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  1. #1
    Council Member slapout9's Avatar
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    On another thread I was talking to Fab Max about his comments on economic warfare, which I happen to think has a lot of merit to it. So let the discussion begin!



    wiki examples of economic warfare!
    http://en.wikipedia.org/wiki/Economic_warfare

    Link to article on how Iran has declared economic warfare on the Us in response to US sanctions.....also suggest China could side with them

    http://www.worldnetdaily.com/news/ar...TICLE_ID=52977
    Last edited by Jedburgh; 11-10-2007 at 11:32 AM.

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    Council Member Brian Hanley's Avatar
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    Seems to me the best economic warfare against us is using ourselves as the instrumentality. Which is, I think a nice to have as far as the Kremlin boyz are thinking. I don't think there's much Iran can do to us. We have been putting ourselves in debt for these wars. That's my largest concern about them. World sliding Euro-ward.

    The idea China is going to side with Iran is not credible to me on its face. China is in a deadly embrace with us economically. Trade ties and they hold a huge amount of our debt. There isn't room enough in the world for that amount of debt to be dumped. That's one of the benefits of being the biggest game in town with everyone else bit players.

    http://www.federalbudget.com/
    http://www.marktaw.com/culture_and_m...ionalDebt.html

    That combined with demographic trends in the USA is worrisome because boomers aren't going to be saving too much longer.
    http://www.census.gov/prod/2001pubs/c2kbr01-12.pdf Scroll down to the age demographics and then slide the graph forward 7 years to the present.

    But, overall trends in the world have been looking up for a long time with very few blips.
    http://www.gapminder.org/
    Last edited by Brian Hanley; 11-10-2007 at 02:40 AM.

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    Originally posted by Brian Hanley:
    The idea China is going to side with Iran is not credible to me on its face. China is in a deadly embrace with us economically. Trade ties and they hold a huge amount of our debt. There isn't room enough in the world for that amount of debt to be dumped. That's one of the benefits of being the biggest game in town with everyone else bit players.
    The PRC has their own sets of issues that make any idea of a mass dump of their accumulated economic assets rather unlikely. There's been sustained coverage by the WSJ over a number of these issues, and China has some rather serious issues that they are trying to manage.

    First off, Iran likes $100 a Bbl. oil. But the PRC has real problems with $100 Bbl. oil - even bigger problems that we & the EU have. China subsidizes fuel, to the point where the WSJ recently noted that per gal. diesel prices in China run about $2.40 a gal., vrs. at least $3.15 a gal. here in the US, and much higher in the EU. And it appears they subsidize all types of fuel. Plus they have to buy most of their oil in dollars, which is why they need that vast (One Trillion+) liquid pool of dollar denominated assets.

    Now, Iran has made noises about only accepting the Euro for oil, but this is even less helpful not just for the EU (raises their currency value even higher, which is literally the last thing they want right now - makes their exports even more expensive), but also for China, that just kills them, because it's a triple hit - (a) Buy more imported oil, (b) At increased subsidy costs for each liter sold, and (c) they have to spend cheap dollars to buy more expensive Euros to pay for each Bbl. of oil.

    And there's a real wild card out there that only the financial types are seemingly paying attention to - Most people don't realize that over the past several years, China's domestic stock market (which outsiders cannot invest in) has had more IPO (Initial Public Offering) activity than anywhere else in the world, including in the US. The Chinese stock market currently has an uncanny resemblance to the 1999-2000 Internet/IPO market which melted down into what became known as the "Dot.Com Bust". If their internal stock market blows up, it's going to be interesting times indeed.

    Hard to believe, but that trillion dollars piggy bank can shrink pretty rapidly.

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    Well, I bought gold some time ago, that's all I know. The housing slump I think took everyone by surprise and the whole world has known about us running in the red for a long time but Iran has huge energy contracts with China. Israel is the wild card from China's point of view and with the falling DOW, they have to be extremely worried on both counts. The world's economy can tolerate an attack on Iran better than it can a nuclear armed Iran IMO. I think even Boscoe (FM) would agree with that.

