Friday, December 30, 2016

Trump Economy - What To Expect

Big Daddy's Big Daddy
Understanding Trump's Dreams
 By Looking at Trump's Role Model
Vladimir Putin is unquestionably the richest man in the world.

A good look at individual role models and their influence on "historic notables" can often present an understanding quite beyond what might, otherwise, be gleaned from the historical anecdotes about the notables themselves. Because there is very little to be "gleaned" from examining the opaque persona -- even when one's information is accompanied by whatever meager facts about such things as family, childhood, experiences and so forth -- of the President-elect, investigating the man's role model might reveal something interesting which had been intentionally obscured.

In this case the "man" is Donald Trump, and the "role model" is Vladimir Putin.

When the President-elect is "snuggling" into his $10,000 bed, he is probably dreaming of being even richer than his brutish Russian ideal. If anyone is still "missing the picture," the money which will make him the richest man in the world will be coming from you. Traditional Republicans are famous for their almost obsessive penchant for looting. In this case MeanMesa feels obliged to replace the term "looting" with a slightly darker, more aggressive alternative, "harvesting."

Dzengis Kahn -
the glory days before ROSNEFT
Vladimir, at least perhaps in the "more innocent" [less sociopathic] years of his earlier life, could have been comfortably classed as a merely a "looter," but based on his more recent behavior, his standing as the world's greatest "harvester" in modern times is quite well justified, Think of it as "moving" from from being merely a violent, monopolistic, Robber Baron to something closer to a successful, "winner take all" autocrat such as Genghis Khan.

As to MeanMesa's "snarky quip" about Vladimir being the richest man on the planet, don't take it lightly. The Federation's President, probably thanks to all the dirty tricks he studied as a KGB officer, is utterly masterful at presenting a completely opaque image of himself to the world press. While media reporting on the matter remains somewhat conjectural, if there's smoke, there's probably fire. Here's an example from a year ago as reported by the UK INDEPENDENT. [This article contains a great photo of Vladimir's $1 Bn Russian palace.]

Vladimir Putin 'corruption':

Five things we learned about
the Russian President's secret wealth

A BBC investigation speaks to exiled former 
Kremlin insiders, who allege wide scale corruption under Putin's regime.

By Adam Withnall
January 26, 2016

[Excerpted. Visit the original article here UK INDEPENDENT]

Sergei Kolesnikov told the programme he worked for the Kremlin to collect money from the super-rich, which they believed was to be spent on healthcare, but which was ultimately used “to help build a $1 billion palace for Mr Putin on the Black Sea coast”.

The BBC said it had seen documents from one of the offshore companies that diverted millions of dollars to the palace, which was constructed during Mr Putin’s first term as president.

It said that, according to Mr Kolesnikov, the owner of the company, Lirus Investment Holding, was Mr Putin himself.

Mr Kolesnikov was also allegedly filmed discussing Mr Putin’s secret fortune – investments of up to $440 million – with another Kremlin insider.

Sergei Pugachev, an exiled oligarch who says he helped Mr Putin become president, told the BBC he was “preoccupied with wealth from the start”. He said he visited one of the presidential palaces with Mr Putin during his first term. “We talked about it, he didn’t hide it, he knew he wanted to leave office a wealthy man,” he said.

 Glimpses of a Russian "Success Story"
Scratching and Clawing Your Way
To the Top of the Russian Federation
The American version has, typically, been somewhat more civil.
Still, setting an unavoidable example for an American oligarch with big ambitions.

While it might be somewhat satisfying to simply conclude that Vladimir is a notably successful equivalent to an American mobster, we must remember that this post is about his "service" as a role model for our new President. It should surprise no one that, as a dynastic oligarch, Putin's elevated position of fabulous wealth and power would very quickly attract the admiring attention of an awkwardly un-directed "financial wizard" such as The Donald.

MeanMesa suspects that this "attraction" would be more accurately described as an "obsession."

Although the important "supporting evidence" of Mr. Trump's "business prowess" remains hidden within his "missing" tax returns and shadowy speculation still absent any forthcoming "revelations" as to the details of his success, his oligarchic ambitions, on the other hand, can no longer pose as an exciting, "romantic secret" lodged somewhere in the intestines of a trust fund baby. The hill billies and bigots representing his electoral support may have been -- temporarily -- inebriated with this artificial "tale of exciting mysteries," but now that all these flamboyant wet dreams are scheduled to become material, we may well see more desperation than we were anticipating.

MeanMesa suspects that it is a fairly safe prophecy that The Donald is planning a "miraculous cash track" which will prove quite similar to Vlad's own "rags to riches" scheme.

