Archive for July, 2013

Oil and Gas energy markets are being revolutionised by a boom in shale oil and gas production in many regions of the world, most notebly the USA.

Forecast to become the leading exporter of oil by as early as 2020 by the IEA (International Energy Agency), many other countries such as the UK and China, to name a few, are exploring their potential reserves of shale in order to provide for their energy hungry populations. Read a couple of articles here for further details

This raises many serious considerations for the medium term state of geo-politics and particularly the power/revenues of middle eastern states and their cartel OPEC, although the longer term picture may see things return to the previous status-quo of heavy US/European dependence on Arab oil.

Saudi Prince Talal has just spoken out about the impact to his native economy, showing alarm bells may start to ring in the gulf state.

Here is the pinch of salt….watch the first 14 minutes of this RT piece discussing the realities of shale, in brief;

– the growth of the US is more geared towards prices at around $20-$30 per barrel of oil, as opposed to the region of $50-$80 that shale may cost
– the per barrel a day return of shale wells, is a fraction of the crude recovery at current levels with substantially more drilling and capital investment required
– it raises considerable environmental questions…but as long as it boosts GDP, whoes counting the cost?

http://rt.com/shows/capital-account/outlook-energy-oil-gas/

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Another critic of the Islamic Finance industry Timur Kuran, was interviewd in the Financial Times recently. Please read the article here

An extract of this piece highlights the core issue;

” Islamic banking, in its current form, will go down in history as a mighty deceit  based on an operational principle that is simply unfeasible. Islamic banks give  and take interest as a matter of course, though under the guise of commissions,  fees, penalties or profit shares.”

Niall Ferguson presents this truly insightful 6-part documentary series filmed during the onset of the current economic crises, about the history of the globalised world of finance [= Ribanomic System] and how it came to dominate our  everyday lives.

Particularly interesting are the origins of Bonds, Insurance, the formation of the modern Company, and the Stock Market.

I would also draw attention to the failure of to learn the lessons from economic and world history as a major cause of various crises, and the importance of behavioral factors in the workings of the Market.

The first episode can be found here, enjoy all six.

 

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The choice is clear

Consumerism. Offer people the choice, they bid up the price for what is on offer, creating a lucrative market, enticing others to participate, increasing revenues. Ensure the availability to the masses, open access to all markets, keep the supply in line, increase demand; higher price tag, greater sales

“No wonder some Muslims feel so at home in Harrods..”

“a steel and concrete metropolis built on the proceeds of enormous oil wealth that showcases their national pride…”

ZamZam Towers

Mecca as it once was…..

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..and how it could potentially be ….

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Note: this image is simply one of a number of proposals commissioned, the current extension work is not shown in this image. Those interested in another future extension design for the Haram should watch this

Placing these proposals into a broader economic context, Saudi Arabia is one of a number of emerging market nations, with forecast GDP growth in the region of 5-6%, the investment in the mega construction projects such as this is one way of keeping this growth on an upward trend, and therefore is of lesser benefit to the muslim ummah, and perhaps more in favour of those at who have vested interests in the Saudi state. Thus, this demonstrates the way in which the underlying motives behind this rapid expansion are little to do with practical needs, and are wholly (holy) economic (read, keeping apace with the global ribanomic race)  in nature.

The following documentary provides an excellent media resource to help understand the workings of the monetary system, particularly from a UK perspective;

‘97% Owned’

We must not commit the mistake of believing that the truth about the way this monetary system works is only known to a select few people. It is not a secretive conspiracy, it is actually knowledge that is in the public domain, which any understanding economist would probably be happy to acknowledge.

Some readers may well have read these famous quotes before, however if you have not, then it is always worthwhile considering the views that those from the past and present, in very high offices, have held;

“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”

– Adam Smith

“At the end fiat money returns to its inner value—zero.”

– Voltaire

“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”

– Napoleon

“If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.”

– Thomas Jefferson

“The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy.”

– Abraham Lincoln

“Give me control of a nation’s money and I care not who makes the laws.”

– Amschel Rothschild

“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. No longer a government by free opinion, no longer a government by conviction and vote of majority, but a government by the opinion and duress of a small group of dominant men.”

– President Woodrow Wilson (regretting signing into law the Federal Reserve Act)

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before morning.”

– Henry Ford

“By this means (fractional reserve banking) government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.”

– John Maynard Keynes, The Economic Consequences of the Peace (1920)

“The modern banking process manufactures currency out of nothing. The process is perhaps the most astounding piece of slight hand that was ever invented…If you want to be slaves of the bankers, and pay the cost of your own slavery, then let the banks create currency”.

– Lord Josiah Stemp, Former Director of the Bank of England (1937)

“If the governments devalue the currency in order to betray all creditors, you politely call this procedure “inflation.”

– George Bernard Shaw

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation […] Deficit spending is simply a scheme for the “hidden” confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.”

– Alan Greenspan, Gold and Economic Freedom (1968)

“..Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.

Of course, the U.S. government is not going to print money and distribute it willy-nilly….”

– Ben Bananke, 2002 (currently he is creating $85bn in new money each month)

“When banks extend loans to their customers, they create money by crediting their customers’ accounts. The usual role of a central bank is to limit this rate of money creation, so that an excessive expansion of money spending does not lead to inflation. But a damaged banking system means that today banks aren’t creating enough money. We have to do it for them..”

– Mervyn King, 2012

” Much as they might like to think they are in charge, it isn’t really the central bank in a country that creates the money – it is the commercial banks. Every time they expand their lending they increase the supply of money in the economy. And every time they contract lending they reduce it..”

Merryn Somerset Webb, editor-in-chief of Money Week, The Financial Times, August 24, 2012

“The banking system can thus create credit and create spending power – a reality not well captured by many apparently common sense descriptions of the functions which banks perform.  Banks it is often said take deposits from savers (for instance households) and lend it to borrowers (for instance businesses) with the quality of this credit allocation process a key driver of allocative efficiency within the economy.  But in fact they don’t just allocate pre-existing savings, collectively they create both credit and the deposit money which appears to finance that credit.”

Adair Turner, Chairman of the former FSA

Unfortunately, this list of quotes could go on and on, you may well read/hear similar quotes first hand, keep you ears peeled..

For reference, here is a diagram of the money creation process

This documentary gives a good account of the workings and the history behind the US Federal Reserve, particularly how it was set up. It is interesting to note the people who were involved and to consider the legacy of their own banking empires which are well known institutions of today:

 

 

This video from Zeigeists’ Peter Joseph, gives an good account of the theory behind the practice of this system as well as the wider issues it creates in soceity: