The Incredible Stupidity of the Western Statist - Let's CRUSH Russia!

Image Source: http://news.bbc.co.uk/2/shared/spl/hi/pop_ups/05/europe_enl_1136301170/html/1.stm


Western statists in government and the media view the entire world as one big chess board wherein they only have to make a few brilliant moves to economically crush annihilate their perceived enemies to control the planet and its resources.

Matthew Yglesias at Vox.com exhibits such a mentality and arrogantly believes his own delusion that the US and Europe can so economically impair Russia that Russia can be blasted back to the Stone Age. Aside from the genocidal insanity that deliberately hurting and harming folks is indeed a desirable foreign policy goal, the stone cold reality of actual facts dismisses such dangerously juvenile aspirations, despite the best efforts of Yglesias to believe his own warped rant and he isn't focused on merely punishing Russia (who did nothing to earn punishment) but he's thoroughly focused on CRUSHING Russia.

One fact that explains how Europe could crush Russia's economy by Matt Yglesias 

Yglesias is convinced that if Europe sanctions Russia that Russia will surely end up burning in the sanctions toaster. He validates his position by asserting that the trade relationship between Europe and Russia is far more valuable to Russia and even implies that Europe doesn't even need to trade with Russia. Yglesias then proceeds to defend EU statism as if it's a force so powerful that no nation state can escape it dictates.

The fly in the ointment is that while Russia is a nation-state, the European Union is a confederation of separate countries. The EU has incredible clout when it speaks with one voice....

The European economy presently sucks, especially southern Europe, so cutting off trade doesn't just hurt Russia, it also hurts Europe because trade is always a 2 way streak. Just how much is EU-Russia trade worth? It's worth a whopping $412 billion according to a CNN infographic, yet Yglesias dismisses $400 billion in trade as if it's really nothing, a most bizarre assumption considering that Europe is Russia's largest trading partner and Russia is Europe's 3rd largest trading partner.

  
The price of 'crushing' Russia economically would be quite steep for Europe but there is much more to the Russia-EU economic alliance and mutual dependency.  Europe is also dependent upon Russia for gas.

Map: Europe's thirst for Russian gas

30% of the EU's gas comes from Russia - in Germany it's 40% and Germany is the Europe's powerhouse economy.

Europe gets very cold in the winter, especially its frigid northern nations like Germany.  Does anybody really think that Europeans and the Germans are about to risk freezing in the winter and risk losing over $400 billion a year in trade to appease the US Empire?   Well, some believe that it's no problem and that the US can supply Europe with all the gas it needs.  Mic.com (formerly policymic.com) reports, here:

Europe's reliance on Russia is temporary. By 2020, the U.S. could become a major energy exporter, supplying Europe with about half of the gas that Russia supplies now, according to the Obama administration. If the EU and the U.S. can agree upon an "energy policy," then Europe could rely on the U.S. as one of their main energy suppliers. That endangers Russia's grip over the EU, but it also means that Europe would only have to manage the next few years under Russian dominance.

The bold assumption that the US can supply Europe with all its gas needs begs the question: Who controls the largest natural gas reserves on the planet and who has the infrastructure to deliver it?  It's not the US.

Top Natural Gas Reserves by Country 2014

Russia has 1,688.00 trillion cubic feet
Iran has 1,193.00 trillion cubic feet
Qatar has 885.29 trillion cubic feet
Turkmenistan has 265.00 trillion cubic feet
US has 308.44 trillion cubic feet

Source: http://www.quandl.com/c/markets/natural-gas

Gas as a resource is worthless without a delivery system and pipelines are indeed the main delivery source. While Russia and Europe are linked by a complex network of pipelines, the US can't deliver gas to Europe because there is no infrastructure in place to accomplish such deliveries, forgetting momentarily that Russia has more than 5 times the natural gas reserves of the US.

Any efforts by the US to deliver gas to Europe will be expensive, require a huge infrastructure investment (probably one that isn't even close to being economically viable) and will also drive up energy costs across Europe, all of which will negatively impact Europe's already ailing economy.

The bottom line is that nobody can meet Europe's natural gas needs more efficiently and cost effectively than Russia, despite the grand delusions of US media foreign policy wonks preaching the hallucinations of USG policy wonks.

If you were a citizen of Europe, would you risk freezing in the winter and suffering more economic hardship just to appease the US Empire?

While the USG and its media hacks may be suffering from an acute case of inhaling way too many summer vapors, at the end of the day Europe will tell the US to take a hike with a polite "Thank you very much but we rather like our $400 billion plus trade with Russia, we very much like Russian gas and we aren't about to commit economic suicide or freeze or genuflect before DC, and by the way we still remember the NSA, YES, America can go straight to hell and we are totally fed up with the damn Yanks."

Why Syria is Serious - It's Where Oil, Monetary Power and Religious Feuds Collide

Syria poses no threat to the US whatsoever and it has never committed an act of terrorism against the US.  So why is the US so hot to bomb a nation of 23 million folks that is slightly larger than the state of North Dakota and has no significant oil?  Whenever something happens we must ask ourselves "Why?".

When Nixon de-tethered the dollar from gold in 1971, the western monetary cartel colluded with Arab oil sheikdoms to make the dollar a petro-dollar.  The monetary cartel argued that the dollar was still commodity money and that gold was merely swapped for oil.  The only purpose of this oil-monetary cartel was to perpetually guarantee that the dollar would be the world's reserve currency so long as oil traded in dollar. The dollar is still the world's reserve currency.  However the global monetary cartels or 'banksters gone wild' got themselves in deep shit with endless monetary printing (inflation), mountains of fiat debt, excessive financial speculation facilitated by easy money (derivatives) and churning world financial markets into casinos that were rigged in favor of the house (banksters).

Anybody who even though about trading oil in a non-dollar currency was slated for extinction. Saddam Hussein threatened to sell Iraqi oil in Euros; he was invaded and executed for non-compliance with the international monetary cartel.  Gadhafi had similar plans to sell oil in non-dollar currency but his plan went even further and Gadhafi wanted to sell oil for gold.

Gadhafi’s Gold-money Plan Would Have Devastated Dollar

Once oil traded in any currency other than the fiat dollar, the dollar would not only be toast and no longer the world's reserve currency but it would take down the entire global monetary cartel aka banksters.

Western elites and the House of Saud have been in bed with each other ever since oil came into big play in the early part of the 20th century.  Saudi Arabia not only spawned the most violent and vile form of Islam ever to exist, Sunni Salafist Wahhabist Islam, it used its petro-dollar wealth to spread its religious disease and the Saudis funded jihad madrassahs (Islamic schools) and radical mosques all over the world, including planting these institutions of hate and violence in Western nations.The West didn't care, so long as the Saudi's were swimming in oil and traded oil in dollars.  It's a marriage of convenience where western elites and savage Sunni Muslims share a bed to make love to each other.  It should be noted that not all Sunni Muslims are adherents of Saudi style Wahhabism.

With regard to oil, Saudi Arabia is widely believed to have the mother load of oil reserves.  Oil reserves and oil production are two different classifications - oil reserves are independent of oil production because they validate future oil power.  It's not only well known that Saudi oil reserves have never been independent verified but it's been widely speculated that Saudi Arabia has vastly overstated its oil reserves and may be close (within a few decades) to being pumped dry.

Saudi Arabia's resource wealth 'vastly overstated'

The Sunni and Shiite sects of Islam have been feuding forever but in recent years the division has grown more violent and not because of the Shiites but because the Sunni Salafists ruthlessly oppress Shiite minorities.  Saddam Hussein was a Sunni; however Hussein was more of a secularist and it's been documented that he drank western whiskey and watched the Goldfather movies over and over. Hussein did oppress the Shiite minority and in Iraq the Shiites comprised the majority - over 2/3 of the Iraqi population.  Ironically, Hussein protected Iraq's Christians.

When the US invaded Iraq, it was a monumental act of sheer stupidity.  By enforcing democracy, the Shiite majority now rules Iraq.  While only about 15-20% of the world's Muslim population are Shiite, the vast majority of them resides in Iraq and Iran.  Neither the Shiites nor Iran/Iraq ever committed any acts of terrorism against the US and neither ever posed any threat to US national security.  All the well documented Islamist terror attacks are acts of Sunni Salafists - 911, London bombings, Moscow bombings, Madrid bombings, Bali bombings, Mumbai bombings, the bombing of 2 US African embassies etc.  The world's most violent and murderous Islamist groups are and have always been armed and funded by the Saudis, the US, the CIA and this has been going on since the days of Jimmy Carter who armed and funded the Afghan Mujuhadeen, now the Taliban.

The Saudi's only care about 2 things - being the world's #1 oil kingpin and spreading its firebrand of Islam which includes eradicating Shiite Islam or severely marginalizing it.  If they lose their oil power, they lose their global political clout and their wealth.  Moreover, it would be unbearable if the Saudi's lost its oil power to Shiite Iraq and Iran.

