Yves here. This post describes some of the too-obvious signs that the notorious Russian oil price cap was not terribly well thought out. I have to confess I had forgotten that I had learned back in 2008, during the debate over the big oil price runup in the first half of that year, that Saudi oil price sales were based not on spot but an average of specified futures prices to impede manipulation. It appears similar mechanisms are widely used now. The article below discusses how pricing is not done at a fixed amount but in reference to floating prices, so participants in a transaction can’t be certain if the price was below the present $60 cap or not.
In other words, the idea of a predetermined price level was goofy, but apparently Janet Yellen couldn’t be bothered to understand the market she planned to meddle with.…
Economists will be economists. Assuming a can opener and all that.
Naked Capitalism
The Russian Oil Price Cap Isn’t as Simple as It Seems
Yves Smith
Gold Goats 'N Guns
EU’s Oil Price Cap Creates a Price Cap… on Stupidity
Tom Luongo
23 comments:
So many people are calling b.s. on this price cap that I feel like the correct position is to be contrarian and expect it to succeed, perhaps spectacularly.
It'll succeed spectacularly. Just not in the way the geniuses in charge think it will succeed.
We'll see.
It will maintain the current price of Russian oil to its customers - and increase the price for everyone else. In other words, the situation already in place thanks to sanctions.
This is a win for domestic oil producers.
In other news, what's going on with the price of Tesla stock?
EIA saying US domestic production supposed to go to all time highs over 13M bpd in 2023..,
And if someone over there whacks Putin this whole thing could flip pretty quickly..,
If you look at OPEC+ as an organized crime family (which is more or less what it is) the move right now by the others would be to whack Putin who is way out of line…
The other thing which may be happening is NATO is going to trade Taiwan (well a hollowed out Shell of Taiwan, the land and the national treasure) to China in exchange for taking down Russia…
TSMC this week big event attended by Biden moving operations to Arizona.. US might be shutting down the Taiwan soft power initiative…
You know you guys keep saying “Russia has its en currency!” Blah blah blah but nobody else says that… not even the Russians.,,
Even Putin is saying “the 60 DOLLAR cap won’t hold”
Get it? The 60 DOLLAR cap …
These OPEC+ criminals are all piece of shit USD zombie nations.. they measure EVERYTHING they do in USD terms.. E V E R Y T H I N G…,
“ This is a win for domestic oil producers.”
If Texas seceded they would join OPEC+…
TSMC this week big event attended by Biden moving operations to Arizona.. US might be shutting down the Taiwan soft power initiative…
That's what I thought too, but then I read this:
Bloomberg points out that the US is heavily reliant on Taiwan’s chips, and that even the new TSMC factory being built in Phoenix will not change that reality:
TSMC’s Arizona fabs will produce 600,000 wafers annually. That sounds impressive, but it’s really not. The Taiwanese company topped 14.2 million last year and is on track to churn out 15.4 million 12-inch wafers loaded with chips this year. If it keeps the same average capacity growth of 8.1% it achieved over the past five years, Arizona will account for just 2.85% of its 21 million annual global output in 2026.
That’s a drop in the bucket, not a game changer.
The above quote is from this Bloomberg article:
Sorry, USA, $40 Billion Won’t Buy Chip Independence
Gotta start somewhere…
INTC, MU, AAPL, TXN others all shifting capital to CONUS….
Going to take some years..
lol this is the next headline under the oil article at Naked Capitalism:
“Get your money out of US banks immediately”
Says there is going to be a total bank run in the US next year…,
👌
INTC, MU, AAPL, TXN others all shifting capital to CONUS….
No, this doesn't scale. That one chip plant will exhaust all your human capital.
Semiconductor Industry Needs More Than CHIPS Act to Succeed
While the CHIPS Act is a significant step in strengthening supply chain security, U.S. capacity to manufacture chips faces an unexpected barrier: human capital. For high-tech industries, a small yet critical core of high-skilled workers is essential. However, decades of declining investment in science, technology, engineering and math education have produced a critical shortage of qualified workers.
In 2015, White House economic projections estimated a need for one million more STEM professionals in the United States for the country to maintain its preeminence in science and technology. The nation missed this mark, and the demand for STEM professionals has only increased.
The rest of your human capital is doing grievance studies. Your next generation is going to be even dumber. Drag queens in elementary schools... 147 different genders... "intersectionality"...
Your culture wars are heating up.