The takings for pillaging the United States are significantly sweeter than those to be found in the Russian Federation. In the words of Presidential contender, Senator Bernie Sanders,

"This campaign is sending a message to the billionaire class: 'you can’t have it all.' You can’t get huge tax breaks while children in this country go hungry. You can’t continue sending our jobs to China while millions are looking for work. You can’t hide your profits in the Cayman Islands and other tax havens, while there are massive unmet needs on every corner of this nation. Your greed has got to end. You cannot take advantage of all the benefits of America, if you refuse to accept your responsibilities as Americans."

It turns out that the "patriotic minority" who voted to elect Donald Trump do intend to hand over "all of it" to the oligarchs who have been salivating in the wings. With his role model, Vladimir Putin, as an "ideal" Mr. Trump clearly intends to replace the current, "richest man on Earth" with a bright new "contest winner" from glittering Manhattan. You know, a "successful apprentice."

If Putin's the Model,
What Should We Expect From Trump?
Vlad's had some "expensive quiet time" with Obama in the White House.

Well, getting rid of that troublesome "quiet time," turns out to be one of the very finest jewels in the newly opened treasure chest. Yes, yes, we already understand that with Trump's nomination of EXXON's Tillerson to be CEO of the State Department, the rubles will start gushing in almost immediately. However, the half trillion dollars from the ROSNEFT deal, we can be certain, will only be the first installment.

Just as The Donald tricked the mindless Trumpkins during the campaign with his unending insinuations about Hillary's non-existent "business in as Secretary of State," the real Donald has already mapped out his multi-billion dollar, "harvesting wet dream."

To put this in perspective MeanMesa has selected a few "educational" snippets from recent reporting on just how things have been for hard working Vladimir. Have a look at the following excepted articles on the subject. [Links to the respective original articles are provided in each case.]

A Putin New Year
Nasty Old 2016 Ends On
 January 20 For the Russian Federation
Getting to know Trump's Hidden Hero

President Obama has been pretty hard on the oligarchs surrounding Vladimir Putin. Many of them have been "singled out" specifically to have travel restrictions and sanctions placed on their holdings in US banks. Obama's energy policies have reduced the value of Russian oil on the international market. There has even been a "wee bit" of State Department/NATO "bristling" about the security of the Baltic countries in the face of Vlad's Soviet Resurrection Dreams.

Take a look at the following [excerpted] articles to see what the international press is reporting about this. Remember, Putin had to be seeing some "high stakes" to make it worth while to openly scheme to elect a "friendly President" in the US.

Foreign Affairs

SNAPSHOT July 26, 2016

Putin Is Still Standing
The Elites That Keep the President in Power
By David Szakonyi

[Visit the site here -Foreign Affairs You have to pay to read the remainder of the article.]

Over the last two years, there has been no shortage of predictions that the regime of Russian President Vladimir Putin would soon collapse under the crushing weight of falling oil prices and Western sanctions. After all, Russia’s economy was weak even before the start of the pro-democracy demonstrations in Ukraine in 2013. The annexation of Crimea in early 2014 and the conflict with the West that followed might have boosted Putin’s popularity at home, but as the argument goes, it dug the country into an even deeper financial hole. Without sound structural reforms to promote investment and growth, the roof would simply cave in under widespread protests, and soon.

But this reading is fundamentally flawed. The real threat to Putin’s hold on power does not arise from societal discontent, whether it’s from Moscow’s and St. Petersburg’s so-called creative class or the lower class, which has been further impoverished by the economic downturn. Instead, the current Russian government survives because it has successfully placated the elites who have become fabulously rich and powerful thanks to Putin’s crony capitalism. This group of insiders either knew Putin during his early political career in St. Petersburg or worked in the “force structures” (known as the siloviki) within the army, police, or Federal Security Service, the successor to the KGB. Over the last decade, they have amassed incredible fortunes, benefiting from the nationalization of oil and gas companies such as Yukos in 2004 as well as insider deals, such as providing banking and other services to the government.

This transfer of wealth into the hands of such a small group of elites has created a system of mutual dependence with Putin: he orchestrated their rise but cannot rule the country or sustain economic growth without their backing. The drying up of oil revenue and restricted access to the West threatened to upend this relationship and shake these elites’ support for the current government.

Russia Loses 23 Billionaires
 to Economic Crisis
[Read the entire article here/MOSCOW TIMES]

The number of Russian billionaires fell from 111 to 88 over the last year as the country's economic crisis gutted personal wealth, according to a Forbes rich list published Thursday.

With Russia suffering a sharp currency devaluation and stalled economic growth, the total net worth of Russia's top 200 wealthiest businessmen shrank by $73 billion, Forbes' Russian edition found.


With Donald Trump as President, Here's What Will Happen to the U.S. Economy
Donald Trump has had a lot of success in business, 
but how will he be for the economy as president?
 Here's how his economic policies will play out.
By Emily Stewart

 [Read the entire article here TheSTREET]

"There's no denying Trump has done a good job of making himself rich -- he's worth somewhere between $4.5 billion and $10 billion, depending who you ask. Can he make the rest of America rich, too?

Trump was elected the 45th president of the United States on Tuesday and in his victory speech at the New York Hilton promised to focus on economic growth when he is sworn in next January. "We have a great economic plan," he said. "We will double our growth and have the strongest economy anywhere in the world."

On the campaign trail, Trump admitted the economy wasn't something he looked forward to tackling. In a January interview with "Good Morning America," he offered up a bleak assessment and added that, in terms of fixing it, it's a task he'd rather skip.

"We're in a bubble," he said. "And, frankly, if there's going to be a bubble popping, I hope they pop before I become president because I don't want to inherit all this stuff. I'd rather it be the day before rather than the day after, I will tell you that."

In an April interview with the Washington Post, Trump reiterated his doomsday view of the economy, suggesting we might be headed for recession. But this time around, he appeared more open to the idea of his being in charge of finding remedies. "I can fix it. I can fix it pretty quickly," he said. And more recently, he maligned the Federal Reserve for creating what he says is a "false economy."
As president, he will now be tasked with accelerating American economic growth and fixing its problems."

The American economy under a President Trump: a primer
Donald Trump has a plan that’s not aligned with those of his party and 
no history of government service to reference, 
so the future economic picture of his presidency is a cloudy one.
But there are some clues.

By Lonnie Shekhtman 
November 10, 2016

Americans sent a clear message during Tuesday’s presidential election: They want radical change. They soon will get their wish. Though what that change will bring for the well being of Americans and the economy, no one can predict, given that Mr. Trump has an economic plan that’s not aligned with the plans of his party, and no history of government service to reference.

"A more isolationist direction for the country could affect global relations, some worry. A decline in trade also could dampen economic growth by raising the prices of imports and reducing the amount of goods and services available in the country."

Tax cuts are tried and true Republican territory, but Trump has also put forward one proposal that is more commonly spotted across the aisle: a massive investment in America’s infrastructure. The president-elect has vowed to spend $1 trillion to rehab America’s roads, tunnels, ports, and bridges in a national project that he says could create millions of jobs.

There is no plan yet for how the government would afford such an investment. But as Merrill Lynch economists point out, if Trump’s administration can get American companies to bring back the $2.5 trillion in profits they have stashed overseas, as he has proposed to do by lowering their tax bill, this could help pay for an infrastructure investment and to offset lower taxes.

President Obama also sought to introduce an infrastructure spending program to boost the economy, but was blocked by a Republican Congress. Trump, who will inherit another Republican Congress, may have a better shot now that Congressional gridlock has been cleared by a full Republican sweep of government.

Additional Reading

Tuesday, December 20, 2016

Trump Economy - Inflating the Bubble

Trump As the Second Un-Elected
 Republican President
The mysteries surrounding the man make him
 an inescapably romantic figure, right?

After losing the election handily to his opponent, Hillary Clinton, Donald Trump is now preparing to take control of the White House as the second in a recent series of un-elected Republican Presidents. Although there are many troubling aspects to this prospect, perhaps one of the most threatening -- aside from his belligerent  military instability -- for a wide number of Americans is Mr. Trump's plan for managing the US economy.

The 2016 election campaigns of both Parties, traditionally intended to communicate candidates' policy ideas to the voters, were complete failures in this respect. Politically, Trump managed to keep what might have otherwise been this "educational aspect" of the campaigns little more than a useless cat fight between contending personality cults.

At the infrequent junctures of his campaign where he addressed possible economic policy such comments lacked any particular substance or details. Unhappily, for the largely politically illiterate voter base which supported him this lack of serious definition caused very little concern. Importantly, although Mr. Trump may actually have some ideas about the national economy, his campaign managed to avoid much mention of them.

Whatever the "Trump economic policy" might be, the current "best guess" remains as opaque as the man's personal finances. Is he really a billionaire? Has he ever paid taxes on the profits of his enterprises? Is he in serious debt to foreign banks in Germany and Russia? Can Trump enterprises' long record of lawsuits to contractors, investors and business associates be dismissed as "innocent and inevitable happenstances" of conducting business reputably? The list of questions seems to be growing longer as every day passes.

The Economic Disaster of the Previous Un-Elected Republican President
It's terribly cruel and unfair to suddenly demand
that a Republican can run the economy.

