Russia’s leverage in the tit-for-tat ego fight over Ukraine is founded on the systems we built and now depend – the Petrodollar and SWIFT system. In the world of international trade, you can think of the SWIFT system as the exchange and the petrodollar as the medium. What happens if Russia suddenly says it will settle all of its energy contracts in something other than US dollars? The Petrodollar would collapse overnight and so would our dollar hegemony.
As a result of the Petrodollar scheme hatched under Nixon and negotiated by Henry Kissinger, all energy contracts must be settled in US dollars, creating the massive demand for dollars we have enjoyed for 40 years. These transactions are settled through the SWIFT system.
BRICS nations have been working on an alternative to SWIFT and the IMF bank for several years; mainly because of the currency cost that comes from having to buy US dollars in the FOREX markets, and the asset stripping tactics of the IMF (mostly in developing countries). As a result of sanctions against Iran, Iran has also worked out trade deals with its trading partners to settle energy contracts in local currencies and in gold, bypassing SWIFT. BRICS countries have also done the same with many of their trading partners. The result is decreased demand for dollar.
In the meantime, Putin can now sit back and let the IMF, and its partner in crime (the US) hand Ukraine to Putin on a platinum platter (or at least extract IMF loans for Ukraine so they can pay past due invoices to Gazprom and bailout imprudent investors in the old regime).
Not only is the US supporting the IMF-mandated austerity requirements that’s tied to any loan package, but Obama is collaborating with the IMF to increase its funding through higher taxes on Americans, while decreasing our power in the IMF. Why, you ask. It’s for the same reason that govt’s are cracking down on its citizens all over the world – govt’s are broke, and getting more insolvent as the world deleverages from a debt-based economy, and the big banks must continue to extract blood from stones come hell or high water (or both).
Rather than shrink along with the rest of the economy, govt simply takes more from its citizens to avoid having to downsize itself. This “need” for more tax revenue has the US (NSA) collaborating with the Socialist-led IMF to hunt down capital (at our expense), so the “all-knowing” bureaucrats can decide what you “need” to survive. The problem of course, which has always plagued lawyers like Obama and Lagarde, is they think they can control behaviors by simply writing laws. Just as there will always be people who violate speeding laws, capital will not obey their warped view of reality, which is why it will hide under mattresses or seek safer jurisdictions, destroying the world economy in the process.
Lagarde sounds just like Obama, and if you listen to these sociopath’s, they think they also have the “answer” to the capital flight problem. Like Soros, they believe if we just had one govt to run the world, then they would have the total control they need to allocate capital in the “proper” proportions. In the meantime, until they have their one-world govt we will have to deal with the NSA looking under every mattress and rock to find the money they “need” to retain their power and perks.
As a quick aside, consider the mind of George Soros. If you’ve ever listened hard to his lectures and read his philosophy, then you know he is quite intelligent, which is also what makes him so dangerous. In fact, in my humble opinion, Soros’ perceptions and analysis of the way “things work” are largely accurate. The issue is in the application and his assertions that only one political party is capable of manipulation.
He also ignores the fact that the passions of man have not changed, and as a result believes that history offers little guidance for future predictions. He must hold this opinion because to believe otherwise minimizes his megalomaniac role in controlling world outcomes. This egocentric view is common among political elite who confuse their power with knowledge. The desire to appear and feel significant, even though they lack the real-world experience to do so, obligates them to force their navel-contemplative views on the rest of society, no matter how unproven.
Back to Russia and the Ukrainian dance…
The fact that Ukraine’s currency is tanking means default is possible (and should be done), which is why the IMF will influence (i.e. blackmail or bribe) hand-picked political replacements to accept the bailout package (loans) that will sacrifice the citizens through austerity, instead of the banks that made the imprudent loans.
Once the pensions and services of Ukrainian’s get cut in half by austerity, they will come begging to Putin to take them back. Remember, it’s always about making sure the banks get paid first, no matter how imprudent or fraudulent the loan. The other option is for Putin to “justifiably” annihilate Ukraine at the slightest provocation after 8 million Russian-Ukranian’s were just threatened with nuclear vaporization.
The US establishment certainly does not want to lose control of the petrodollar and dollar hegemony; but short-term “thinking” by politicians with no practical experience, and businesses driven by profit at all cost, can produce less than desirable results. This is especially true when you have a world leader that doesn’t play by the establishment’s rules. Sorry Mr. President, Russia is not just a “regional power”, not when they have nukes and are a major energy provider to Europe, China, and India. How can Obama make such naïve remarks when our biggest ally, Britain, just signed up for a direct gas IV from Russia within a week of Putin taking control of Crimea? This is one of the reasons that Obama is getting no respect outside the US (and in two-thirds of the US).
We know what happened to other leaders that proposed the idea of bypassing the petrodollar (i.e. Gaddafi, Hussein, Chavez). However, unlike Putin, these leaders did not have nuclear weapons as a deterrent to US Jackals and military persuasion. We also know that Asia will not isolate Russia, and neither will other G20 leaders. Therefore, what exactly is our policy with Russia? It only appears to be coherent from the vantage point of the military industrial complex.