speed.
   Western Hockey League defensemen are just a different breed
   of folk. And gods bless ‘em for it.
   To Americans, Smith getting elected would be like a real
   libertarian becoming governor in Colorado, or for Germans
   Alternative for Germany (AfD) not just winning but forming a
   government in a German state.
   But it loses context for those of us not there. We can identify it
   but we can’t feel it.

   So, I didn’t realize how important this was until I went to
   where she was elected, two hours outside of Edmonton, in
   Lloydminster. A place I kept describing as Lake City, Fl but with
   a different accent.
   These were my people, the ones I moved out of Gainesville
   twenty years ago to live among.
   I saw firsthand just how happy people were that they stuck it to
   the ‘liberals’ crying in Edmonton over Smith’s win.
   It’s the same sentiment I hear from people in the small towns to
   the west of Gainesville who want to form their own county and
   get away from the DNC mob bosses that suck the life out of
   them to fund health care for indigents while refusing to pave
   their roads.
   No province in Canada has been more negatively affected by
   Davos’ minions in Ottawa, Brussels, and D.C. than Alberta. As
   one veteran of the Alberta oil patch said to me, “What’s the one
   type of oil they’ve clamped down the hardest on? The one that
   produces the most asphalt and diesel fuel.”
   Trump shut Venezuela out of the global oil market and tried to
   revive the Keystone pipeline to help while Obama/Biden shut it
   down, freezing the Canadian oil sands out of the US. The
   export terminal at Kitimat, B.C., has been in ‘development’
   forever, keeping Alberta gasping for air.
   In hockey, you can play the speed game through the neutral
   zone to gain the blueline and setup up your offense quickly,
   playing keep away until you open up a shooting lane. It’s fancy
   and beautiful to watch. It’s good hockey, don’t get me wrong.
   It’s also tiring on the defense and subtly humiliating.
   This is how the politicians on the other side of the continent
   operate, they always seem one step ahead, passing laws and
   blocking others to maintain their advantage, stealing the wealth
   of the ‘hicks’ and keep them reacting rather than strategizing.
   The problem with that is, if you do this long enough, especially
   to hard-working, decent people with a deep sense of fairness
   and humility, eventually they stop playing the other team’s
   game

   So, as opposed to ceding the blueline because it’s safer to play
   full team defense, the coach sends out the boys from Red Deer
   to stand up on the blueline and deliver a hit so big it
   reverberates through the entire stadium.
   It may not even be legal. It may cost them a goal. But, you
   know what?
   Hits like that change the course of a game … or a season.
   Hits like that establish a reputation. Hits like that are literally
   heard ‘round the world.
   Oh, that’s quite enough of that, eh.
   This was Western Canada’s declaration of independence.
   And when you look around the world today, there’s an awful lot
   of these declarations happening.
   Big Enough to Be Brave
   In order to make such declarations a place has to have the
   economic power to ‘make the hit’ in my hockey metaphor
   above. We are used to believing in a world where the West
   dominated economically and, by extension, politically.
   I’m not about to suggest we still do not dominate. We do. We
   also have an entire international regulatory and institutional
   scheme in place that helps prop up this position. But over the
   past 30 years things have changed radically.
   We talk a lot about the rise of
   China as an economic
   superpower but is it
   something we can visualize?
   Even for me, while I
   understood the point
   intellectually until I saw the
   shift presented visually I didn’t
   fully put the situation
   together.
   There’s a short video I want you to watch that helped me
   understand why there are declarations of independence from
   the West’s political order happening seemingly everywhere.
   It’s a simple thing, just over a minute long, that graphs the GDP
   of the G-7 nations versus that of the BRICS – Brazil, Russia,
   India, China, South Africa – from 1992 to the present and
   slightly beyond.
   But the key here is that it isn’t Nominal GDP the video charts
   but Purchasing Power Parity GDP (GDP PPP).
   The difference is an important one. I always say that Nominal
   GDP is a misnomer. It isn’t Gross Domestic Product but rather
   Gross Domestic Spending. It says nothing about the quality of
   that spending or what was bought with the money. It only
   measures the amount of money spent.
   GDP PPP however normalizes that spending for how far that
   spending goes locally. One thing I noted about going to Canada
   was that while the Canadian dollar (CAD) is weak versus the
   US dollar, there were no bargains to be had. Canada is
   expensive and has a crappy currency.
   No wonder Canadians are angry.
   It was nothing like going to Mexico three years ago. My US
   dollar went farther.