There's no need to delve into the catastrophic chaos of the Bush W. administration's twisted economic policy. The outcome speaks for itself. Culminating in the bloody global economic collapse of 2008, the entire effort of eight years of Republican administration literally shook economies around the entire planet. Although the Obama years have seen a marked improvement, economic experts estimate that it will require as many as two decades of stable growth to permanently rectify the damage.

Are we now preparing to extend those "two decades" to four or five?

To answer this question we must identify similarities between the two administrations. Unhappily, even peering through the fog of politically manufactured uncertainty about Trump's plans, there are many unsettling signs of the same thing happening again. Here, we can add two words to that dismal prediction: "sooner" and "worse." 

The record of the economic results of complete Republican control of both houses, the White House and the Supreme Court has, historically, been devastating, in this case, the Great Depression. These were the political conditions in the US government just prior to the 1929 economic collapse.

Although overly simplified charts showing inaccurate accounts of various Presidential economic performance readily prove practically any proposition, the elevation of Trump relied very heavily on the now infamous "fake news" which showed the Obama Administration's performance as a bleak rampage of deficit spending and debt expansion.

The following Washington Post article by Ezra Klein [one of MeanMesa's favorites] fills out the comparison between the Bush W. and the Obama economies in a refreshingly rational manner. [You can read the entire article here/WASHINGTONPOST]

The stunning difference between the economy under the un-elected President Bush W's Administration and the elected President Barack Obama's Administration. Americans will vote for what they want if they have the opportunity. [image]

Populist Donald Trump - 
"Champion of the Working People"
New Wealth Shoots To the Top 1%.
Make that the Top 1/10th% of the Top 1%.
Hang on to your hats! You haven't seen anything yet.

Trump desperately needs to accomplish something that Republican Presidents have historically found almost impossible.

He needs to expand the national GDP by any means possible while increasing employment, raising wages for the confused middle class who supported him and avoiding huge annual deficits. MeanMesa suspects that the President-elect intends to employ a rather un-American scheme to "deliver the goods" as he attempts to meet these expectations. Although he will enjoy the luxury of presiding over a Republican controlled House and Senate, he shouldn't get his hopes up with an expectation that all those power hungry, GOP tea baggers, "industrial revolution" ideologues, banksters and other straggling, sold out dead enders will necessarily share his enthusiasm.

The Donald has been quite eager to claim that -- under his leadership -- the rate of the national GDP will grow to 4-5%. Unhappily, the semi-conscious "patriots" who eagerly voted for him have the wild expectation that some of that growth will...wait for it...trickle right down to their level. That is unlikely in the long term.

In the short term a milder version of this lower class dream can be accomplished with lots of borrowing and deficit spending by the Republican saturated Washington, DC.

[Economic Policy Institute]
During Trump's "campaigning," he collected all the "economically disenfranchised" voters he could find in the rust belt and fly over states. He very professionally teased their despair with plenty of blame and promises, embellishing their distrust of the nation's recent economic performance with literal glaciers of fact-free propaganda scowled out to the boisterous mobs at his rallies.

The useless, industrial, domestic media reported every word without so much as a whimper concerning the fact that most of it was false -- sewn from whole cloth by a man whose greatest notoriety derived from a television reality/sit com show.

The chart [above right] shows a picture of where new wealth was headed in 2011, just as the US economy was starting to recover from the last Republican disaster [These "top enders get everything" trends are worse now than they were then.]. Importantly, back in 2011 we were all reassured because the national GDP was beginning to, once more, grow at a feeble, yet positive rate. However, when we face facts, we realize that pumping newly created wealth into the top 1% feeds the GDP figures in exactly the same way increased earnings among the middle class would have if they had occurred -- even if they didn't.

Now, President-elect Trump has surrounding himself and packed his cabinets with self-identified devotees of this idea that, "Yes, GDP is going to grow. The reason it will grow is because all of us billionaires are going to get even richer -- and that counts as economic growth!"

How to Inflate the Bubble
Seek out among these financial geniuses
 to see who can blow the hardest.

As mentioned before the President-elect must find ways to rapidly increase the nation's GDP. [During the Obama recovery, the GDP has increased from around -8% at the end of the Bush W. train wreck to a meager but steady growth rate around 2-3% -- and increase in the rate of around 10-11%. A 2-3% growth rate is lower than the US has traditionally generated in recent times. To make good on his ambitious promise, Trump would need better than 4-5% annual GDP growth rate.] The inevitable fact that the new wealth will be destined almost exclusively for the dynastic treasures of the US oligarch class has never been considered a serious political problem for Republicans. The middle class Americans who will probably be left out of this equation's "new prosperity" have grown accustomed to deteriorating standards of living, increasing costs and stagnant wage levels since the Reagan era.

