Saturday, September 19, 2009

An Economic History From 1998

My highlights from research on 1998 (with umpteen revisions tonight).

I was wondering whether the massive drop in oil prices that year was engineered in order to facilitate economic collapse in Russia, but having looked at this graph, it appears that such a scenario more likely could have happened in the late 1980s; if it occurred at all?

When were the impacts of the banking system's use of a new and unregulated form of 'high-power money' (in 1994) felt? I refer to money created through what has been referred to as "arcane procedures and instruments"; like 'zero-reserve sweeps'. These novel banking processes resulted in an enormous expansion of the money base that was largely concealed from public scrutiny. More on this topic here.

1998 – May 7th. Greenspan:
"We need an understanding if we are to minimize the chances that 'we' will experience a systematic disruption beyond our degree of comprehension or our ability to respond effectively..."


1998 – Global currency crisis associated with the the failure of Long term Capital Management. It was a currency trader. With the guidance of the US Fed all of the banks got together when it started to collapse and propped up the currency markets. Underscored is “the fact that
“deregulation” has created an economic monster which requires more and more tinkering from the stewards of the system.”[1]


1998 – August 31st. Russia’s economic problems helped sent the Dow Jones Industrial Average to its second biggest single-day drop ever, 512 points.

1998 US IP owners imposed draconian new US copyright regime.[2]

Late 1990s. The percentage of people belonging to the middle class in the “old industrial countries” began to decline from the late 1990s to the present (August 2008). Making up for the falling incomes of First World workers for some years after 2000 was an increase in consumer credit. In 2007 a “popular default” broke out in the US. [3]

1998 – Present (2007. China’s huge labor surpluses absorbed through debt-financed investments in huge mega-projects that dwarf the already huge Three Gorges Dam. [4]

1998 – Book: The Buying of the Congress: How Special Interests Have Stolen Your Right to Life, Liberty, and the Pursuit of Happiness. Today ... there is no leadership or protest against our subjugation to the powerful economic interests that have captured our Congress and our politics. We are tired, and there is no alternative but to protest. (An appendix lists 32 leading members of Congress, along with each of their top ten career patrons (corporations and lobbying PACs). It's a depressing picture.) [5]

1998 – Doug Nolan’s Credit Bubble Bulletin begins.

1998 Hugo Chavez elected President in Venezuela (loss of oil to US)

1998 – Economic Giantism hastens

1998 – February 4th. US House of Reps Sub Committee. On the Asian Financial Crisis

1998 – Greenspan quote:
"Nor should we require individual banks to hold capital in amounts sufficient to fully protect against those rare systemic events which, in any event, may render standard probability evaluation moot. The management of systemic risk is properly the job of the central banks. Individual banks should not be required to hold capital against the possibility of overall financial breakdown. Indeed, central banks, by their existence, appropriately offer a form of catastrophe insurance to banks against such events."[6]


Late 1990s – The economy was growing, unemployment was creeping downward. Wages were increasing only modestly. Greenspan kept interest rates low, knowing that the workers’ fear of unemployment would continue to keep wages in check. The low interest rates fuelled the dotcom bubble. [7]

1998 – George Shultz vetted Bush Jr for the job as US president and put together the team behind his presidency. [8]

1998 September 21st. US Fed Reserve and 16 major Wall Street investment banks meet to organise a financial bailout of the hedge fund that they had all lent money to – Long Term Capital Management. There was real fear that the bond market would seize up as creditors rushed for the exits. The US Federal Reserve pushed billions of dollars of liquidity into the markets.

The US Fed denies involvement in the LTCM bailout.

"Perhaps [Paul Volker's] highest profile stance since his Fed days was taken during the Long-Term Capital Management fiasco of 1998. Volcker questioned the "bailout" of LTCM by the consortium of investment banks.

"Why should the weight of the federal government be brought to bear to help out a private investor?" [9]


1998 – October 6th. IMF head, Michel Camdessus, warns of global systemic crisis.
"We are speaking not just of countries in crisis, but of a system in crisis, a system not yet sufficiently adapted to the opportunities and risks of globalisation."[10]


1998 – October. Former chairman of the US Federal Reserve Board Paul Volcker said in a [then] recent speech to the International Finance Institute, published in the Financial Times:
“The problems we see with such force today are systemic--they arise from within the ordinary workings of global financial capitalism. ... Consider the latest bit of evidence from the US itself; one unsupervised and unregulated financial institution--an institution boasting the most elaborate models of market behaviour and sophisticated advisors--carried the possibility, by testimony of the US Federal Reserve, of pulling down the financial tent." [11]

[Volcker was referring to the multi-billion dollar bailout of the Long Term Capital Management hedge fund.]