According to Wikipedia the world's top oil producers are:

1.  Russia 10,900,000 barrels a day and 13.28% of world's oil
2.  Saudi Arabia, 9,900,000 barrels a day and 12.65% of world's oil
3.  United States, 8,453,000 barrels a day and 9.97 of world's oil
4.  Iran, 4,231,000 barrels a day and 4.77% of world's oil
5.  China, 4,073,000 barrels a day and 4.56 of world's oil
6.  Canada 3,592,000 barrels a day and 3.90 of world's oil
7.  Iraq, 3,400,000 barrels a day and 3.75 of world's oil
8.  United Arab Emirates, 3,087 barrels a day and 3.32% of world's oil
9.  Venezuela, 3,023,000 barrels a day and 4.74% of world's oil
10. Mexico, 2,934,000 barrels a day and 3.56% of world's oil.

The link to the world's top oil producers is here and the link to the world's oil reserves is here.

Here's the geo-political monetary conundrum - everybody knows that 'banksters gone wild' has decimated the dollar as well as other fiat currencies. Moreover, fiat central banks are teetering on brink and are unsustainable under the mountain of debt no matter how much 'out of thin air' money they create.  Many nations have reacted by pulling back on treasuries; they aren't buying and they are quietly selling.  Russia and China absolutely believe that the dollar as the world's reserve currency is on life support and both have been stockpiling gold because they understand that someday the world will be forced back into sound money and a new reserve currency will emerge.

Russia would love nothing better than to see the dollar crash along with the evil US empire.  After all, it's well documented that the US had its buddies in the Middle East hyper-pump to drive down the price of oil to crash the Soviet Union and force its breakup.  While Russia did indeed suffer significantly, it got back on its feet and reinvented itself by embracing capitalist principles.  The payoff has been phenomenal for Russia and its oil and natural resource industries are booming. Under KGB turned capitalist Putin, the Russian economy is doing well.

What does the US fear more than anything? It fears the dollar losing its world currency reserve status because when that happens the US dies and is nothing more than another bankrupt banana boat republic.  America is already a bankrupt banana boat republic, the noose around our neck has been knotted and an ever so slight kick of the stool will dangle our corpse.

What can really trigger or expedite the dollar losing it's lofty reserve currency status? Only one thing - oil trading in any currency other than dollars and that has already begun.

China is Trading Oil in Non-Dollar Currencies

Iran Seeks Alternative to Dollar Amid Oil Sanctions

After sanctioning the hell out of Iran and constantly threatening to bomb and invade, America can't very well expect Iran to sell it's oil in dollars.

What's really at play with the Syria debacle really has nothing whatsoever to do with Syria, it's just that Syria is aligned with oil rich Iran who is aligned with both Syria and oil rich Iraq.  What is unique about this alliance is that Syria has a 75% Sunni majority.  Yet, a majority of Syria's Sunnis support Assad and greatly fear a violently ruthless Saudi styled Wahhabist Taliban-Al Qaeda takeover of Syria.  The US invaded Libya and now US supported Al Qaeda gangs have busted the country into bloody civil war, a situation that did not exist under the leadership of Gadaffi.

If major oil producers like Russia, Iran and Iraq start trading oil in non-dollar currencies, that kind of combined oil power would definitely expedite the death of the dollar and the empire. If the Saudi's are running out of oil and there is substantial documentation on this issue, the Sunni Saudis are definitely willing to wage wars to secure dominance over Shiite Iraqi and Iranian oil and the Saudis are not lacking in western partners in crime.  Western powers are 100% behind the evil House of Saud and even openly support and arm Al Qaeda styled Sunni Islamists. The power of the 2 biggest global cartels in human history are at stake - a fiat banking cartel dominated by the dollar being the world's reserve currency and the global oil cartel. Together they just about control everything from the monetary to the economies of every nation on earth.

The world runs on oil and money.  Oil is power.

Syria?  For the House of Saud and Al Qaeda-Taliban styled Sunni Islam, it's all about preserving their oil power and disemboweling an age old religious enemy while using the US military to do it for them. For the US, it is all about preserving the already doomed dollar, Sunni oil cartels and bankster cartels.

The House of Assad is Alewite, an offshoot of Shiite Islam.  As previously noted, the majority of Syria's Sunnis support Assad because they don't want their country taken over by violent Sunni Al Qaeda gangs.  Furthermore it's been documented that Benghazi was a CIA operation gone bad and the goal of that operation was the arming and funding of Syrian Al Qaeda rebels with the help of Saudi Arabia and its Sunni allies.

The US actually believes that it can preserve the dollars' world reserve currency status by militarily intervening in Syria to use Syria as a base to invade Iran.  By controlling Iran-Iraq oil and forcing it under the control of Saudi Sunni Islam, the western marriage of Sunni Islam and the petro dollar can survive at least in the short run.