The American voters who supported Trump remain, generally, unaware of any of these trends and statistical facts. Thanks to the meat handed propaganda these voters are considering "news," MeanMesa predicts that most of them will consider the [following] likely examples of Trump's probable economic course to be evidence of "spectacular, genius level, leadership." Temporary, modest increases in the GDP will be interpreted by this crowd as an "economic breakthrough."

Reduce Social Security, Medicare and Medicaid Expenses

The Republican House Speaker has repeatedly expressed various plans -- including more than one "Annual Budget" -- to reduce the existing levels of Federal payments for these three programs. While Trump's campaign included the repeated, very specific "promise" to "protect" current payments for these program benefits, he has since the election moved to within an "intimate" range with House Speaker Ryan on many of the Speaker's favorite "pets."

If the Trump Administration -- with enough complicit Congressmen and Senators -- manages to lower benefit payments while retaining the massive Social Security Trust and continuing the "paycheck contributions" at their current level, he will effectively lower the current deficit and, given time, the existing total national debt. Anyone naive enough to expect Donald Trump to "live up to his word" is either in a coma or has been saturated with the very, very suspicious propaganda narrative about the man in the corporate media.

Although none of these changes would be popular with the vast majority of US voters, we have already seen the Republican Congressmen and Senators repeatedly willing to "take their political lumps" by casting votes for special interests against public opinion in order to sustain the flow of billionaire dollars filling their campaign treasuries.

The Social Security Trust fund is full of ready cash -- and more than a few dollars worth of "special issue" treasury notes which are "payable on demand." It represents an alluring attraction for a Republican desperate to pump stolen money into the economy in the search for that elusive GDP gain. In the last few decades Republican Presidents have proven over and over that they cannot govern.

Legislation to Spend on Infrastructure 

Trump, perhaps as a clumsy mistake or innocent over sight, actually spelled out a few of the eerie economic sides of his "rebuilding America" plans. His idea for this would be the now "fashionably chic" concept of using a mix of government and private funds to accomplish this feat without a sky rocketing impact of the Federal budget.

However, on closer examination, the fenders were already "flying off the truck." 

It turns out that The Donald's idea of "sensible infrastructure programs" were actually just the industrial wish lists of those very same, altruistic, patriotic interests who were intending to make these investments anyway. Further, those "investments," rather than miles of repaired interstates, public school buildings roofs, dams, bridges or flood levees, were for projects specifically directed toward increasing their corporate interests and assets.

The "Trump addition" to this "Mad Hatter's Birthday Party" came in the form of gigantic tax incentives to compensate these busy billionaires as they were, of course, ...wait for it...Rebuilding America.

Rapidly Expand Corporate Profit

Remember, corporate profits disappear right into the all encompassing "stew pot" of national economic activity when it comes to calculating GDP figures.

"Gross Domestic Product (GDP) is the broadest quantitative measure of a nation's total economic activity. More specifically, GDP represents the monetary value of all goods and services produced within a nation's geographic borders over a specified period of time."

What does this mean?

While there have been some spectacular "opportunities" for Trump now unstoppable "profit machine," such as the relaxation of the post Crimean invasion sanctions opening a clear path for the half trillion dollar merger of EXXON and ROSNEFT, the President-elect's now well positioned billionaires are "discovering" all sorts of other tasty "business opportunities" across the board.

We are watching a breath taking shift in changing values. Prior to Trump's election numerous decisions based on traditional American values had imposed "legislative discouragements" to some of the oligarch classes "favorite money makers." For example, EPA regulations had prevented industries from taking advantage of saving expenses by dumping wastes in the nearest river. Banking regulations had established a separation between high risk taking and regular banking for the big guys and their hedge funds.

Perhaps most painful of all, ObamaCare [ACA] had undercut the wild, anything goes, profits to be made with corporate extraction process of the pre-ACA health insurance industry as it took its "cut" of the $6 Trillion/year US health care budget.

All of these "legislative discouragements" had been put into place to protect the interests of American citizens. In each case the corporate "cost" of implementing such laws had been deemed to be a reasonable price for protecting average citizens, sustaining access to reasonable living standards and guaranteeing a sort of minimum quality of life for those with wealth levels below those of the oligarch class.

Trump's "expand the GDP at any cost" strategy will target every one of these laws. Values have indeed changed. Corporate profit -- and an artificially expanded GDP -- will become the highest priority. The whole scheme is deliciously complicated. Trump supporters will take months or years of continuously deteriorating living conditions before they even begin to notice.

Monday, December 12, 2016

Trump and the Russians - Cashing Out Crimea

Obama's Sanctions
 After the Illegal Russian "Annexation" of Crimea
If you look back far enough,
there's an old map somewhere which will justify anything you want to do.
If you have complete control over your domestic media,
you can force feed your citizens any version of reality which suits you.