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    Tonight's evening news had an interesting story on how Canadians are sweeping down into Washington to take advantage of our sliding dollar and the State Patrol is expecting huge traffic issues due to the increases from them during the upcoming Christmas Shopping...(or should I say "Holiday Shopping?")...

    I must say these are interesting times to be around. I'm not a FOREX or arbitrage guy but I think China has so much tied up in our dollar that any moves against it would cause them devasting losses. It appears to be a bit of a catch-22 since they hold so much of our debt. If we do get into it with them I am more concerned with their Information Warfare capabilities in the cyber/SCADA realms. That is my cents worth....
    Last edited by bismark17; 11-10-2007 at 03:56 AM. Reason: Grammar.....

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    Quote Originally Posted by bismark17 View Post
    Tonight's evening news had an interesting story on how Canadians are sweeping down into Washington to take advantage of our sliding dollar and the State Patrol is expecting huge traffic issues due to the increases from them during the upcoming Christmas Shopping...(or should I say "Holiday Shopping?")...

    I must say these are interesting times to be around. I'm not a FOREX or arbitrage guy but I think China has so much tied up in our dollar that any moves against it would cause them devasting losses. It appears to be a bit of a catch-22 since they hold so much of our debt. If we do get into it with them I am more concerned with their Information Warfare capabilities in the cyber/SCADA realms. That is my cents worth....
    Agreed bismark. China in many ways is so dependent upon US economic growth and stability that disrupting the US economy is like cutting off one (at least) of their own limbs. Pretty soon, US pressure on China to allow the Yuan to reach its true value may be quite unnecessary. China has no interest in, and a lot to lose from, continued US dollar devaluation.

    For that matter Iran can have little impact through straight economic means upon the US. Only blocking the flow of oil (direct military means) could seriously affect the US economy. And Iran has no economic interest (to say the least) in doing that.

    Them Canajuns, though, I tell ya', I'd be keepin' a close eye on them. They think they can just blend in and not be spotted while they implement their nefarious schemes of economic subversion of the US...well, I say take out all the Molson and Labatt breweries, and proceed to drown them in Miller and Bud - I drink Guinness by the way, so I should still be okay.
    Last edited by Norfolk; 11-10-2007 at 04:12 AM.

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    Quote Originally Posted by goesh View Post
    Well, I bought gold some time ago, that's all I know. The housing slump I think took everyone by surprise and the whole world has known about us running in the red for a long time but Iran has huge energy contracts with China. Israel is the wild card from China's point of view and with the falling DOW, they have to be extremely worried on both counts. The world's economy can tolerate an attack on Iran better than it can a nuclear armed Iran IMO. I think even Boscoe (FM) would agree with that.


    The housing slump and the inbalanced trade due to easy access to credit by US consumers (in which money was created to stimulate consumption and the housing industry rather than creating and/or stimulating industry) was predicted by many respected financial players years ago (Warren Buffet warned about the housing bubble, dollar decline and trade deficit as early as 2005 link.



    As far as Iran, neither China, Russia ... or Europe for that matter wants the US to have hegenomy over the top 3 oil producing states: Saudi Arabia, Iraq and Iran if they are to go along with US position on Iran. Strategically, China and Russia want the US to guarantee that they have a stake in the production of oil in both Iraq and Iran. China would seem to automatically get action in all these countries as leverage to US influence (and China has to be perceived by these states to be able to stand up against any US interests that runs counter to Iran, Iraq or Suadi interests) so China doesn't really feel the need to submit to US pressure.


    But neither China, Russia, the EU or the US would want any of these major oil producing states to have too much power .... and it's not in the interest of any of these countries to have a nuclear armed oil producing state (Russia's only source of power now is oil and it's nuclear arsenal and countries are already nervous about that.)
    Last edited by Firestaller; 11-11-2007 at 11:06 PM.