2. Fullgoldcrown says:

   June 22, 2023 - 6:38 pm at 6:38 pm

   As a statistic, GDP PPP is far better than Nominal GDP, even if
   both are fundamentally flawed.
   Now, take a minute and watch the video. A minute of pictures
   is worth thousands of words.
   The main takeaway is that today the BRICS countries control
   more of the world’s GDP in PPP terms than the G-7. But there
   are other subtle things to note.
   Sanctions against Russia starting in 2014 forced nearly a
   decade of stagnation even in PPP terms on the Russian
   economy as it has to reorient away from oil and gas. This gave
   the G-7 a reprieve while oil prices recovered.
   China’s share is leveling off and India’s is rising rapidly.
   The ZIRP years in the West accelerated the rise of the BRICS
   and the fall of the G-7’s purchasing power, even with a stronger
   dollar in recent years.
   It is this trend, now possibly accelerating, that gives rise to the
   second tier of countries in the BRICS’ orbit, declaring their
   independence from the West. These are Iran, Saudi Arabia,
   Egypt and Turkey. The rumblings coming out of Northern
   Africa have France’s colonial rule on very shaky ground.
   The former Soviet ‘Stans have warmed up to Russia’s newfound
   diplomatic and economic voice.
   So, when the US and the EU all demanded the world join them
   in denouncing Russia for invading Ukraine last year, they spoke
   loudly and clearly with one
   voice. No.
   This has prompted round after
   round of sanctions from the
   US and, in particular, the EU
   to punish this disobedience,
   forcing countries to choose
   between them and Russia.
   On this front they have been somewhat successful.
   Bin Salman in the Middle
   At the heart of all of this is Saudi Arabia. This is the pivotal
   country because of one thing, oil. For decades the West pitted
   the Saudis against Russia. In 2014’s oil crash which took the
   price from $125 per barrel to under $30 in less than five
   months, it was Saudi Arabia who piled onto the fall,
   announcing production increases into a falling market.
   It was a replay of the late 1980’s when the US and Saudi Arabia
   piled on to crash the price of oil to starve the Soviet Union of
   money at a time when it was clear the Communist Party was on
   its last legs.
   The Saudis helped by increasing production with the promise
   that they would gain market share globally after prices returned
   to normal. In 2014, it was clear that the US and soon to be
   Crown Prince Mohammed bin Nayef, a favorite of the CIA, set
   up the same play against Russia as they did in the 80’s.
   The Saudis dropped their monthly selling prices below the
   prevailing market while Russia struggled with falling revenues
   and a massive corporate bond rollover collision through the
   first half of 2015. Russia companies were already under heavy
   sanctions over the reunification with Crimea in March.
   In short, the gambit failed.

   Russian President Vladimir Putin in late November 2014
   ordered the Bank of Russia to stop defending the ruble,
   allowing it to fall dramatically.
   He then cut a deal with China to open up swap lines to get
   Russia much needed access to global markets to service and
   redenominated the debt of companies like Gazprom and
   Rosneft. Lastly he put forth a new economic program that
   would broaden Russia’s economy away from oil and gas,
   increasing its independence.
   This stopped the fall of the ruble in its tracks, inflation soared,
   but the crisis was contained politically. In May 2014, right after
   sanctions went on Russia, China and Russia agreed to the
   Power of Siberia pipeline, now the backbone of Russian/
   Chinese trade.
   I gave this history lesson for three reasons.
   First, it provided the backstory to how Russia was capable of
   surviving the shock and awe sanctions of 2022 including
   cutting them out of SWIFT.
   Second, because Russia didn’t collapse, it beat the Saudis/US at
   their own game. Russia took
   market share from Saudi Arabia
   who was left with a massive budget
   deficit that rose as high as 25% of
   GDP. It cost the Saudis hundreds
   of billions of dollars.
   In fact, it led directly to the
   replacement of Nayef as Crown
   Prince by Mohammed bin Salman
   (MbS) in a palace coup. This was
   the beginning of the end of US/
   Saudi relations. President Trump
   worked hard to repair them but
   MbS has little to nothing good to
   say to President Biden.
   The third reason for the history
   lesson is because this was Russia’s
   declaration of independence from
   the West. It has been a long and
   painful struggle, which is still going
   on and in its final act over Ukraine,
   but the rebellion began over a
   three-day period in late November 2014.
   Previous to that Russia tried to maintain a stable ruble versus
   the dollar through oil’s ups and downs. After that Putin
   allowed the ruble to float freely to reflect the global market.
   He had to stop being a ‘price maker’ in rubles and become a
   ‘price taker’ in rubles.
   By doing that he and Russia became the price maker in
   something far more important than the Russian ruble, oil.
   Prices are set at the margin. Whoever controls the marginal
   barrel of oil production controls the price of oil, ultimately. No
   one’s production in real terms is lower than Russia’s, and
   certainly not in the quantities they can provide the market.
   The deal MbS cut with Putin after things settled down and oil
   found its way back towards a reasonable price was simple.
   Let’s share power within OPEC, manage prices so that all
   producers are budget neutral at a minimum and broaden our
   markets.
   The threat, of course, is that the West would then try to crash
   oil prices again, this time to bring the Saudis to heel but also