When the Russian Federation moved troops into the Crimean peninsula, territory which was settled in international law as a part of the autonomous nation of Ukraine, all hell broke loose. Wishing to clearly communicate how seriously various western democracies considered this action, Washington and most of the members of the European Union, after the usual, painfully laborious negotiations, imposed wide ranging economic sanctions on the Russian Federation -- sanctions which also specifically targeted individual Russian Federation citizens deemed to have significant culpability in fomenting Russia's illegal invasion.
International sanctions during the Ukrainian crisis
[Excerpted. Read the original article  here/WIKI]

The Russian military intervention in Ukraine, which began in late February 2014, prompted a number of governments to apply sanctions against individuals, businesses and officials from Russia and Ukraine. Sanctions were approved by the United States, the European Union(EU) and other countries and international organisations. Russia has responded with sanctions against a number of countries, including a total ban on food imports from the EU, United States, Norway, Canada and Australia.

The sanctions have contributed to the collapse of the Russian ruble and the Russian financial crisis (2014–present). They have also caused economic damage to a number of EU countries, with the total losses estimated at €100 billion. 

While "free market loving" Republicans in the US ridiculed this response, its economic effect on the Russian Federation began to sting the oligarchs surrounding Vladimir Putin right away. Although the sanctions failed to alter the course of the Federation's international "land grabbing" habits, the pain it inflicted on these Russian billionaires did succeed in "modifying the atmospherics" among the voices supporting Putin's dream of re-establishing the old Soviet Empire piecemeal. 

As we saw with the successful sanctions program in Iran, there were no realistic expectations that we should expect these Russian Federation sanctions to "deliver" in short order. Still, as the weeks and months of the sanctions bore on, some of the most lucrative sectors of the Russian economy -- although the Federation government took great steps to obscure the fact -- gradually began to slowly putrefy from its isolation.

There IS a little history. [image]
Never famous for being "too sensitive," Putin marched boldly ahead with his empire building dreams quite steadfastly even though this trajectory of implementing these ambitions with his usual "unbending intent" had to be navigated around the wounded, wailing oligarchs who had been singled out for their own, personal part of the sanctions. His government controlled domestic media managed to sustain an image of "popular support" on the home front with glacial flow of meat handed , Russian Federation propaganda for the domestic Russian market.

Zeroing In On "Two of the Wounded
Selling crude and natural gas to the Chinese has its limits.
EXXON doesn't like being on the "other end" of Obama's sanctions.

Although many cases of this "sanction pain" could be included here, one which might stand out among the rest would be the "corporate conglomeration scheme" being hatched between EXXON and the Russian government oil giant, ROSNEFT [ROSNEFT/WIKI]. 

For years the Russian government had patiently been conducting its own form of "nationalizing" the country's domestic energy, most notably YUKOS which became a ROSNEFT property following the jailing of its old owner, billionaire Mikhail Borisovich Khodorkovsky. For some reason as soon as "Boris" was safely locked away, YUKOS stock value careened down to crisis mode, and Putin's cronies maneuvered its assets to the public market and promptly "cashed them in" to buyers all around the world of oil.

Well, with all the "dots and dittoes" of Russian production neatly tucked away in the government corporation, the next, normal step would be to "conglomerate" even farther with one of the largest oil corporations in the US. Everything would have gone along "just swimmingly" without the damned sanctions.

Exxon Faces Collateral Damage From a New Cold War

By Liam Denning

Thirty years to the day since Ronald Reagan and Mikhail Gorbachev concluded an unsuccessful summit in Reykjavik, an alarming 1980s revival has taken hold in U.S.-Russian relations. 

Apart from the threats and accusations being thrown around regarding Syria, there are missiles being deployed on NATO's doorstep, as well as Washington formally accusing the Kremlin of trying to hack the U.S. election process, something Moscow has denied. Regarding the latter spat, it's unlikely to have helped endear Moscow to the front-runner in the race for the White House -- who wasn't that stoked about President Vladimir Putin to begin with. 

All of which is a bit of a problem for all of us. It is also a problem for one oil major in particular: Exxon Mobil. 

Russia has special significance for Exxon. Early in the 2000s, former CEO Lee Raymond came close to buying a stake in Yukos only to watch its CEO Mikhail Khodorkovsky fall out with President Vladimir Putin and get arrested. 

Raymond didn't get his big Russian deal. But his successor, current CEO Rex Tillerson, did. 

Tillerson had spent time in the 1990s overseeing a flagship Exxon project in Russia. And he flew there in 2011 to meet with Putin and announce a strategic partnership with Rosneft, the national oil company that absorbed Yukos' main assets after Khodorkovsky was thrown in jail. 