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    Council Member bourbon's Avatar
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    Political crack opens at rare OPEC meeting, By Jad Mouawad. International Herald Tribune, November 18, 2007.

    While the Saudis wanted to reassure the world that OPEC is a reliable oil supplier, the leaders of Venezuela and Iran, who have traditionally been more hawkish members of the oil cartel, sought to score political points, saying prices were not too high and criticizing the decline of the dollar.

    The polished meeting was a study in contrast that underscored OPEC's schizophrenic nature. It is too early to say whether it signaled a rift in the exceptional consensus that has sustained OPEC's success in recent years, or whether it was merely an example of conference theatrics by countries at odds with the American government.

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    Council Member bourbon's Avatar
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    Seven Questions: The Price of Fear, Foreign Policy Online, November 2007

    Something funny has happened to the price of oil: It no longer reflects reality. The reason, according to Fadel Gheit, one of Wall Street's top energy analysts, is that “financial players have seized control of the oil markets”. Find out how they did it in this week’s Seven Questions.
    Imho, what he is saying is pretty shocking and important.
    Bold emphasis is mine.
    FP: So what about derivatives trading—

    FG: That’s exactly what I’m focusing on. I truly believe that major investment banks and a large number of very high-risk-taking financial players have seized control of the oil markets, especially in the last six months. During that time, oil prices moved in one direction and market fundamentals really moved sideways or even lowered. Demand has slowed down significantly. We have seen all kinds of indications that we are reaching a breaking point here. We’ve seen what happened to gasoline margins on the West Coast; they’ve dropped to an almost 18-year low. All this is an indication that something is wrong with the system, that supply and demand fundamentals do not justify the current price. But if the current price is based on speculation, there is no limit to how high oil prices can go. Basically, as long as there is somebody willing to bid higher, the price of the commodity will move higher.
    FP: So, in other words, our own fear is driving up the price of oil?

    FG: Well, if you are a commodity trader, you want to do your best to push the commodity price in the direction that you forecast. And obviously, when you have a lot of financial players making bets on much higher oil prices, they would like to see a self-fulfilling prophecy. They want to see oil prices reach the level that they put the bet on. So, they can spread rumors. And if the glass is half empty or half full, they will say it’s empty.

    To my knowledge, there is no oil shortage. Any willing buyers will not have a problem finding oil. Global inventories are over 4 billion barrels. In simple math, that is the equivalent of all the oil produced in the Middle East for six months. So, the fear premium, in my view, is totally exaggerated; it’s not justified by logic or market fundamentals. Again, it’s very difficult to quantify fear. But that is the psychological factor, in my view, that is bringing oil prices to these unprecedented levels. For instance, I don’t believe that Iran is going to cut oil exports, because Iran needs the revenue more than the world needs Iran’s oil. We have to be logical in assessing the risk. And obviously, financial players want to exaggerate the situation so that the risk premium increases and they make more money.
    The concept of "super-empowered" individuals and groups is a little beyond me. But as I am learning more about futures markets and oil speculation, it is becoming increasingly clear to me that there are powerful incentives for instability, that are shared by a myriad of interests.

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    While the West has tended to view war as something normally separate from the rest of life, many of the Rest have tended to view war as the normal state of life, and therefore, war is waged against one's enemies in every aspect of life. That Iran sees fit to wage economic war upon the U.S. simply fits in that regard.

    After all, Iran doesn't have anything that can take on Mickey Mouse at the cultural level - in a rather extended sense something that seems to be one of Iran's chief beefs with the U.S. - so Iran has to make an end-run around Mickey and Minnie and Donald Duck et al and hit the U.S. where it can still try to hurt them most, especially at the strategic level. At said level, the U.S. is vulnerable economically, and the weaknesses most exposed to Iranian attack are the price of petroleum and the value of the dollar.