The real axis of evil is the Saudi-US-oil-central bank cartel. The real goal is to ultimately invade Iran and Iraq (again) and sever the possibility of a Russia-Iran-Iraq oil arrangement that trades oil in non-dollar currencies.  The plan is to isolate and marginalize Russia to force it to sell oil in petro-dollars.

The US and the Wahhabist Sunnis are willing to explode the entire Middle East into horrific war and even use nuclear weapons to achieve its goal of controlling oil and the preservation of the petro-dollar.

Assad and the Syrians are merely expendable pawns on the international chess board of the elite power brokers and the NWO. So are the folks of Iran and Iraq.  Syria is geographically significant because it stand between Turkey and Iraq.  The Turkish Prime Minister Erdogan is a hardcore Sunni Salafist with deep ties to the US and House of Saud.  However, Turkey's Sunni Muslims have been rising up against Erdogan in well publicized revolts because the Turkish Sunnis don't want to be ruled by the Saudi version of Islam.  Moreover, the Turkish people oppose war on Syria, a war that PM Erdogan emphatically supports.

This will not end well. It's clearly evident that the US and Saudi Arabia et. al. are murderous psychopathic nations. The situation holds the potential to draw in Russia and plunge a world already suffering economic misery into a global war where the only beneficiaries are a handful of elites who are more than willing to slaughter millions to maintain their oil and bankster power.

Non-stop warfare is an unspeakable evil and it's long over due for folks to bring this issue to the table. A humanity that commits genocide for oil, bankster and defense contractors is a humanity that is doomed by its own evil. 

Cyprus: Where Big Oil, Big Money and Geopolitics Collide

The island nation of Cyprus is garnering big global headlines as the government seems determined to plunder the bank accounts of its citizens to guarantee debt service payments on a $13 billion Troika loan to bailout bankster.  To understand Cyprus, you have to start with having a grasp of geo-politics and the history of Cyprus.  The sordid and lurid details of Russian oligarchs using Cyprus banks for laundering money from their nefarious activities is indeed firing up imaginations because the Cypriot people, and people everywhere, are suddenly shocked and appalled that ordinary people are now forcibly being required to bailout Russian mobsters.  Forget that the entire global financial system is itself a well organized crime syndicate.

Cyprus is an island nation and the 3rd largest Mediterranean island after Sicily and Sardinia (both under Italian sovereignty) and according to the CIA Factbook is .6 the size of Connecticut.  With 1.1 million folks occupying the island, Cyprus has a long and fascinating history of being a pawn on the Muslim-Christian chessboard as battles waged for theocratic and empirical control of the Mediterranean.

Somebody made the astute observation:  If goods don't cross borders then armies definitely will.  It's always been true, though rarely practiced in human history.  The Venetians acquired vast wealth and prosperity through trade and they even traded significantly with the Muslim world.  Consequently, the Venetians were wisely obsessed with trade, protecting their trade routes, avoiding war and negotiating peace with anybody to preserve trade.

Cyprus has always been a Greek majority, Greek speaking island and became part of the Orthodox Byzantine Empire in the 4th century.  It's close proximity to Turkey (less than 50 miles from the Turkish mainland) made it an attractive conquest for the now defunct Ottoman Empire.  Cyprus was deemed critical to Venetian trade and the Venetian Republic, here, and the Venetians invaded Cyprus in 1489.  Relations between east and western Christianity were never good as Roman Catholics under the rule of Rome locked horns with Orthodox Christians under the rule of Constantinople.  Constantinople fell to the Muslim Turks in 1453 under the Ottomans who embarked on a massive geographic military expansion of conquest and plunder.

In 1570, the Ottomans invaded Cyprus, quickly conquered most of the island, including the capitol city of Nicosia, but the heavily fortified city of Famagusta was held by the Venetians and only fell after a long seige.   The heroic defender of Famagusta was Marco Antonio Bragadin, here.  When Bragadin surrendered after being promised safe passage out of Cyprus, the Muslim Turks literally flayed him alive and carted the spectacle of a human being being skinned alive through the streets as a warning that such was the fate of anybody who defied the Muslims.

The horror of Bragadin's fate spread rapidly throughout a shocked Christian world.  That's when the Christian West decided to stop the Ottomans.  The Venetians had been paying the Ottomans a huge amount of money in annual tribute.  They were furious at the betrayal and conquest of Cyprus.  Several Italian states and other western Christian nations quickly assembled a navy which was not a problem for the seafaring Venetians.  The goal was to wipe out the Ottoman navy which it accomplished at the legendary sea battle of Lepanto, here and here.