The two companies were to jointly develop potentially massive oil reserves in Russia's Arctic waters, the Black Sea, and Siberian unconventional resources. Putin spoke of investments from the deal eventually reaching perhaps $500 billion -- a big number even for Exxon. No sooner had the venture struck oil beneath the Kara Sea, though, than Exxon was forced to down tools as U.S. sanctions over the Ukraine crisis kicked in. 

Exxon is no stranger to dealing with inconveniences like sanctions, nationalizations, and wars. But if Russia remains frozen out by sanctions for years, then Exxon may need a plan B for 2020 and beyond. 

Ostensibly Exxon is awash with drilling opportunities. At the end of 2015, it had proved reserves of almost 25 billion barrels of oil equivalent but claimed overall resources of 91 billion. 

When you produce around 4 million barrels of oil equivalent a day, though, it is a constant struggle to find that next big pool of resources to offset declines in old fields with fresh ones for years to come. That struggle gets even harder when oil and gas prices collapse and you have to cut investment to help protect a sacrosanct dividend. 

Even when oil and gas prices were high, Exxon kept missing ambitious production growth targets. Overall production last year was actually lower than in 2006, Tillerson's first year as CEO; output of higher-value oil has dropped by roughly a fifth.

In addition, Exxon's reserves replacement ratio plunged below 100 percent last year. Granted, much of that reflected the impact of lower natural gas prices causing Exxon to de-book some U.S. reserves. Still, this was a reminder that Exxon had mistimed another big deal aimed at refilling its tank -- namely 2010's $35 billion acquisition of shale gas driller, XTO Energy. 

And, looking at Exxon's cumulative record on replacing reserves, it's clear these metrics have been slipping in recent years. Since 2006, reserve replacement including acquisitions has been 129 percent (not including the effect of disposals). Organic reserve replacement, though, has been 101 percent.

[Excerpted - read the original article  here - BLOOMBERG]

What Exxon, like any major, really seeks are very large, oil-focused prospects that play to its strengths, where reserves can be booked periodically to top up the tank and high upfront costs can be defrayed over decades of production. In other words, exactly what Russia potentially offered. 

Whether focusing on such mega-projects is a good way to go is debatable, but for now that is Exxon's way. And the company's judgment on this score has notably been called into question this year. For example, as Wolfe Research analyst Paul Sankey has pointed out, the cut to Exxon's triple-A credit rating by Standard & Poor's was directly linked to concerns around the huge spending required to replace its reserves. 

If relations between the U.S. and Russia keep worsening and sanctions stay in place -- or even get sharpened -- then that puts a big question mark over where Exxon's next wave of production will come from and how profitable it will be. 

The obvious solution, as it has been in the past, is for Exxon to make another big acquisition, most likely in a less politically fraught, but still huge, resource such as U.S. shale (Texas' Permian basin, say, although that's looking crowded already).

One upshot of the worsening stand-off in Syria, and elsewhere, could be that those persistent rumors around Exxon buying the likes of Anadarko Petroleum, Apache or Occidental finally become more than just talk.

For some totally mysterious reason the US State Department seemed reluctant to "get on board" with this massive merger plan while Obama's sanctions, punishment for Russian Federation behavior in the annexation of Crimea, were still in place and beginning to show some results. Although it looked like Putin was remaining quite stubborn with respect to his ambition to own Crimea, there seemed to be a flicker of a growing possibility that his equally illegal ambitions to also own Eastern Ukraine might be softening.

However, for EXXON, ROSNEFT and Putin, the real question was "What could be done about this irritating, lingering, State Department 'problem?'

Sorry, Big Oil, It Looks Like This Is Just Going
 To Be "One Of Those Things"
Darned State Department. Darn sanctions.
Oooops. Did you forget about the election?
What a difference a few months can make!

With the Trump "electoral victory" now well in hand, these "deal breaking frustrations" with the big ROSNEFT - EXXON "marriage" seem to have blown away like a "Russian North Sea Winter Time Breeze." Since the President-elect is wasting absolutely none of his "working hours" worrying about the good of the country, he's found himself enjoying an unexpected amount of free time -- time which can now be dedicated to getting the EXXON - ROSNEFT train wreck back on the tracks!

Plus, suddenly being President should help, too. And, perhaps most important of all, being a new President also includes picking a new Secretary of State. After all, these problems with the big ROSNEFT deal seem to be coming from the State Department and all those damned sanctions. Although The Donald is not particularly concerned about the "running America stuff," he is understandably attracted to the giant pile of profit which might spring forth from "friending it up" with Putin and the Russian oil heavies at ROSNEFT.

