Morrie Beschloss

When President Trump laid out his significant objectives shortly after his January 20, 2017 inauguration, he signed a number of executive orders to ignite a reversal of America’s increasing dependence on overseas manufacturers, especially those products that would put American “blue collar” workers back on the assembly lines.

Chief among these was the revival of the U.S. steel industry, that had lost its global superiority several decades ago. Much of the emanating products would be the badly-needed steel pipelines, which had languished in the backlog of a non-existent infrastructure, waiting to be bigger and better than ever— after a hiatus of more than a quarter century or more.

Unfortunately, this idle promise has yet to gain reality, as more than half must come from a major Russian steel company, and a mix of other foreign sources.

By the end of 2017,this promise had remained unfulfilled, as have an embryonic revival of a U.S. steel industry, that provided the backbone of America’s “Marshall Plan” to rebuild the Western World, destroyed in World War II. Ironically, within the current Russian-American involvement investigation, much of current U.S. steel demands continue to be supplied by cheap foreign steel, with imports rising 24% in 2017, the greatest expansion since the end of the 20th century. To add to this embarrassment, the largest single supplier of U.S. steel imports is Evraz, PLC, Russia’s second-largest steel maker. That company has two factories in the U.S., in Colorado and Oregon, and four in Western Canada. The latter is especially deeply involved in producing steel and large domestic steel pipe.

Furthermore, Evraz won a major contract with America’s largest liquified natural gas company, Cheniere Energy, to supply the steel pipe for a 200 mile pipeline to bring natural gas from Oklahoma to the Gulf Coast conversion facilities and ports. To the Administration’s embarrassment, the resultant major U.S. partially-owned Florida-based company, Borg Steel Pipe Corporation, the U.S. producer was not able to come close to Evraz, in bidding for the $100 million contract.

In September, Commerce Secretary, Wilbur Ross, said the Administration will defer a decision to impose tariffs on foreign steel, so that it could focus full attention on tax reform. This has upset American steel executives, who are verbalizing their growing frustration with U.S. Administration promises, while planning domestic expansion, as promised by the Trump Administration.

With 2018 mid-term Congressional elections already casting their November 6 forthcoming shadows, further digression from American steel product usage could prove counter-productive to thousands of steelworkers, whose votes were instrumental in electing President Trump in a half-dozen steel producing states. The inability to fulfill a substantial steel industry comeback promise in the months ahead could instigate negative political action in states that elected President Trump in his upset 2016 presidential victory.

As previously clarified, both China and India, (Numbers 1 and 2) leaders in world population, have also gained the world’s leading position in numbers of billionaires.

Asia’s billionaires have overcome those of the U.S. for the first time, driven primarily by China, according to Swiss consulting and accounting firm, UBS Group AG.

2017 was a banner year for this expanding multitude of wealth, up 17% over 2016 to $6 trillion, greatly overcoming the percentage increase in global equity markets and world economic growth.

While the number of Asian billionaires came primarily from China and India, they far exceeded total billionaire numbers to 637 over 2016, while the U.S. increased to just 563, as Europe’s billionaire ranks remained static at 342.

In Asia, the most recent growth has been most stunning, adding a net 67 billionaires in China to 318, and India increasing by 16 to 100. Asia is well ahead of both the U.S. and Europe in youth, with China’s billionaires averaging 55 years old, more than a decade younger than their European and U.S. counterparts. Globally, the average billionaire is 63 years old, up three years from two decades ago.

Despite the U.S. falling from the top spot, it still has the most wealth concentrated among its billionaires at $8 trillion total, but according to Swiss banking giant UBS, the total wealth of billionaires in Asia could surpass that of the U.S. in the next four years.

The figures in this report were based on a database of more than 1500 billionaires. Surprisingly, much of the world’s billionaires are heavily invested among major sports franchises, including professional football, baseball, soccer, and basketball. The report further indicates that more than 140 of the top sports clubs globally are owned by just 109 billionaires. Of these, 60 derive from the U.S., 20 from Europe, and 29 from Asia. More than half of the world’s sports club purchasers have been made by billionaires in the past two years. In further clarification, the average sports baron is 68 years old, with an average wealth of $5 billion, according to the report.