The 1570 defeat of the Ottoman Navy was largely symbolic.  However, it did slow down Ottoman expansion but the Ottomans managed to keep Cyprus until 1878 when it ceded control of Cyprus to the British.  Ottoman power was approaching its zenith but that changed in 1683 when Ottoman armies were decisively defeated at the gates of Vienna.   After Lepanto (1570) and the Christian defeat of Islamic expansion at Vienna (1683), the Christian world ceased to fear the Ottomans who had so terrified the western Christian world for hundreds of years, starting with the defeat of the Serbs in 1389 and the Muslim conquest of Constantinople in 1453.  Revolts against Islamic rule started to accelerate and they accelerated on two fronts, from the Orthodox east and the Papal west.

1736 Russo/Austrian-Turkish War
1768 Russo-Turkish War
1770 Revolt in Peloponnese
1787 Russo/Austrian-Turkish War
1804 First Serbian uprising
1815 Second Serbian uprising
1821 Greek War of Independence
1877 Russo-Turkish War
1912 First Balkan War
1913 First Second Balkan War

By 1878, 300 hundred years of Ottoman rule over Cyprus was ending.  The Suez Canal opened in 1869, the Ottoman Empire was literally in shambles and the Ottomans ceded control of Cyprus to the British.

The Greek Cypriots welcomes British rule over Ottoman rule but there was always a Greek Cypriot movement called 'enosis' that yearned to unite with Greece under the Greek flag.  It wasn't long before the Greek Cypriots started revolting against the British.  After significant agitation for sovereignty, Cyprus finally shed British rule in 1960 and became the Cyprus Republic.  That resulted in a low level civil war between the minority Muslim Cypriots and the majority Greek Cypriots who were further conspiring to unite under the Greek flag.  The Muslim Turks and the Greek Christians may have shared an island but they really didn't co-exist together.  The Muslims occupied the northern part of the island while the Greek Christians occupied the larger southern portion.  Greece itself was internally a mess as various players sought power and Greece was politically unstable while waging various revolutions that included a military dictatorship.

The president of Cyprus post 1960 independence was Archbishop Makarios, a firebrand cleric, a communist sympathizer and a hardliner Greek unity advocate.  Makarios did wage a successful guerilla war against the British.  By 1964, not only was the Cold War in full bloom, the world had just survived the Cuban Missile Crisis.  Britain and the US used Cyprus as a military base for spying on the Soviets and other communist nations.  In fact, Cyprus was strategically very significant to the US and Britain as a military base.  Although Greece and Turkey are mortal enemies, they both joined NATO in 1952.  Orthodox Christians are always on the side of Orthodox Russia, the Orthodox Balkans and Orthodox Greece.  Makarios refused to be a puppet of the US and Britain and he was convinced that the US and Britain favored Turkey over Greece.  A BBC timeline on Greece from 1924-2012 is here.

In 1964 the US and Britain got the UN to send 'peacekeeping' troops to Cyprus.  They've been there nearly 50 year.  As Cyprus continued to heat up, The Turkish military invaded Cyprus in 1974 and some even believe that the CIA engineered a coup to kill Makarios who managed to escape.  Makarios died in 1977, he left no memoirs and all that is left is an interview he granted to Italian journalist Oriana Fallaci who died in 2006; the 1974 interview is here.

In 1983, the Turkish Cypriots declared their independence from Cyprus and named itself the Turkish Republic of Northern Cyprus.  However, only Turkey has recognized the sovereignty of the TRNC.   While it is indeed a tragedy that the Muslim Turks and Christian Greeks can't live together in peace and prosperity, it's not an unusual situation when you are dealing with folks with festering wounds spanning hundreds of years.  Cyprus remains a divided nation - 2 languages (Turkish and Greek), 2 religions (Islam and Christianity) and two entirely different cultures.

Although many view Archbishop Makarios as a radical Greek nationalist, he was very much a product of the times.  As it turns out, Makarios wasn't so crazy in his assertion that the US and Britain were backing Turkey.  The Raw Story published a piece on 2007 based on the disclosure of 700 pages of highly classified CIA documents known as the 'Family Jewels'.

New documents link Kissinger to two 1970s coups

Release of CIA's Family Jewels provides insight into political juggernaut and Bush Administration adviser

Former Secretary of State Henry Kissinger pushed for the 1974 Turkish invasion of Cyprus and allowed arms to be moved to Ankara for an attack on that island in reaction to a coup sponsored by the Greek junta, according to documents and intelligence officers with close knowledge of the event.

Nearly 700 pages of highly classified Central Intelligence Agency reports from the 1970's, known collectively as the "Family Jewels," are slated for public release today.....