    That said, the U.S. waged a very effective economic campaign against the U.S.S.R. in the 1980's, and, combined with a comprehensive set of proxy wars, information warfare, cultural warfare, diplomatic pressures, alliances, support of dissidents and subversion, etc., took advantage of the weaknesses within the Soviet system to help to bring about its downfall. And without a single US Battalion having to be sent into battle against the Red Army. This sort of warfare was somewhat more in line with that of ancient Chinese military theory, for example, than with 20th Century Western military theory.

    Nevertheless, US strategists of the 1980's clearly saw that to defeat the Soviets by military means was simply not worth the candle; other means were required, and in the circumstances, worked. At the risk of over-simplification, the US simply spent the USSR into the ground on military technology and procurement, knowing that the US could afford such expense, but the USSR would succumb to its own internal weaknesses in attempting to follow the US.

    Nor is the US an amateur at economic warfare: that is how the US won during the Recent Unpleasantness, albeit in tandem with actual military force. The US Army pillaged, tore up, and burned out the economic heartland of the South in late 1864-early 1865; the US Army fighting in the Lower South deliberately avoided giving battle in most cases, and simply manoeuvered the Confederates out of their positions. Both World Wars involved the economic blockade and attempted strangulation of each others economies by both sides. In World War I, the Germany economy finally collapsed and the population starved; military collapse followed within months. Germany nearly accomplished the same thing with Britain in the spring of 1943.

    Chinese strategic and military thought does not make a modern Western-style distinction between war on the one hand, and the life of society/civilization on the other. The use of military force is theoretically and ideally the final phase of a given war between enemies; prior to that, the war is waged by all other means, including economics. Only when the enemy is sufficiently weak, or is anticipated to become stronger later, is then directly struck with military force. But it is all war, the struggle for survival, growth, and supremacy, and from such perspectives, that's what life is about. A grim, red-in-tooth-and-claw neverending struggle for dominance.

    It is only logical then that (sadly) many business types have long been devotees of Chinese strategic and military thought (amongst others).
    Last edited by Norfolk; 11-10-2007 at 03:22 AM.

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    Default Who brought down the USSR?

    Quote Originally Posted by Norfolk View Post
    That said, the U.S. waged a very effective economic campaign against the U.S.S.R. in the 1980's...
    Alternative view: the Saudi Princes waged one of the great economic wars of the post-WWII era against the USSR for control of the oil industry. They opened their spigots, crashed the price of oil, and bankrupted the USSR.

    We take credit for defeating the USSR just as we often take credit for defeating NAZI Germany. Perhaps neither is fully deserved.

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    Quote Originally Posted by Fabius Maximus View Post
    Alternative view: the Saudi Princes waged one of the great economic wars of the post-WWII era against the USSR for control of the oil industry. They opened their spigots, crashed the price of oil, and bankrupted the USSR.
    I'm not sure the oil price lows of the mid- 1980s had anything to do with such lofty strategic aims. Rather, they were a combination of an increase in supplies and stocks due to high prices following the Iranian Revolution; a slowdown in demand due to these same high prices; and ambitious Gulf development expenditures (and hence pressures for larger OPEC quotas). When the price started to drop, the Saudis eventually tired of being the swing producer, and instead for a while sought to maintain revenues by offsetting price declines with production increases.

    At most the (secondary) strategic aim was to reduce the market share of high-marginal-cost oil producers (with North Sea, older-well North American producers, and new explorations being more vulnerable by this time than the Soviets were).

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    Quote Originally Posted by Fabius Maximus View Post
    Alternative view: the Saudi Princes waged one of the great economic wars of the post-WWII era against the USSR for control of the oil industry. They opened their spigots, crashed the price of oil, and bankrupted the USSR.

