The economy is in slippery shape. Mostly down, with a few ups here and there. Most of the ups are in prices for goods and commodities. Another up is unemployment. Downs include Christmas sales, home and car prices.
Oil has its ups and downs too. Remember where gas pump prices were a few months ago? They are down again, but may head up again. The connection between oil and an economy that depends on it tells us a bit about our economic future.
So what will the future bring? Year-end (or year-beginning - depending on when you read this article) is a good time to make predictions about America’s and the world’s future. However, predictions are like opinions - which are like noses – everybody has one.
For example, there’s a “prominent” Russian analyst, Professor Igor Panarin, who thinks the United States is going to collapse by 2010. The Wall Street Journal actually printed an article by this ex-KGB hack predicting a breakup of America by July 2010 into five parts that would combine with other world powers. He thinks Alaska will break off from the United States and combine with Russia. Boy, Sarah Palin won’t have to look too far to see Russia if that happens. He thinks Hawaii will join with Japan or China. Midwestern states will join Canada, California will become a part of China, Northeastern States will join the European Commonwealth, and best of all, he thinks Texas will become a part of Mexico.
Texas joining Mexico? This idiot obviously never heard of something called the Alamo, or the eighteen-foot border fence or the Minutemen. The only amazing thing about his prediction is that the Wall Street Journal considered this recycled propaganda attack from the Soviet era credible enough to print. You might expect this type of story from World Weekly News, next to the “Bat Boy” stories, but finding it in a financial newspaper? Gee, Wall Street Journal readership must really be down. What’s next, WSJ - page 6 topless girls?
Russia thinks it’s doing well. It’s bragging about how well it’s doing. Of course, it has a lot of gold and gas and oil reserves. It also has a lot of debt. What is not being said in the hype to return Russia to the stage as a world power is that if the United States ever failed, so would Russia. Russia sells us things. Russia NEEDS to sell us things. Oil prices are down because demand is down. If our economy totally failed, demand would likely all but dry up, which would put a huge damper on Russia’s economy.
The real analysis - it’s all about oil again. Six months ago, oil sold for $147 a barrel. Now it’s under $40 a barrel. Russia spent a lot of money to develop new oil fields – but no one needs or is going to buy the new supply right now. Russia will have a budget deficit this year. By the way, so will Saudi Arabia. So will Iran – according to VOA News, Iran depends on oil for 80% of its foreign income.
Of course, as oil goes down, natural gas prices are looking to increase. Russia has a lot of natural gas too. Russia’s main source of natural gas appears to be Professor Panarin. But other than the Wall Street Journal, I don’t think many other people are buying it.
In fact, it’s Russia that is failing. Yesterday, the ruble fell to an all-time low against the Euro. According to Bloomberg News, Russia devalued its currency for the . 12th time in seven weeks. Between August and November, Russia lost 1 million jobs. Putin has scared away foreign investors with his militaristic talk and attacks on private business in Russia. Russia’s attempt to supplant the Soviet Union as a world power is very expensive. It’s newest submarine launched missile, the Bulava SLBM, failed a test launch right after Russia made a commitment to full scale production – an expensive embarrassment to Russia’s prime minister – and dictator – Vladmir Putin. Putin expects to raise natural gas prices, first, because he can, and second, because he has to do so to finance remilitarization. However, just as with oil, demand will shrink as an adaptation to price increases and a smaller economy. Reagan broke Russia with an arms race. Putin thinks he can break America with a new arms race. I’ll make a prediction – Russia will go broke first. Funny thing about pipelines, they’re remarkably easy to sabotage. That’s why Iraq isn’t producing much oil now.
Russia’s failure is why Putin is investing in chaos. He has followed a strategy of trying to break up nations into factions. He’s done it in Georgia, supporting separatist movements. It’s a KGB strategy – divide and conquer. He’s backing the Palestinians because war in the Middle East boosts oil prices, and right now he needs oil prices up to pay his bills. He’s shutting off gas supplies to Ukraine to try to break it up. And now he’s using his stooge , Panarin, to try to stir up trouble in America. But it will fail of course. Russian’s willingness to use force, in fact, it’s need to use force, will be it’s undoing. Putin is still popular in Russia, but as his economy worsens, so will his popularity. That’s why he’s painting America as a devil and failed experiment – to take attention off his own failures. However, the worst thing that could happen for Russia is for Putin to succeed in bringing back the Soviet Union. The USSR failed once – it would fail again – but do a lot of damage on the way down.
So, Professor Panarin, here’s my prediction. Putin gets a lot of press in 2009. By 2014, he’ll be the subject of a “whatever happened to” documentary. The world has changed. Try as he might, Putin won’t be able to change it back. The world is too interconnected. Russian soldiers in South Ossetia were eating chicken imported from America.
So keep an eye on gas pump prices. As oil falls, so does Putin.