Monday, March 9, 2020

Russia moves for N.A. production and banking death blow while Kenney's agenda disintegrates over-night

The fuckwad UCP's social license and benefit of the doubt to do as they please to implement the Kenney agenda just expired. Kenney it would appear is out of time to get the rich off the hook and I suspect the next week is going to be an incoherent mess of announcements as he bides time figuring out what to do regarding the reinvigorated price war.

The Kenney propaganda machine is slow to adjust, a weakness of such a rigid and corrupt regime. As oil prices collapsed Sunday night Kenney was tweeting promotional pictures of himself and the young (and ironically, indoctrinating), probably now futureless, "Student Petroleum Society".
Congrats kiddos!

Six years ago when the Saudi's initiated their price war I wrote a post describing where I saw it going. In it I predicted that so long as the Saudis believed their plan was working oil would sit around a $60 price point. This prediction has turned out with OPEC+ in the last 6 years maintaining production levels to keep the price roughly around $60. I also predicted that as a result of sunk costs and mounting debt North American production would have no choice but to turn on the taps and levy expensive research.

What most analysts got wrong at the time (and still get wrong) is that while the war is taking place in the oil industry the real target was the U.S. banking sector. I've long been tracking the demise of the U.S. dollar and I've long believed Saudi Arabia has been slowly moving out of the shadow of the U.S. empire and into the shadow of the new rising economic alliance between Russia and China. An alliance which has routinely called for the USD to be replaced as the world reserve currency.

In recent years calls to drop the dollar have reached the main stream, with even Mark Carney calling last year for it to be replaced with an electronic blockchain currency. Shortly afterwards the Bank of Canada announced it was "exploring" a digital currency that would replace cash. They updated Canadians a few weeks ago announcing they were now moving to "lay the groundwork" for such a currency.
The Bank of Canada doesn’t see a compelling case for introducing a digital currency at the present time, but is getting ready to move quickly, should the need for one become more evident, Deputy Governor Tim Lane said. 
While Canadians are well-served by the present payment system, the central bank has begun to look at potential features and requirements of a digital currency, Lane said, according to the text of remarks to be delivered Tuesday in Montreal. The central bank is now actively developing a prototype digital currency, according to a background document. 
“We need to move forward to work out what a potential CBDC might look like and how it could be managed, if the decision were ever taken to issue one.” Lane said regarding preparations for a potential central bank digital currency in Canada. 
Central banks around the world are trying to get to grips with emerging payment technologies. Private-sector initiatives such as Facebook Inc.’s Libra are adding urgency to the debate over how digital currencies should be handled. 
The Bank for International Settlements and the International Monetary Fund have called for central banks to at least study the possibility of as private sector firms experiment with competing units of exchange.
If you're not aware, the BIS is basically the central bank of central banks, and is effectively the command and control system for the infinite growth ponzi-conomy. Of course the IMF need no explanation.

The article continues...
The Bank sees two main scenarios where the central bank could see the need to issue its own digital currency: firstly, if the use of cash is restricted or eliminated, and second, if private cryptocurrencies were to make serious inroads.
The second reason, is being used to justify the first.

I can assure you, as a software engineer and given the long documented history of slow moves away from the US dollar, if the Bank of Canada is actively putting man hours into developing this "alternative currency" then they intend to implement it. This is thousands of man hours were talking. This is being coordinated with the BIS and IMF who coordinate with Russia, Saudi Arabia, and China. All of their central banks operate under the BIS system, too.

The last six years of ~$60 WTI price has acted like a slow drain on the financials of North American oil companies, but it's also been a drain on the banks. There is a critical piece of information missing from western analysis of the recent Russia/OPEC spat. All of the western focus is on Saudi's response to Russia, no focus is being put however on why Russia split from the OPEC Pact in the first place: to target North American production. Thankfully Zero Hedge caught it.

Putin Dumps MBS to Start a War on America’s Shale Oil Industry
But the OPEC+ deal also aided America’s shale industry and Russia was increasingly angry with the Trump administration’s willingness to employ energy as a political and economic tool. It was especially irked by the U.S.’s use of sanctions to prevent the completion of a pipeline linking Siberia’s gas fields with Germany, known as Nord Stream 2. The White House has also targeted the Venezuelan business of Russia’s state-oil producer Rosneft.“The Kremlin has decided to sacrifice OPEC+ to stop U.S. shale producers and punish the U.S. for messing with Nord Stream 2,” said Alexander Dynkin, president of the Institute of World Economy and International Relations in Moscow, a state-run think tank. “Of course, to upset Saudi Arabia could be a risky thing, but this is Russia’s strategy at the moment – flexible geometry of interests.”
OPEC's response to drop prices pretty well simply obliges the Russian plan. This all comes as the liquidity crisis in the US banking sector has continued to worsen, making this - in combination with the economic effects of COVID-19 - a perfect opportunity to strike the death blow to US finance and production. And by extension.. Alberta's too.

Kenney is not prepared what-so-ever for these events, the UCP said just a few days ago they will be announcing "strategic investments" this month.

I believe these "strategic investments" was part of Kenney's agenda to transfer the remaining risk in the province to taxpayers. This is going to be a lot harder of a sell to the population of Alberta now, as will maintaining the war room, or the army of propagandists. Effectively Kenney's entire edifice built on the propaganda of a province under attack will now disintegrate as Albertans begin to realize what a real "attack" on our oil industry looks like, and how ineffective Kenney's fake "war" really is against such an attack.

Think Russia will listen?

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for CenturyLink

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.


  1. Is this how the USD "reserve currency" is toppled, Richard? The American economy depends on the American dollar as the world's reserve currency. If the country suddenly had to borrow and repay in a non-USD currency how would it manipulate debt to keep it manageable?

    1. Really hard to determine, but I and the folks I follow I trust with this type of information (and those that have been accurate regarding predictions around it) seem to think so. Notably Jesse Columbo of TheBubbleBubble, and Brandon Smith of alt-market.

      The ducks have never been lined up in a row as nicely for the event to take place as they are now I'd be genuinely surprised if the central banks didn't use this opportunity to move away from the USD especially as the Fed initiates new rounds of QE and drops rates to 0 right off the bat. USD has nowhere left to go.

    2. Sorry in answer to your second question, they don't. It'll be hyperinflation or default for the US.

  2. Anonymous30/3/20 12:45

    "Non-partisan trends and commentary for critical thinkers."