Fortunately, Donald already had their phone number. Also fortunately, there just happened to be someone "waiting in the wings" to set the State Department back onto a profitable new course. Here are a couple of [excerpted] articles which will help "complete the picture" for these wonderful coincidences.

Article 1: from Vanity Fair


December 10, 2016
[Excerpted. Read the original article  here - VANITY FAIR]

Exxon Mobile C.E.O. Rex Tillerson, an oil industry veteran with deep ties to Russia, is likely to be nominated as Donald Trump’s secretary of state, according to multiple news reports over the weekend. Trump’s pick could still change, sources say, but is expected to be announced within the coming days after Tillerson met with the president-elect twice in the past week. “Whether I choose him or not for ‘State’- Rex Tillerson, the Chairman & CEO of ExxonMobil, is a world class player and dealmaker. Stay tuned!” Trump tweeted Sunday morning.

While Tillerson is well-respected as a business leader with experience making deal around the world, his close relationship with Russia could mean a difficult Senate confirmation process. The 64-year-old executive has known President Vladimir Putin for decades, and was awarded the Russian Order of Friendship in 2013, shortly before Russia’s invasion and subsequent annexation of Crimea. The United States responded by imposing economic sanctions on Russia that arrested a massive $300 billion deal in 2011 between Exxon and the state-controlled Russian oil giant Rosneft to drill under the Arctic Ocean. Tillerson has been a vocal opponent of the sanctions, which have reportedly cost his company some $1 billion in losses. “I don’t know what Mr. Tillerson’s relationship with Vladimir Putin was,” Republican senator John McCain said Saturday in an interview with Fox News. “But I’ll tell you it is a matter of concern to me.” A Democratic Senate aide also told Politico that “the Putin relationship will be a major focus” in confirmation hearings. “Tillerson and the company opposed sanctions efforts on Russia, he has received an award from Putin, and has done extensive oil business generally in the country.”

Article 2: from CNN Money

Behind the deep ties between Exxon's Rex Tillerson and Russia
by Matt Egan, Julia Horowitz and Chris Isidore @CNNMoneyInvest
December 11, 2016
[Excerpted. Read the original article here - CNN]

Tillerson himself seemed hopeful that the Exxon deal could lead to even closer ties between the two countries. "It cannot be anything but helpful to broadening the relationship between the American people and the Russian people," Tillerson said at the time.

Putin later awarded Tillerson the Order of Friendship, which is given to foreign citizens for "special merits in strengthening peace, friendship, cooperation and mutual understanding between peoples." It is also awarded for those who make a "great contribution" to "large-scale economic projects" in Russia.

In 2014, Exxon was hit hard by a round of U.S. and European Union sanctions that targeted Russia for its intervention in Ukraine. Exxon said it could have lost up to $1 billion due to the sanctions, according to regulatory filings.

Exxon would likely stand to gain if sanctions are lifted on Russia by the new administration.

"We are very anxious to get back to work there," Tillerson told industry analysts in March when asked if Exxon would be interested in restarting its venture with Rosneft in Russia.

Tillerson noted that it would take time to resume operations, especially in the Arctic, because "we had to dismantle all of the capability and the infrastructure" due to sanctions.

Tillerson said he's "thankful" the Russians haven't done anything to "make the situation worse." To the contrary, Tillerson said Russia has "done things to help us hang on to the rights we have" in the wake of the sanctions.

Go Ahead and Stab Ukraine in the Back.
They should be used to it by now.
Sometimes it can be messy undoing something honorable
 that's been done in the past.

President-elect Trump's brand new Secretary of State will start lifting the sanctions on the Russian Federation as soon as he's sworn into office. MeanMesa expects that all those old "hard feelings" about Putin's illegal invasion of a sovereign country will almost instantly become nothing more than a fleeting memory of "the bad old days."

Russian soldier on Crimea border.
It remains to be seen if this wonderful feeling will also include a "wink and a smile" to inform the Russian President that the US State Department is now totally on board with the small, additional matter of his also annexing East Ukraine, that is, the US State Department will be "open for business."

Hey, when there's this kind of cash on the table, anything goes. A nice, new oil corporation carefully crafted together from "this and that," EXXON and ROSNEFT with total assets worth $500 Bn should have more than enough loose "bucks" floating around -- here and there -- to allow all the "players" scratch their way a bit closer to their dream of perpetual dynastic wealth.

No one can be all that sure about what will be left of Ukraine after Vladimir runs it through his super power meat grinder and re-injects what's left into his dreamy Soviet-style new, Russian Federation Empire. However, once it's all said and done, the surviving Ukrainians will know better than to ever trust the US to be their friend again.

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