1998 – October. As President Bill Clinton was warning of the worst financial crisis in 50 years, and calling for strong global leadership, the war against his administration being waged by powerful sections of the American bourgeoisie was intensifying with the House judiciary committee recommending an unrestricted investigation as to whether ground existed for his impeachment.[12]

1998 – November. Failure by the Organization of Petroleum Exporting Countries (OPEC) to cut production at its meeting in November 1998 prompted prices to collapse to a 12-year low of $10.35 a barrel in New York the following month.

1998 – Robert Rubin (then US Treasury Secretary) and Alan Greenspan persuaded Congress to change banking laws to permit the merger of Travelers Insurance, Citibank and Citigroup

1998 – October 21st. Discussing the 1998, 1987 and 1929 crashes. (Select Committee of the US Treasury. Minutes of evidence). Mr Davies: “It seems to me that we are somewhere in between the 1987 episode and the 1929 episode—hopefully a great deal closer to the 1987 episode…. So the Fed lost control of interest rates and to some extent sadly that has happened in recent weeks, although nothing like to the same degree…. The other element of the perverse policy was that fiscal policy generally was far too tight, so a combination of those events led to ten years of depression…. the world economy is generally weaker going into this crash than was true in 1987. Therefore, rebound would be slower and the background is weaker, so we will not get the rebound that we saw in 1988. Professor Minford: “after a big crash like 1987, which was on the same scale if not rather bigger than the share market crash we have seen in the last couple of months, that it was easy to turn round. We overdid it in retrospect…. There is no lack of liquidity today. In fact, some people maintain there is too much. Money supply in the United States is clearly growing quite robustly at this moment. All this points to the fact that we do have the ability to respond to this; and all the evidence is that we are responding to it…”

[1]Rigging the Market: The Secret Maneuverings of the Plunge Protection
Team
Mike Whitney, Information Clearing House, 09/14/06
http://www.undollars.com/archives/arch_undollar.whitney_9_17_06.htm

[2] The Bear's Lair, by Martin Hutchinson
http://www.prudentbear.com/articles/show/2070
The decline of Western incomes. July 23, 2007

[3] The crisis of the global economy
A report of the Institute of Globalisation and Social Movements, Moscow
By Vasily Koltashov
Translated by Renfrey Clarke, Links – International Journal of Socialist Renewal
http://links.org.au/node/517

[4] THE NEW IMPERIALISM: ON SPATIO-TEMPORAL FIXES AND ACCUMULATION BY DISPOSSESSION, David Harvey -- http://titanus.roma1.infn.it/sito_pol/Global_emp/Harvey.htm

[5] Lewis, Charles and the Center for Public Integrity. The Buying of the Congress: How Special Interests Have Stolen Your Right to Life, Liberty, and the Pursuit of Happiness. New York: Avon Books, 1998. 416 pages. ISBN 0-380-97596-3
http://www.namebase.org/cgi-bin/nb01/fB

[6] Greenspan 1998
http://www.federalreserve.gov/boarddocs/Speeches/1998/19980226.htm

[7] Michael Perelman. Chapter 2 of his draft book ‘The Invisible Handcuffs’.
http://michaelperelman.wordpress.com/2008/07/22/second-chapter-of-the-invisible-handcuffs-of-capitalism-how-market-tyranny-stifles-the-economy-by-stunting-workers/

[8] George Pratt Shultz: Profile of a Hit Man
by Scott Thompson and Nancy Spannaus
This article appears in the December 10, 2004 issue of Executive Intelligence Review.
http://www.larouchepub.com/other/2004/site_packages/econ_hitmen/3148shultz1.html

[9] Paul Volker - Part 2. Brian Trumbore
President/Editor, StocksandNews.com
http://www.buyandhold.com/bh/en/education/history/2000/paul_volker2.html

[10] Tuesday, 6 October, 1998, 19:41 GMT 20:41 UK
IMF chief warns of world crisis
http://news.bbc.co.uk/2/hi/187695.stm

[11] Conflicts dominate Washington meeting
World leaders at International Monetary Fund conference
acknowledge global economic crisis
By Nick Beams
8 October, 1998
http://www.wsws.org/news/1998/oct1998/econ-o08.shtml

[12] Conflicts dominate Washington meeting
World leaders at International Monetary Fund conference
acknowledge global economic crisis
By Nick Beams
8 October, 1998
http://www.wsws.org/news/1998/oct1998/econ-o08.shtml

14 comments:

Brenda Rosser said...