    We take credit for defeating the USSR just as we often take credit for defeating NAZI Germany. Perhaps neither is fully deserved.
    As to the role of Saudi oil in bankrupting the USSR, it was contributatory, but insufficient even in tandem with other factors. Additionally, the USSR was the largest producer of petroleum on the planet, and its reserves considerably outweighed those of Saudi. Not only was it quite self-sufficient for its own needs, but it could earn a pretty penny in foreign hard currency with its exports.

    And considering the price of oil after 1973 compared to the price of oil prior to late 1973, even with the Saudis in effect generously subsidizing the West by keeping oil prices artificially low, such prices were still historically high; WWII was fought on $3 a barrel oil. Under no circumstances was the price of oil at any time post-1973 a major problem for the USSR, one way or the other. Even at only 6 times the 1940's price, the Soviets were making out pretty good.

    As far back as the early 1970s, Kissinger had arrived at the conclusion that the Soviet economy would be unable to sustain its military strength much past 1984-5. The Soviet system was cracking internally, and the sheer burden of trying to keep up with US military equipment and R&D spending created unbearable stresses on a system that was dealing with general disillusionment at home, dissent within the populations of its satellites, and its own faltering economy - so badly mismanaged that it had to buy large quanitities of cereals from Western countries for years. The Soviet Union was crumbling under its own weight while its subjects were chipping away at it from within; the US pile-on in the 1980's forced an issue that could otherwise have dragged on for a few more decades had a rather less aggressive policy been pursued.

    I'll grant you partially the comment about the defeat of Germany in WWII; but as to "we", I'm not American, and can assure you that the Commonwealth view of the outcome of WWII that it was won by British Brains, Russian Blood, and American Muscle differs substantially from the more popular US view. But the Commonwealth view is in no doubt that American Muscle was utterly essential to the defeat of Germany. No American muscle = no Nazi defeat.

    Chinese investments (such as in US T-Bills) are being hurt by the devaluation of the US dollar, not only because even interest rate hikes (which are not occurring at the moment) are unlikely to be able to make up for the dollar's loss of value, but also because to convert cheaper US dollars into more expensive currencies entails additional loss. China is stuck holding the bag until the US dollar stabilizes - and the PLA's pay increases and equipment purchases are funded in no small part by hard currency earned from exports to the US.

    In any event, economic warfare has long been a civilized way of taking the fight to the enemy, particularly for nation-states. It is but one of many ways war is waged by the state against its enemies, whether military force is directly applied or not: "Learning from the Stones: A Go Approach to Mastering China's Strategic Concept, Shi," by David Lai.

    http://www.strategicstudiesinstitute....cfm?PubID=378

    This article on Chinese strategic thought is for the most part easily assimilated, and this is assisted by the essential simplicity of Sinic conceptions of strategy. It is not complex, merely subtle and thoroughly comprehensive. Although this article is hardly comprehensive, and is fairly fundamental, taken with the Chinese strategic classics, there is little that subsequent theories of war do much other than add commentary or technology.

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    Default Necessity is the Mother...

    Necessity is the Mother of invention...

    I believe it was 2006 when the Saudi representative to OPEC said that contrary to popular belief, Saudi Arabia had no interest in unstable and steeply rising oil prices. At that time, he Saudi's had promised to increase production by 900k. His reasoning was very simple. If oil prices continued to rise uncontrollably, eventually, it would effect the world economy and crash the supply demand in world wide recession or depression. Thus, destabilizing their own economy, causing unrest and potentially to internal unpleasantness.

    However, this year the Saudi OPEC rep said that they could do no more to increase supply and stabilize the price. Thus, I believe the Saudi's are doing what we are doing and that is waiting to see what the market will do.

    Their other fear is that, if the price hits the "pain threshold" for the US and Europe, we will do what we did in the late 70's and 80's like revamp our automobile manufacturing for improved fuel economy or possibly drive towards the invention of alternative energy. I don't think biofuels is a sustainable or long term answer. I believe the answer will return as solar or other energy sources with the advancement of nano-technology and anti-matter. But, that's for another discussion.

    Suffice it to say, even with emerging economies and China's growth, if the US was able to develop other energy resources or, if oil finds in other nations (like the recent find in Brazil) can come onto the market quickly, the oil surplus that would be created would cause the oil market to crash. Not only is that bad for Saudi Arabia, its bad for Russia whose economy is also 50% reliant on energy exports. It's why they are in a rush to complete a transnational pipeline for gas and oil to China. They want to take advantage of a long term market growth when there is a possibility of stagnation or loss of market in other regions. Also the reason Iran was interested in pipelines with China. Problems with that to follow.
    Kat-Missouri

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    Default Economic Warfare with Iran

    In regards to economic warfare and Iran, I noted here (scroll down and to bottom for additional links on Economic Warfare and Iran), whether Iran survives economically or not is not just linked to their oil and natural gas income, though it plays a major part, both good and bad.

    For instance, Iran is now talking about building eight additional refineries for oil. Right now, they only have one. They are still rationing gasoline, though at a subsidized rate. The problem here is that, however much they are raking in on a bbl of oil, as a net importer of refined oil and gasoline, they are putting out a very large chunk of their income to buy it. It might sound good on paper, but it causes other issues.

    Second, Iran is suffering from record inflation to go along with its "growth" period. Inflation is, in fact outstripping economic growth about 4 to 1. Housing prices have tripled. Food prices have quadrupled. This is in relation to both the incredible inflation of oil and the sanctions which have denied credit to even the basic importers. Some have sought an end run by working through third party nations like Dubai and Germany where they set up what appears to be other national companies. Yet, the price to import these food stuffs has increased along with the necessity to use huge, upfront cash deposits.

    At the same time, Iran has been busy trying to repress their labor movements that are demanding a pay raise after over a decade of the same pay (most are making about $2/day). These people are having to work two or three jobs just to feed their families, buy gasoline and pay for heating, much less housing now that the rates are increasing so drastically. For the last two years, parts of Iran have had to institute heating rations because the nation is so dependent on exporting their energy resources to sustain their economy. Besides oil and natural gas, the third largest export from Iran is Hydro-electricity to Afghanistan and Iraq.

    I posited a theory once that the unrest in Iraq and Afghanistan benefited Iran, not just politically, but economically since it keeps infrastructure from being developed in these nations to offset that export as well as the somewhat limited income from export of manufactured goods.

    This need is created by their Soviet style economic system. More than 70% of all working Iranians are employed in a state run business. appx 50% are in the oil and natural gas industry which is just about the only money making industry out of Iran. Another 30% work in the service industry that is largely controlled by the IRGC, but have limited "money making" capabilities since it simply funnels internal funds from one hand to another. They do control certain textile and other manufacturing plants as well as mineral extraction.

    At this time, neither their manufacturing nor mineral extraction nor even export of some food stuffs (another reason that food prices are high in Iran) is anywhere near being able to produce the amount of revenue necessary to create a diverse economy. Neither are the only 10% of private entrepreneurs in Iran capable of producing much in the way of export. While the Iranian Islamic Revolutionary dream is to create a self sustaining economy (as was once the Soviet model), it is impossible with the existing business and economic structure.

    Their manufacturing and mineral extraction is in bad shape. Earlier this year, one of the showdowns that was happening in the Iranian cabinet was an argument between these two industries and the oil and natural gas industries over revenues produced as well as the amount of money being invested. They were accusing each other of being the cause of the economic problems in Iran. Even with all that energy export revenue, inflation is seriously damaging their capabilities to continue running the nation.

    The mineral and manufacturing industries fought back stating that, if they had the infusion of cash that the oil and gas industry had to improve their infrastructure (including machines, transportation and even roads), they could be in a better place to produce revenue. Ahmadenijad settled that by replacing the mining and manufacturing industry ministers.

    If you are truly familiar with the economic woes experienced by the USSR pre-collapse, you'd know that they suffered similar problems. Like the USSR, Iran has many price controls in place which means that these industries cannot even make money internally to help improve the situation.

