Throughout 2014 and 2015, the Russian economy weathered a multitude of storms thrown against it by the DC syndicate and the Wall Street mafia. Russia’s currency, bonds, energy sector, GDP, and national security all came under attack by the Empire of Chaos. Most nations would have collapsed under the pressure, but Russia is NOT most nations. Instead, the Russian Bear awoke from the long winter slumber it had fallen into after the Cold War and several fraud-plagued years of misrule by that bumbling drunkard, Boris Yeltsin. Today, Russia is a vibrant nation. She takes pride in her accomplishments, in her culture, and in her toughness. More important still, she has engineered tremendous economic and financial improvements since 2008 in preparation for the inevitable collapse of the U.S. dollar.
Readers of Rogue Money, followers of The Guerrilla, and most particularly followers of our resident Russian expert, James The Russian Analyst, already know the backstory. Those who do not would do well to take a spin down memory lane and check out the archives section of this site.
Those interested in the future, please read on. What I will detail for you now are recent moves made by resurgent Russia and her staunch ally, China, to break the petrodollar once and for all. I will also summarize for you what these moves mean for the U.S. on the 2016-2017 timeline that The Guerrilla has discussed with you many, many times before.
After the Soviet Union collapsed in 1991, and after the Russians had regained their senses, Vladimir Putin and the new Russian leadership understood that Russia’s Achilles heel was her energy sector. Abundant oil reserves represented Russia’s strength, but also her weakness. They knew there was no way for Russia to regain her former strength without threatening the “full spectrum dominance” of the neo-con controlled Americans. Thus, they came to understand that what had long been the strength of the American empire also happened to be its greatest weakness – the Petrodollar.
For years the Russians and the Chinese waited, knowing that Uncle Sam’s unbridled debt binge would lead him to weakness and collapse. They bided their time and the moment that they anticipated has arrived.
Back in 2013, The Guerrilla trumpeted the purchase of Morgan Stanley’s oil pricing desk to Russian oil producing giant, Rosneft. What has been lost in our short-sighted world is how significant that deal truly was. Dear readers, allow me to refresh your memories. The deal, the total value of which is still undisclosed, included the acquisition of more than 100 front office executives in trading hubs in New York, Singapore, and London. One-third of Morgan Stanley’s total commodities front office personnel shifted to Rosneft.
The deal allowed the Russians to take control of all pending sales, supply agreements, international terminals, inventories, physical oil purchasing, freight shipping, logistics, and equity investments. The logistics part of the deal included more than 100 commercial tankers managed by Morgan-owned Heidmar Holdings.
Why did Morgan Stanley make the deal? Because it could no longer operate in what was becoming an increasing difficult commodities market The risks associated with trading in highly-collateralized oil became too much for the derivative-battered bank to handle. In addition, Morgan’s downgraded credit rating had greatly increased its borrowing costs.
Morgan Stanley was one of the biggest players in the petroleum business and was number 2 in aviation fuel production behind Vitol. All of the major airlines did deals with Morgan Stanley and at one point American and United Airlines both dealt with Morgan Stanley exclusively. Now all of those benefits, systems, deals, and infrastructure were suddenly in the hands of Rosneft (i.e., Russia) and like China’s addition of the Renminbi to the IMF’s Special Drawing Rights basket of currencies was a move to break the dollar’s reserve status, Rosneft’s purchase of Morgan Stanley’s oil desk represented a step toward breaking the dollar’s petro status.
Rosneft could now stretch tentacles of influence over major sectors of the global economy that previously had been out of reach. Also, I might add that Russia’s move paired nicely with China’s soon-to-be-announced Shanghai Gold Price Fix. Step one – control over oil pricing in Rubles and control over RMB pricing of gold – was complete.
Step two involved the massive energy deal Russian signed with China, the largest industrial economy in the world. Remember that deal, my friends? The $400 billion deal with the Chinese in 2014 tied up the Eurasian trade zone in a brilliant pincer move that made the corrupt politicians in Washington DC crap a brick.
That little maneuver gave surrounding regional economies positive incentive to integrate with the New Silk Road. Those countries were presented with the option of benefitting from the massive trade that will run on the road or dying in obscurity by holding petrodollars as Uncle Sam breathes his last on his deathbed.
Those two steps by Russia upped the ante. Now comes the kill shot. All of the benefits purchased from Morgan Stanley went fully operational November 2015. The Russians announced that they will begin “testing” (i.e., diplo-speak for what they intend to do) the trading of a new Russian oil benchmark. This new benchmark will price all oil futures in Rubles, NOT in dollars.
This development is key. Setting a pricing benchmark conveys legitimacy, increases adoption, and introduces a competitor to the marketplace. All of this is very attractive to many nations today. These nations SUFFER from the pricing of oil in petrodollars. They have been at the mercy of the criminal syndicates in The City and Wall Street. Now, thanks to the Morgan Stanley deal, the Russians have set up shop as honest brokers in their backyards.
The timing for all of this could not be more perfect. European oil is priced by the Brent index, a model the Russians have also traditionally used to price their oil. The thing is that the Brent index, just like the West Texas Index (WTI), is dying. The Brent North Sea oil fields are drying up. Take into account that the Saudis are also running out of oil and the Russian Bear becomes the new big dog on the block! New suppliers need a new pricing model and Russia is ready to provide them with one.
The current models using Brent, WTI, ICE-Brent, and Dubai are not long for this world. Now do you see the beauty of the Rosneft Morgan Stanley move?!
The Morgan Stanley purchase was a key strategic play. Russia now possesses the Morgan Stanley pricing infrastructure, the world’s largest oil customer in China, and it is the world’s largest producer of oil. The Brent contracts controlled by Wall Street and The City are ticking time bombs.
Every one of those contracts is linked to a daisy-chain of overleveraged derivatives held by JPM, Goldman Sachs, Deutsche Bank, and other members of the criminal syndicate. The catch is that all of those contracts were signed with the expectation that the price of Brent would be in the range of $60-$80 per barrel, not in the $30 range it is today.
Listen closely, my friends. Can you sense the pressure building? Can you feel the fund managers cringing as their carry costs become unbearable? Low oil prices are hurting the Russians, but they are absolutely killing the bankster-controlled U.S.
And there you have it. In a series of well-calculated moves Vladimir Putin, chess-master extraordinaire, killed the petrodollar, Wall Street, AND the Empire of Chaos all at once. They are dead men walking, they just haven’t realized it yet.