In answer to my own question, it doesn't look like there was deliberate suppression of the oil price in the late 1980s.

1987 – “From 1980 on, the CIA annual assessment report of the Soviet Union was being doctored and that essentially two different reports were being produced. There was a real CIA document, which was called the Annual Assessment Report of the Economic and Military Strength of the Soviet Union. The Democrats had suspected even as early as 1979 that the last real CIA assessment report they had when Carter was still president, clearly indicated that the Soviet Union was beginning to crumble internally…..Clinton found out in April that the Bostonian Regime had in 1987 put the arm on the then West Germans and the Japanese to secretly lend money to the Soviet Union. This is what tipped the balance for him. Clinton was hemming and hawing about it until he found out about the Bush Cabal's final strategy, that they had actually propped up the Soviet Union to maintain the Great Lie. The Soviet Union was very close to bankruptcy in 1987 and the Bush Cabal was scared. They knew that if the Soviet Union fell apart economically in 1987, the jig was up and people would know they had lied. Everybody would know that they had lied about the military and economic strength of the Soviet Union. Therefore the West Germans secretly lent the Soviets $80 billion and the Japanese secretly under Bushonian pressure lent them another $40 billion. However, the money was lent with the understanding that the US treasury and the people of the United States would be ultimately responsible for the$120 billion should the Soviet Union default on said loans...."

How George Bush Sr. Almost Got Indicted for Fraud
News: 11/20/02 - 01:11:28 by Admin by Al Martin
http://news4florida.tripod.com/indexfraud.html

BruceMcF said...

I don't follow what this has to do with the hypothesis that Saudi Arabia pushed down oil prices in the 1980's to to engineer a Soviet economic collapse.

Indeed, if it was known that the Soviet Union was vulnerable, that would make the strategy more likely, rather than less.

Brenda Rosser said...

Fair enough Bruce McF. I should have provided a few more explanatory phrases....my thoughts travel faster than the words sometimes.

My logic was that it is nonsensical to provide a large loan to a nation and then engage in actions to sabotage that country's economy. But then, when I look at the history of US imperialistic behaviour towards other nations, this is precisely what the ruling elite manoevre. Loan default in order to gain access and control over the resources of debtor nations. Economic hit man tactics to collapse the economies of labelled 'rogues'.

I found the following reference this afternoon:

1983 – CIA Director Bill Casey went to Saudi Arabia and cut a deal: in return for the latest American weapons (F-15 jets and AWACS planes), the Saudis agreed to open the crude spigots. ...
The Long War in the Middle East and Russian Oil
Charles Ganske. 3rd August 2006
http://www.russiablog.org/2006/08/kommersant_mideast_war_means_m.php

rosserjb@jmu.edu said...

The Saudi crashing of the oil price in 1986 (that was when it happened) had a big fat zero to do with the USSR. It was all about internal oil games in OPEC and internal royal family politics in Saudi.

The Saudis had been propping the price up at $34 per barrel ever since the second and third largest producers in OPEC, Iran and Iraq had gone to war against each other at the beginning of the decade. Both of them immediately began cheating on their official OPEC production quotas in order to buy weapons from abroad with cash (especially from the US, who mostly sold to Iraq, but then also did so to Iran during the infamous Iran-contra period). For the Saudis to keep the price up, they had to cut production and cut production and cut production.

By early 1986 they had done so so much that they were running a budget deficit. Subsidies to the extended royal family were in danger of being cut. This, along with increasing annoyance and frustration with both the Iraqis and the Iranians (and awareness of the Iran-contra deals) were what set off the Saudis to open the pumps and crash the price.

Now, I think you ascribe too much power to the "Bush cabal" and also have them weirdly focused on propping up the USSR, which was not nearly as germane to their interests as other matters closer to home. Keep in mind that George H.W. Bush was VP then. In July, 1986 the price of oil hit $9 per barrel. Texas real estate interests that had engaged in lots of speculation based on the high price of oil began to see their prices collapsing and they and their banks going with them. This was what drove Bush to see King Fahd and beg him to get the prices back up again. The Saudis redialed and got the price back up into the teens, where it mostly stayed until a few years ago, except for that late 90s dip. However, this was not enough to save the Texas real estate interests and bankers, and the Savings and Loan crisis came out of Texas, ultimately costing US taxpayers about $175 billion.