    Agriculture is equally damaged from lack of investment and expansion along with orders to export most of the food stuffs that created the net import of grains and other food staples like vegetables and fruit.

    All of Iran's economic growth is in oil and natural gas. It is unsustainable. Unless, of course, they can get nuclear weapons and improve their regional hegemony, holding other regional suppliers "hostage" and forging alliances with countries like Venezuela, keeping oil supplies down and the price high by artificial reductions or limits. (Something that would be of some benefit to Russia as well since their economy is so heavily invested in the energy sector).

    Other problems that Iran has is that the threats of potential strikes by the US have forced them to spend more on defense, though not much, it is still damaging. In fact, besides the probability of nuclear proliferation by Korea to Syria that precipitated a recent strike against Syria, the fact that Israel was able to easily circumvent Syria's Russian bought air defense system has caused Iran to have to invest in upgrades, further stressing their budget, along with other military equipment and preparation.

    This juggling of funds and budgets is also apparent in their continuing inability to pay full monthly fees for the building of the Bushehr nuclear facility. Which has caused Russia to state they will continue to build the facility, but there will obviously be a slow down. In the meantime, Iran is putting a lot of money into buying and making centrifuges and other equipment for creating nuclear technology.

    the long and short of it is, all of the money is staying at the top end, within major government structures, one major industry and being spent on imports of equipment and basic necessities outside the country. That is what is fueling inflation and keeping government run entities from increasing pay to workers. Money is not filtering down in the economy to allow for improved internal economic growth. Of course, corruption and Ahmadenijad's insistence on putting old IRGC cronies in position of power over these industries is creating a whole new economic class paradigm in Iran.

    It's a point that we should be exploiting in our information warfare. Particularly, as the previous high separation of the economic classes was part of the original causes for the Islamic Revolution. The Islamists promised at that time to institute a more equitable "Islamic" system that had its roots in socialist economics learned in the universities of France and other European nations. the reason, of course, that the leftward, labor movements of Iran originally supported the revolution.
    Last edited by kehenry1; 11-10-2007 at 12:03 PM. Reason: left out last paragraph
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    Default economic warfare

    It's a hot topic by email among some working with military theory, and I've exchanged many dozen notes on the subject. I think this is the very edge of new thinking about war/conflict. But it seems to have a small audience.

    As I said on my blognote yesterday: A brief note on the US Dollar. Is this like August 1914?
    "In an age of nukes & 4GW, conventional war between major powers is unlikely — perhaps obsolete. But political stresses remain a fact of life and must be expressed. Perhaps money has replaced bullets as the new form of combat. WWII was as much a war between competing economies as between armies. Modern financial systems allow us to eliminate bombs as the intermediate step, for pure economic warfare."

    The first and perhaps most important work in this area was Unrestricted Warfare (1999), written by two PLA Air Force Colonels. They say, in effect, the first war of the new era was the attack by speculators on the SE Asian currencies. This damaged their economies for several years; many of their people were eating bark. If these hedge funds and other traders were based in, for example, Singapore they would have been politely invited to stop. Now. If they declined, the next measures taken would have been less pleasant.

    But they were based in New York and London, attacking behind the shield of western military power. Notice has been taken.

    Tom Clancey's Debt of Honor describes commercial aircraft being flown as weapons into buildings. Fiction then, fact now. Will the earlier events in that book -- a geopolitical attack on US stocks and the US dollar -- also become fact?

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    The economy of the world has moved from soley industrial to information based. I've been thinking that fourth generation warfare is about information and not insurgency. Cyber infrastructures and economics are intrinsically linked. Need proof look up the Chicago Board of Trade Outage and some the costs that may have initiated. By the way that was a Y2K outage for those who didn't know. I'm no economic scholar but I remember the Dot Bomb and that was based on what? An idea? Well funded companies? I've read articles in the same paper saying dollar diving bad, and dollar diving good. The United States doesn't have the vast manufacturing that would seem to be tied to a diving dollar and benefitting. One interesting tidbit is that this devaluation will make the United States more competitive in closed economies and protectionist environments. But, who gets rich with that?