   hurt Russia financially while it tries to maintain its war footing
   in Ukraine.
   That’s why President Biden is dumping the US SPR onto the
   market. That’s why US Treasury secretary Janet Yellen came up
   with the cockamamie $60 cap on Russian crude. That’s why
   Biden is trying to open up discussions with Nicolas Maduro in
   Venezuela.
   And this is why MbS won’t take Biden’s phone call.
   Putin provided MbS not only support to stabilize Saudi Arabia’s
   finances and MbS’s vision of a more diverse Saudi economy, but
   he also provided him the blueprint for unpegging the riyal, the
   Saudi currency, from the U.S. dollar.
   Now that we’re up to date let’s look at the latest rash of
   headlines from June 6th which all point to a major shift in
   Saudi Arabia’s geopolitical positioning:
   1. The normalization of diplomatic relations with Iran is
   official as embassies opened in each country.
   2. Iran, Saudi Arabia, the UAE, and Oman, in coordination
   with China, announced a plan to
   form a joint navy to police the
   Persian Gulf. Iran. Saudi Arabia.
   A navy. Did anyone have that on
   their bingo card for 2023?
   3.Iran announced to the world they
   have a fully homegrown hypersonic
   missile with a 870 mile range,
   which comes on the heels of a
   ballistic hypersonic missile capable
   of flying at Mach 13.
   4.The end of a two-year fight
   between the PGA Tour and Saudi
   Arabia’s LIV with the proposed
   merger. There is always a
   geopolitical angle to international
   sports, from the World Cup to the
   Olympics. Here it gives the Saudis
   yet another angle by which to
   spend accumulated dollar assets
   and diversify their investment
   portfolio.
   Taken together these headlines, all of which came out in a rush
   after the US announced the resolution to the debt ceiling fiasco,
   should be considered a prelude to the next step for them; to
   break the peg between the riyal and the US dollar.
   If Biden and Davos are successful in breaking the oil market
   back into the $60’s or even the $50’s then MbS’s response will
   be to break the peg. They can’t compete with Russia under
   these conditions. Attacking the price of oil is a triangulation
   strategy designed to starve Russia of the money needed to fight
   in Ukraine and a concomitant attack on the Saudis’ finances, in
   a desperate attempt to bring them back into the fold.
   But it’s not the 1980’s anymore. Hell, it isn’t 2014 anymore.
   The G-7 doesn’t control the lion’s share of the purchasing
   power. So, China and Russia stand ready to assist the Saudis if
   they have to break the peg. This is why Russia is working with
   them and OPEC+ to cut production.
   This is why everyone is signing up to become members of the
   BRICS alliance. They are moving into the orbit of the rising
   powers, not away from them scared of the big bad West.

   This month the bombshell came from Egypt, who is in furious
   talks with the IMF over its loans to them. China is holding the
   IMF hostage willing to write down part of Egypt’s debt if the
   IMF will. The IMF is refusing, as always, demanding reforms
   rather than working out a compromise.
   This is pushing Egypt directly into the arms of the BRICS who
   will encourage Egypt to default and lend them the money they
   need on better terms. It’s a different world folks. The rulesbased order is giving way to the golden rule: he who has the
   gold makes the rules.
   I’ve covered Turkey’s troubles in grave detail, but the re-election
   of President Erdogan despite unbelievable pressure to get rid of
   him is a big statement by the Turkish people. Events like that
   allow for events like we just went over to occur.
   If Erdogan had lost that election, MbS would have been taking
   Biden’s phone calls again and Secretary of State Antony Blinken
   wouldn’t be begging China for a meeting.
   These seemingly little things tick away in the background while
   we’re distracted with lurid video from Hunter Biden’s laptop,
   aliens, and the Trump arraignment go unnoticed. But these are
   the events that shape the future.
   In hockey, you don’t skate to where the puck has been, you
   skate to where it will be, stick on the ice, ready to receive the
   pass. But keep your head on a swivel because if you don’t some
   big kid from Red Deer might just come in from the side and
   take it clean off.
   Oh, he lost a couple a Chiclets on that one, eh!