Some Greek Cypriots believed then, and still believe, that the invasion was a deliberate plot on the part of Britain and the US to maintain their influence on the island, which was particularly important as a listening post in the Eastern Mediterranean in the wake of the October 1973 War between Israel, Egypt, Jordan and Syria.

According to columnist Christopher Hitchens, author of the book The Trial of Henry Kissinger, "At the time, many Greeks believed that the significant thing was that [Prime Minister Bulent] Ecevit had been a pupil of Kissinger's at Harvard."

Several intelligence sources, who wished to remain anonymous to maintain the security of their identity, confirmed to RAW STORY that Kissinger both pushed for the Turkish invasion of Cyprus and allowed arms to be moved to Ankara.

Cyprus was admitted to the EU in 2004 and adopted the Euro as its currency in 2008.

Fast forward to today as the Cyprus banking crisis explodes and the Troika (EC, ECB and the IMF) demand that the Cyprus government literally steal bank deposits to guarantee a $13 billion bankster bailout loan.  It's no secret that Cyprus banks have been the choice of Russian oligarchs and their nefarious money laundering schemes.  So who is being bailed out and why?  It's clear that a bailout of bondholders is the motivating factor behind the Troika bailout but the greater question is this:  WHY would the Troika be so foolishly suicidal as to risk banks runs and accelerate spreading economic calamity for a puny nation like Cyprus that only comprises .2% of the EU's GDP?

That the Cyprus depositors are being plundered is clear.  The WHY is not so clear.  Although the financial pundits are yapping endlessly about the situation in Cyprus, most are stuck on 'yap' with very little substance, except for Reggie Middleton who runs the Boombustblog.com and is published at Zero Hedge.

What Is The Value Of The Gas Assets That Cyprus Pledged To It's Bank Depositors?

Following yesterday'shighly analytical rant on Cypriotic bank nonsense, I present an interesting analysis on the value of the gas assets pledged to those who's bank accounts may be clipped by the Cypriotic government/ECB. For those who don't know, the proposal was to compensate those who were subject to the tax/levy on their bank accounts with bonds linked to the output of Cyprus natural gas mines. Of course, the first question anyone should ask is "Why not simply pledge the gas assets directly to the ECB vs stealing from the bank depositors?" I think we can all ascertain the answer to that question. I was tweeted an analyst by Anthony Alfidi wherein he delved into the fundamental value of the exchange. I would like to reproduce a portion of it here. The balance can be found on his site.

Cyprus Bank Deposit Levy and Natural Gas Bonds

Cyprus' president has pledged to cover the value of its imminent savings deposit levy with an equivalent value of natural gas bonds. It's hard to say whether Cypriot savers should take this promise seriously without some analysis of its viability.
Let's use the European bailout sum for Cyprus of US$13B as a proxy for the amount of savings about to be confiscated from Cyprus' resident depositors. I need a proxy because I have no idea how much the government of Cyprus will actually collect from this levy. The natural gas revenue needed to back the bonds that would make savers whole would likely come from the Aphrodite field. Title to this field is unclear; Turkey has made a competing claim for the sovereign right to control drilling.

This is the likely answer to the quetion above. If the ownership and rights to the mine are in question, then it is essentially an encumbered asset. As such, how is it Cyprus's to pledge to anybody? May I add that Turkey actually has a functional military, and Cyprus has???

There is currently no pipeline from Cyprus to either Turkey or Crete which could deliver the gas to market; that would cost US$1B to build and Cyprus has no money. Building a $10B LNG terminal is ten times as unlikely, because Cyprus is still broke. The energy supermajor that ends up building it will get the lion's share of the revenue from the gas field as compensation for its costs and will have to deal with the likelihood of being shut out of other projects in Turkey.

Again, exactly how will this gas asset be monetized? I have not verified the facts and calculations behind this article, but if they ring true, then it appears that Cyprus is pledging the option of future development to a gas asset that it MIGHT own in exchange for actual cash in terms of what is being offered to bank depositors. So, the most valuable asset possible (actual cash denominated in a major currency) is being exchanged for an option on an undeveloped asset whose ownership and right to pledge/transfer is undetermined. Does this sound like a good deal to you? And we haven't even started to glean the actual fundamental value yet?

The lack of drilling and delivery infrastructure means that no Aphrodite gas will go to Europe until 2018 at the earliest. A lot can happen with the price of natural gas in five years. The wide availability of shale gas in the U.S. will keep the price down in North America. Europe's need for gas is met mainly by Russia, and Gazprom can adjust its rates at will to pressure Russia's neighbors.