BTW, "reform premier" Yegor Gaidar has written a book a few years ago (sorry, forget title) that argues indeed that the Soviet (and now Russian) economy was/is very much dominated by the price of oil. The last year of positive Soviet GDP growth was the first full year of Gorbachev's rule, 1986. After that, the system was going down the tubes, and no amount of German or other loans would save it. But what happened to the Soviets was strictly a sideshow to the Saudis in their decisions.

Brenda Rosser said...

I'm not at all sure about the causes behind the dramatic fall in oil price around 1986 Barkley. I can't say that you have persuaded me to dismiss this question.

There were secret dealings between the US (Democrat and Republican administrations alike) and Saudi Arabia.

There is evidence (for instance) that 'Operation Desert Storm' was planned at least a decade in advance. Also, that Saudi Arabia was cooperating with the US administrations in actions against 'communists' and providing funding for some of them.

"In the Fall of 1981 Prince Fahd of Saudi Arabia received a contract to purchase $85 billion of AWACS aircraft from the United States. This arms program was formally called ‘Peace Shield’ and was officially launched in 1984. This long term proposal, which took nearly eight years to develop, came to fruition in 1990 in the form of American arms support and manufacturing companies located in Saudi Arabia itself. Since the initial arms sale in 1981 the U.S. has slowly dug in as a ground support presence at the invitation of the Saudi government. Americans shouldn't be surprised at the speed with which U.S. forces assembled in Operation Desert Shield. Thanks to Operation Peace Shield, we were already there.

The AWACS arms purchase of 1981, Operation Peace Shield, has been crucial to the development of the Administration's military strategy, not only in the Middle East but throughout the world.As a result of what one administrative aid called "the AWACS rule" (San Francisco Examiner, 6/27/86), the administration has been able to channel Saudi investments directly into "anti-communist movements" all over the world. Prince Fahd is quoted (by Sam Joseph Bamieh) as saying in 1981: “he was very happy about the fact that finally they got an agreement on the AWACS ... an understanding was arrived at whereby, he said, we will supply funds, meaning the Saudis' funds, and raise other funds from friendly governments to Saudi Arabia and sources other than Arabia, to fight, to help you guys fight, the anti-communist movement around the world." Under questioning Bamieh stated that the agreement included no specific locations. "When I asked him where, he says, anywhere the Administration will ask us to. When I said when, he says, whenever they ask us to."

Oil Policy and U.S. Covert Action in the Middle East
By Kathy Mitchell and Scott Henson
November 1990; pages 12, 17; Volume 2, No. 2
Polemicist

The history of US governments' economic warfare tactics against other nations is well established and well researched. It is logical that those engaged in the planning and carrying out of these 'strategies' would be aware of the collateral damage it would do to the United States.

rosserjb@jmu.edu said...

Brenda,

The cooperation between the Saudi and US governments of both parties (and Texas oil men were Democrats for a long time) dates back all the way to 1945 at least, when then King Abdulaziz (aka "Ibn Sa'ud," not actually his name or even a proper title, as it means "son of Sa'ud," and his father was Abdul-Rahman, so his full and proper name was Abdulaziz ibn Abdul-Rahman ibn Faisal al Sa'ud) met with FDR aboard a ship in the Persian Gulf, shortly before FDR's death and on his way back to the US from Yalta.

The very religious Saudis were always very anti-communist and while the Cold War was on never diplomatically recognized any communist-led government anywhere in the world. Their most notorious of funding and support of anti-communist movements was of the anti-Soviet mujaheddin operating out of Pakistan, to whom they sent in 1979 one Osama bin Laden to help fund the building of tunnels and aid the "Afghan Arabs" fighting that group, young Osama being the son of the man who had overseen the rebuilding of the Grand Mosque in Mecca, an appointment made by then Saudi intel chief, Prince Turki ibn Faisal ibn Abdulaziz al Sa'ud.

They welcomed Desert Storm, as they feared Saddam invading them. However, they were the main influence on George H.W. Bush holding him back from going to Baghdad to overthrow Saddam as they saw him as a Sunni Arab counterweight to the Shi'i non-Arab Iranians. They opposed the invasion of Iraq on the same grounds, but went along with the US as "good soldiers" when we did it.

I would say that arguing that somehow the state of the Soviet economy in 1986 was a more important factor in Saudi decisionmaking than the unhappiness of members of the Saudi royal family at the threat of losing their subsidies due to a policy that propped up oil prices for warring Iran and Iraq who were cheating on their oil production quotas (and had been for five years, and doing more so all the time) is a very hard case to make, even if somebody wrote a book making such a claim.