    At to Tom Clancy and his discussion of an attack on the dollar isnt' that based on stuff that happened in the 70's repackaged?
    Sam Liles
    Selil Blog
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    The scholarship of teaching and learning results in equal hatred from latte leftists and cappuccino conservatives.
    All opinions are mine and may or may not reflect those of my employer depending on the chance it might affect funding, politics, or the setting of the sun. As such these are my opinions you can get your own.

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    Default Much of the 21st century may be events foreshadowed in the 1970's

    Quote Originally Posted by selil View Post
    At to Tom Clancy and his discussion of an attack on the dollar isnt' that based on stuff that happened in the 70's repackaged?
    Great point! The 1970's saw the forequakes of global peak oil production; the real thing will likely occur sometime in the next 20 years (today, perhaps). The 1970's saw the first great US dollar crisis, foreshadowing the real thing which lies in our future (today, perhaps).

    The 1970's were a difficult decade for America. And the next few years...

    The geopolitical implications of this could be immense. The great emerging powers will certainly take advantage of any weaknesses in America's power.

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    Quote Originally Posted by Fabius Maximus View Post
    Great point! The 1970's saw the forequakes of global peak oil production; the real thing will likely occur sometime in the next 20 years (today, perhaps). The 1970's saw the first great US dollar crisis, foreshadowing the real thing which lies in our future (today, perhaps).

    The 1970's were a difficult decade for America. And the next few years...

    The geopolitical implications of this could be immense. The great emerging powers will certainly take advantage of any weaknesses in America's power.
    Peak oil is a doomsayer's tool. As the price of oil increases and settles at a higher level, the profitability of extracting oil from non-low hanging fruit reservoirs will arrive. While the absolute amount of oil will decrease, the relative amount will continue to increase. As the price goes higher and higher, it will also provide the profit incentive for more serious research on alternatives (and better alternatives than the fallacy of ethanol, which has served to drive up food prices and beer prices ).

    Also, let us not forget that some of the pain of the 70s was due to poor fiscal policy choices in the 60s coupled with the fallacy of price controls and a weak Fed response. In some sense, years of inflationary policy along with supply shocks created a perfect storm, and ship captains bungled the response. While there may be some parallels to a "perfect storm" scenario now, you have a Fed that is much wiser as well as much more credible, so I'd be careful in drawing too much off of the experiences in the 70s. Besides, you can look at the rapid rise of the price of oil in the past few years, we have already allowed an oil "shock" to transmit through the economy without seeing the same adverse effects of the 70s.
    Last edited by Shek; 11-10-2007 at 03:55 PM.

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    Default Peak Oil and the 1970's

    Quote Originally Posted by Shek View Post
    Peak oil is a doomsayer's tool. ... Also, let us not forget that some of the pain of the 70s was due to poor fiscal policy choices in the 60s coupled with the fallacy of price controls and a weak Fed response.
    I am not aware of any major energy-related institution that says global oil production will not peak. It's like death, the question is when. Due to lack of knowledge about reserves in the Middle East and Former Soviet Union, there is a wide range of estimates -- from now thru 30+ years, clustering in the 15 year range. Since a crash adaptation program will take roughly 20 years, we're already on the clock. The major agencies -- us DOE and the International Energy Agency -- have been clear on this challenge, esp this year. I recommend reading the IEA's World Energy Outlook 2007 (here's the free Executive Summary)

    Which is why the 1970's period tells us so much. As Shek notes, some nations adopted wise policies and did quite well -- global growth was strong for the full decade -- while some (e.g., the US) acted foolishly and suffered.

    For more on this see my blognotes:
    What's needed to adapt to Peak Oil - part I
    Peak Oil - part II

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