And such pressure is guaranteed if Russian citizens are to lose the 2 billion or so euros to the Cyprus bailout levy that is being bandied around.

Apparently, the Aphrodite gas field is loaded with gas and oil as Turkey makes a probably futile attempt to claim those resources, here.

'Noble Energy received the concession to explore block 12 in October 2008.[6] In August 2011, Noble entered into a production-sharing agreement with the Cypriot government regarding the block's commercial development.[7] Sources in Cyprus indicated in mid-September that Noble had commenced exploratory drilling of the block.[8]

Cyprus demarcated its maritime border with Egypt in 2003, and with Lebanon in 2007.[9] Cyprus and Israel demarcated their maritime border in 2010.[10] Turkey, which does not recognize the border agreements of Cyprus with its neighbors,[11] threatened to mobilize its naval forces in the event that Cyprus would proceed with plans to begin drilling at Block 12.[12] Cyprus' drilling efforts have the support of the United States, European Union and United Nations, and on September 19, 2011 drilling in Block 12 began without any incidents being reported.[13] The development of oil and gas resources in the Cypriot Exclusive Economic Zone (EEZ) abide to the UN Convention of the Law of the Seas (UNCLOS) which the Republic of Cyprus ratified in 1988.[14]

According to Noble Energy, a total gross unrisked deep oil potential is 3.7 billion barrels (590×106 m3). The field has a gross mean average of 7 trillion cubic feet (200 billion cubic metres) of natural gas with an estimated gross resource range of 5–8 trillion cubic feet...

Who is Noble Energy?  It's headquartered in Houston, TX and its Wikipedia history is here.  The Board of Directors, here, includes alumni of Goldman Sachs, Merrill Lynch and energy executives.

Meanwhile, the giant state owned Russian oil company, Gazprom, has offered to bailout the Cyprus banks in exchange for exclusive exploration rights.

Gazprom’s audacious offer to bail out Cyprus in return for its natural gas

Talk about buying low and selling high. Gazprom, Russia’s state-owned oil company, reportedly offered to bail out Cyprus’s troubled financial sector in exchange for exploration rights to the country’s natural gas.

Cyprus is holding a bank holiday until Thursday as it works to finalize a deal with European leaders that would rescue the country, but the tentative agreement includes a controversial provision taxing bank depositors, one that even conservative German newspapers think is a bad idea.

Hence Gazprom sweeping in with its “friendlier” rescue offer. It’s not clear if they wanted to take over the entire bailout, which would cost roughly €16 billion, or merely the depositor bail-in of €5.8 billion, but either way they’d be getting a pretty rock-solid deal: The gas reserves could be worth as much as €300 billion, though it would likely take about seven years of development to start exporting gas and collecting revenue, not to mention fears of competing claims on the reserves from Turkey.

Cyprus rejected the offer, preferring to refine the fiscal program it is negotiating with the European Central Bank, European finance ministers, and the International Monetary Fund, which will likely include some concessions from the Russian government, which made an emergency loan to the country last year.

The irony here is that one of the reasons Cyprus’ bailout is so unpleasant is that it acts as an off-shore financial center for Russia, whose residents and corporations have as much as US$19 billion in the country’s banks and stand to lose about US$2 billion if the depositor tax goes through. A significant motivation for the deposit tax was to make sure that foreigners taking advantage of Cyprus’ bank secrecy laws and low taxes would take part of the hit. A partnership with Gazprom, in exchange for exploration rights, would have further solidified the island’s status as a Russian client.

The Cyprus government is trying to use its gas reserves to keep people from pulling their money out of the country, offering to compensate depositors with securities linked to the reserves. While the long time-horizon on returns from those securities might be scant comfort to private investors who fear losing money they keep on the island nation, the ability of the Cypriot public sector to manage those reserves in the long-term is one the country’s bigger advantages in digging itself out of its fiscal hole.

A Texas oil company, a Russian oil company, Russian oligarchs, banksters, big oil, and Turkish claims to the oil/gas patch all combine for very intriguing geopolitics. All of which makes what is happening in Cyprus even more repugnant - with so much BIG money vested in Cyprus energy resources, why stiff the ordinary Cypriot depositors?

Is the Cold War about to reappear and heat up into a HOT war as US/EU interests clash with Russian and Turkish interests?  The Turks and the Russians hate each other but the US has always been committed to advancing the US/British Empire and that almost always requires squashing Russia.  But Russia isn't broke and bankrupt like the US and the EU.  It's rolling in energy wealth as well as other natural resource wealth.  Russia has been stockpiling gold for years.

Currency Wars Escalate: Russia Stockpiling Gold

Of course, all the vultures are circling the fiat monetary corpses and even before they keeled over and officially croaked but croak they will.   The smart money recognizes a walking corpse when it sees one.  How long can the EU and the Euro last before the whole failed experiment in fiat money propelled statism finally implodes?  How long can the US continue to spend, print and borrow?

Meanwhile, the world is waiting and watching......

Cyprus?  They've got something that the stooges who lord over the planet want very badly.  At the end of the day, it's always about money and resources.

The Future of the Dollar as the World's Reserve Currency

  

Americans need to start thinking about what can and will happen when the dollar is no longer the world's reserve currency. What does it really mean? It's means that America becomes just another bankrupt banana boat republic swimming in mountains of debt and that our standard of living crashes.

China and Russia are Acquiring Gold, Dumping US Dollars

There is evidence that central banks in several regions of the World are building up their gold reserves. What is published are the official purchases.

A large part of these Central Bank purchases of gold bullion are not disclosed. They are undertaken through third party contracting companies, with utmost discretion.

US dollar holdings and US dollar denominated debt instruments are in effect being traded in for gold, which in turn puts pressure on the US dollar.

In turn, both China and Russia have boosted domestic production of gold, a large share of which is being purchased by their central banks...

It is absolutely true that China and Russia have been stockpiling gold because common sense tells them that the fiat paper monetary systems of the West will go bust. It's practically a law of physics that paper money always reverts to its intrinsic value of zero, except for the toilet paper value.

Many are wondering if western banks even have any gold. Ft. Knox has never been audited nor have our supposed gold reserves ever been verified. "Where's the Gold" is entirely an issue of pure speculation and while the US claims to hold the lions' share of the the gold reserves of the world, the stability of the dollar as it relates to gold and the gold that supposedly backs the dollar is prompting other nations to go for the gold.  Fiat paper currencies rely on trust and once that trust starts to evaporate, monetary collapse isn't too far behind.

 Chinese Gold Imports Surge In September, YTD Total Surpasses Official Indian Holdings

Anyone who may have been concerned by the slowdown in Chinese gold imports in August, when the country imported "only" 53.5 tons of gold from Hong Kong (down from 75.8 in July), can breathe a sigh of relief. According to the Hong Kong Census Bureau, in September Chinese gross imports soared by 30% reverting to the long-term trendline of 65 tons in gross imports per month, and rising to a total of 69.7 tons. Net imports were 40% less, although that excludes organic Chinese gold mining and recirculation, which is why for all intents and purposes the gross number is the apples to apples one. And using that, Year-To-Date China has now imported a whopping 582 tons of gold, more than the official holdings of India at 558 tons, and which through November has certainly surpassed the holdings of the Netherlands, and make China's gross imports in just 2012 nominally the equivalent of Top 10 largest sovereign holder of gold.

This way at least we know where China is recycling all that vast trade surplus, which incidentally in October just printed, goalseeked or not, at the highest level - $32 billion - since January of 2009. Too bad China no longer recycles all those excess reserves into US Treasury paper (as we showed previously here).

The last sentence above is crucial because it indicates that China is no longer buying US debt.  It's also important to note that the trend of foreign nations who once reliably purchased  US Treasuries has been quietly and not so quietly declining as foreign nations and investors dump Treasuries.

A government only has 3 methods to raise revenues:

1.  Tax the people (Americans are pretty much fully plundered by taxation).
2.  Borrow by conning other people and nations into buying your worthless debt.
3.  Just fire up the printing press and create money literally out of thin air.

Option 3 is the most dangerous and signals the end stages of a monetary system as it collapses through inflation.  America is in the final stage of monetary collapse.  So who is buying our debt?  The Federal Reserve is buying the debt.

Federal Reserve Purchasing Over 60% of 2011’s Fiscal Deficit

The other day, in my post “The Lull Before the Storm ”, I mentioned that for fiscal year 2011, the Federal Reserve would be purchasing over 60% of the Federal government deficit.

In other words, the Fed would be dancing the Monetization Waltz, just like Latin American countries used to back in the 1970’s: Proof positive that America is indeed a banana republic—only with nukes.

A lot of people didn’t believe me—or wanted me to check my figures. Or wanted to know if I was having an acid flashback from those aformentioned 1970’s. A lot of people couldn’t believe it.

Mark Twain said it best: There are lies, damned lies, and statistics.

Pay attention folks. We are bearing witness to the final days of the welfare-warfare empire. While the dollar remains a petro-currency tied to the price of oil, when oil starts to substantially trade in non-dollar currencies, we are officially toast because once the dollar loses it's world reserve currency status, thing will get very ugly very quickly.