Blissex said...

«When were the impacts of the banking system's use of a new and unregulated form of 'high-power money' (in 1994) felt? I refer to money created through what has been referred to as "arcane procedures and instruments"; like 'zero-reserve sweeps'.»

In part it was the 1995 decision to regard some types of loans as not requiring backing capital for regulatory purposes; the idiot Luskin actually found something interesting here:

http://www.signallake.com/innovation/FedReserve1995.pdf
«The key event that happened around 1995 is that the fractional reserve ratio was not only lowered, it was effectively eliminated entirely. You read that right. The net result of changes during that period is that banks are not required to back assets which largely correspond to M3 or "broad money'' with cash reserves. As a consequence, banks can effectively create money without limitation. I know that sounds hard to believe, but let's look at the facts.»

Then there is the 9915-1996 start of the Yen ZIRP, which is enormously important and most Usian commenters, in their stolid parochialism, forget.

Then in 1995 Newt Gingrich gets elected on his Contract On America platform, of relentlessly higher asset prices and lower salaries, and Clinton's economic advisers subscribe to it it, and then it goes on and on,the most colossal credit expansion to create capital gains ever seen, even bigger than the one before the First Great Depression.

Crucial graph of the boost in margin stock speculation as the yen carry trade and the USA credit boom happened:
http://bigpicture.typepad.com/comments/2007/10/margin-debt-gro.html

Then growth of M3 over decades:

http://www.nowandfutures.com/key_stats.html
http://bigpicture.typepad.com/comments/2007/12/no-inflation-no.html

Then growth of foreign USA debt:

http://blogs.cfr.org/setser/2008/09/08/the-stealth-bailout-illustrated-in-close-to-real-time/

Then some "relevant" (blue chip) stock prices, also with a 1995 hockey stick:

http://finance.yahoo.com/q/bc?t=my&s=MER&l=off&z=l&q=l http://finance.yahoo.com/q/bc?t=my&s=FNM&l=off&z=l&q=l

Even IBM's stock price took off in 1995 after a near bankruptcy and losing its domination of IT:

http://finance.yahoo.com/q/bc?t=my&s=IBM&l=off&z=l&q=l

and curiously GE started to do really well only in 1995 too (think GE Capital):

http://finance.yahoo.com/q/bc?t=my&s=GE&l=off&z=l&q=l

Blissex said...

«My logic was that it is nonsensical to provide a large loan to a nation and then engage in actions to sabotage that country's economy. But then, when I look at the history of US imperialistic behaviour towards other nations, this is precisely what the ruling elite manoevre. Loan default in order to gain access and control over the resources of debtor nations. Economic hit man tactics to collapse the economies of labelled 'rogues'.»

It was widely known (outside the USA) that the URSS was having deep economic trouble, especially in agriculture. The USA probably decided to bribe the Saudis to take advantage of that, and to use the loans as you describe.

«BTW, "reform premier" Yegor Gaidar has written a book a few years ago (sorry, forget title) that argues indeed that the Soviet (and now Russian) economy was/is very much dominated by the price of oil.»

There is a summary of his argument here:

http://www.aei.org/publications/pubID.25991,filter.all/pub_detail.asp

The Russians haven't forgotten, haven't forgiven.

TheTrucker said...

I never looked at oil prices in the 90's till now. I never thought much about the Reagan economy in those terms either, always looking instead at the Fed continually reducing the interest rates as the cause of the increasing economic activity in the 80's. But now I look at the price of oil and see a driver for US economic improvement in the 80's as well as a reason for Russian collapse. It wasn't Republican tax cutting and tough talk about a wall, was it?

Was it Volcker's Saturday night special destroying the US economy in 1979 that reduced the price of oil (no demand), and was it the gradually decreasing interest rate that revived the economy and restored the demand for oil by 1990? Or was the causation running the other way?

Then in 1998 was it the Republican lust for capital gains (1997 tax act) that bubbled the economy or was it the price of oil falling off a cliff again?

Brenda Rosser said...

Barkley wrote: "a very hard case to make, even if somebody wrote a book making such a claim...."