40,000 homes in North Carolina left without power after electrical substations are shot up: Police probe links to residents protesting drag show which was cut short when lights went out
Why train high skill workers when you can poach them from abroad?
Yo, The Chinese were let in to displace the natives as part of the soft power initiatives…
I went thru this and witnessed it first hand in the Science academe…
I used to travel to Taiwan transferring them weapon systems back in the day when I worked for DoD..
Once the USD capital is cutoff theyre done,,,
Or they are going to have to fend successfully for themselves … maybe they can by now,,,
All we have to do is cut off the student visas…
Ahmad what you didn’t get as a technician is a proper appreciation of the time domain…
And with China rapidly losing access to Taiwanese-manufactured chips because of US export controls and their effect on TSMC, it is entirely possible that the CPC will calculate that destroying TSMC in the short term is a net benefit for China, giving it a comparative advantage.
Scorched earth works for China too. That would set everyone back and give China time to catch up.
I don’t think they will do that..
Chiang must have occupied the main capital district of China before he retreated to Formosa.,
Taiwan has all the national treasure of China,, ancient Ming dynasty Han dynasty ceramics, jade, military armor, paintings, all that type of stuff… all in Taiwan in the national museum..
Chiang must have cleaned it all out and took it with him… he took the whole historic identity of China,,,,
UK gave up Hong Kong..,
If US thinks it opportune to give up on the Taiwan soft power thing (maybe exchange for Russia?) then they will scuttle the western assets and leave the China vestiges to China who it rightfully belongs to.. Ming vases, cloisonné , chopsticks, bamboo scaffolding, uneducated rabble, etc..
The capital flows have definitely tipped back towards CONUS for right now.,,
Trump represents a populist constituency that is done with the post WW2 soft power initiatives and want to reset it finally back to post WW2 training wheels off the USD zombie nations via bilateral arrangements… so maybe that is why the entrenched post WW2 tptb are resisting him so vehemently..
Seems inevitable that US will have to move on from the post WW2 arrangements… but the I trenched tptb are trying to hang on…
In Cartesian terms the X-axis is arrow of time pointing out to the right it just keeps going.. stuff takes time… as a technician you seem to live in the here and now which is probably appropriate..
https://www.pewresearch.org/science/2021/04/01/stem-jobs-see-uneven-progress-in-increasing-gender-racial-and-ethnic-diversity/
“ science, technology, engineering and math (STEM) …. which have seen considerable growth in recent years.”
US is increasing STEM output ..,Art Degree stuff ie gender bending, climate nutters, etc, attracts eyeballs because it is sensational but STEM is increasing.,, this has been prophesied…
Hopefully we wipe out the Art Degree all together… in the Christian teaching there is the “millennial reign of Christ” (who was a Tekton ie not an Socratic moron) ) characterized by immediate justice.. which would perhaps mean elimination of this current scourge of Socratic methodology via the liberal Art schools for 1,000 years then immediate smack down if these sub human mental scum try to bring it back during those 1,000 years.,, would be nice,, we may be transitioning into that..,
These schools is where all the shit comes out of .,, they are moron factories.,, gotta get rid of them ideally..
All this international politics and warfare stuff pales in comparison to the importance of human academic operations… which the west dominates.,,
All eyeballs should be on western academic operations imo…
Matt,
The constant need to denigrate others means that you are suffering from Narcissistic personality disorder (NPD).
Narcissistic personality disorder (NPD) is a personality disorder characterized by a life-long pattern of exaggerated feelings of self-importance, an excessive need for admiration, a diminished ability or unwillingness to empathize with others' feelings, and interpersonally exploitative behavior. Narcissistic personality disorder is one of the sub-types of the broader category known as personality disorders. It is often comorbid with other mental disorders and associated with significant functional impairment and psychosocial disability.
Within the DSM-5, NPD is a cluster B personality disorder. Individuals with cluster B personality disorders often appear dramatic, emotional, or erratic. Narcissistic personality disorder is a mental disorder characterized by a life-long pattern of exaggerated feelings of self-importance, an excessive craving for admiration, and a diminished ability to empathize with others' feelings.
The problem with NPD is that it can lead to spiritual damage, as it is a form of self-deification. That's a form of idolatry. That never ends well.
I would love to hear a conversation between Matt and Neil. On the technical things I think Matt always provides interesting view points along with Neil. On social things I think I read Matt say he was to the right of Hitler(or was it genghis khan?). I mean that's gotta be a recipe for an interesting conversation right?
NPD is often misdiagnosed due to its similarity to ADE (Art Degree Envy).
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