I'm not one to be impressed by books, Barkley! ;-))

On the other hand, here's an interesting paragraph from one in my library (it confirms a view that oil is a strong geo-political weapon in the global economy):

“In 1995, there was a world glut of oil. Indeed, the strongest motive of the United Sates and its Saudi ally in maintaining the oil embargo on Iraq was to prevent a further plunge in the oil price, should Iraq start offering its million barrels a day back on the world markets. Adjusted for inflation, the world price of oil in 1995 was close to what it had been in 1973, before the great OPEC price rise. China’s looming oil demands looked likely to change all that. The International Energy Agency, based in Paris, reported that the growth in oil consumption of developing countries alone would, over the next decade, be the equivalent of the entire oil consumption of Western Europe. China in 1994 consumed about 5 barrels of oil per head (compared to 30 barrels a head in Germany, and 53 barrels a head in the United States). The lower estimates for China’s growth suggested this would double to 10 barrels a head within ten years. That meant an extra 6 billion barrels a year, or 16 million barrels a day – twice the production of Saudi Arabia. Combine the soaring demand with the declining production in the North Sea and Alaska’s North Slope, and oil demand and oil prices were set for some dramatic growth. Put that together with the meeting of the oil executives in London, and the brew became intriguing. The new strategic cockpit, the energy source on which the great industrial economies will depend in the coming century, lay not just in the Persian Guld but in the heart of Eurasia. This was the region where Russia, China, and the Islamic world, and the religious-cultural traditions they each represent, all met and josteld for influence. The most powerful American and European energy corporations had their deals, their drills, and there personal in place while the Russians commended the essential infrastructure, in the form of pipelines. This is where the cold war era of geopolitics came into collision with Clinton’s dawning new world of geo-economics. And it was significant that the first wars of the post-cold war world, the Gulf War against Iraq, and Russia’s battle for its pieplines in Chechnya, had been about oil. Danger, profits and power all swirled together. As the Azerbiajan International Oil Consortium agreed in London to go with Clinton’s policy of two pipelines, breaking the Russian stranglehold, the new Great Game was under way. Clinton’s perception that the cold war world was being transformed into a new era of global finance was only part of the truth, In the Great Game, geopolitics and geo-economics were indistinguishable.

Pages 305-306 ‘Clinton The President They Deserve – An intimate political biography of the 42nd President of the United States’. By Martin Walker. 1996. ISBN 1-85702-415-X

Thanks for the helpful info, Barkley, on the US and Saudi Arabia btw.

Brenda Rosser said...

Jigsaw:

1970s: Contacts between the KGB and the Arab terrorists, who sought assistance for terrorist attacks on oil fields in order to keep energy prices high.

1980: (i)Russia's economy failing and it is unable to feed its people; (ii) The Carter administration knew that; (iii) Carter stopped the shipment of farm products to the USSR that year, allegedly because the USSR invaded Afghanistan.

1980s - Saudi Arabia is sending US arms to Iraq and a Saudi policy exists to artificially prop up global oil prices by cutting production.
[August 5, 1986: Covert Arms Sales to Iraq Nearly Revealed]

1987: US organises loans - in secret - to the USSR as it collapses under the weight of very low oil prices.

Brenda Rosser said...

At this point I will leave off on discussions of oil geopolitics.

I feel, in one sense, that I'm simply stating the obvious. Oil is very important in economics and politics. Who doesn't know that? National elites do manipulate the trade of commodities where they can.

I think that most people are aware that the reasons for war are quite different from the publicly-stated ones.

To take on the challenge of delving into why particular wars occurred or why nations collapse is simply too big a task for blogspace like this, and for the resources that I have at hand.

It's sufficient to pose a question and leave it open for discussion. That's what I have tried to do.

In short, I don't know why the Soviet Union collapsed. I have some ideas about the topic but nothing to form the basis of any solid assertions in relation to the cause.

rosserjb@jmu.edu said...

I would say that of course oil is extremely important in global political economy. One also should know that the Saudi leaders are fully aware of this, very knowledgeable and sophisticated in their understandings of these matters, and very subtle as well. Nevertheless, their decisions are ultimately driven by their internal politics and they worry more about their fellow OPEC members and their immediate neighbors in the Gulf region (which they prefer to call the "Arabian Gulf") than about relatively distant powers such as Russia.

The one relatively distant power they do worry about is the US, and have so ever since that 1945 meeting between FDR and Abdulaziz, the father of the current pack of royal leaders (he had 43 sons). They view the relationship as an alliance, a friendship, but it is a complicated one. They have never been happy (since 1948) with the support of Israel by the US. More recently, the US was unhappy about them being the home of most of the 9/11 terrorists. There continue to be all kinds of frictions on both sides.

Brenda Rosser said...

I can understand a foreigner having a complicated relationship with America ;-) Thanks for clarifying jBR.