Two-thirds of U.S. basketball and football franchises are owned by billionaires, as are just under half of U.S. premier league soccer clubs.

The report further states that the immense price tags on all major sports team value expansion makes it increasingly clear that it’s mostly only billionaires who have the financial firepower to buy such expanding sports franchises. Only these have the financial wherewithal to provide the necessary additional investments to keep such franchises up to date, according to the report. Remarkably, this is not only occurring in the U.S. and Europe, but is also getting more popular in Asia. This emphasizes that the huge value generated by both public interest and team values are gaining immense interest globally.

Since saving the world from facing certain destruction by the Germany/Japan combine in World War II, the U.S. also kept the co-superpower Soviet Union steamroller from dominating Western Europe. America was also chiefly responsible for the economic rebuilding of both friend and foe with the Marshall Plan. The United States of America has also achieved the unchallenged world gross domestic product leadership; with only a distant runnerup position from the world’s people population leader, China, since 1980.

But to the surprise of the budding European Community, a new Chinese global-leading population (1.45 billion) has developed a considerable Number Two “gross domestic product” position since 1980, trailing the U.S.’s $18 trillion GDP. That gap is closing with China’s GDP at $12 trillion today.

But since the beginning of the 21st century, the expanding Southeast Asian economic combination of government, industry, and superbly strong independent business balance has thrust China’s previous internal struggles into a unified superpower. This approach has elicited the emergence of President Xi Jinping as Red China’s greatest leader since Mao tse-Tung. After the most recent 2017 unified government restructure and the failure of the President Obama-led Trans Pacific Southeast Asian economic union, this has caused a unified China, (including Moslem Uighurs and the Tibetan segment) to be a serious challenge to the U.S.’s once assured world economic leadership.

To the world’s surprise, China’s compatible relationship between the Communist government’s major economic domination of steel, oil, and rare minerals, etc. and a thriving and growing independent business colossus, seems to have provided an economically balanced world unification, never before experienced.

While the U.S. is struggling with an economic rebuilding of healthcare, taxation, infrastructure development, and internal political lack of unification, China seems to have taken on both economic power, and a solid military base to advance its interests. Also, there has been an unexpected political unification, led by Xi-Jinping that points to a real possibility of global gross domestic product world leadership.

With a unified parliament, a thriving business community, and access to needed commodities of all types, China is certain to challenge the U.S.’s long-standing GDP number one spot, as early as the end of the current decade. This is especially so since infrastructure development in China is moving full speed ahead in an economic and military direction, never before seen in this world population leader.

With growing lack of U.S. unification, depending on a mid-term election yet to be resolved, China may well be occupying the world’s number one position, as the current decade ends.

As the various rationales behind Russia’s economic foreign policy continue to be debated on a constant media argumentation, the answer lies much more in Moscow’s economic well-being, rather than the preference of Russia’s global political relationships.

Whether observing Russia’s preference in the recent presidential elections, or its continuing involvement in America’s political direction, the tangible answer lies in Russia’s economic survival, based primarily on oil and natural gas global distribution.

With a 150 million population bereft of a strong middle class, privately owned independent businesses and shorn of the power of its once military superpower status, fossil fuels (coal, oil, and natural gas), lie at the heart of Moscow’s expansion of its almost unlimited oil and gas pipelines. These once formed Russia’s massive financial power, as the Soviet Union’s republics, and its Eastern European satellites, on which that nation’s own domestic product depend, were dominant.

In its heyday, Russia went so far as to recruit Germany’s Chancellor Gerhard Schroeder (1998-2005) as a mainstay of its natural gas giant Gazprom, and he is now chairman of Rosneft, the Russian major state oil company. The once popular Schroeder has been further recruited to influence Germany and other European countries to veer away from “renewables (solar, wind, geodesic power, ethanol, etc.) in favor of the more “reliable” fossil fuels.

In this context, Russia has found far more compatibility with President Donald J. Trump, a champion of fossil fuels, as opposed to his erstwhile competitor Hillary Clinton, who made no secret of her desire to close all coal mines, and vastly increase renewables. Her answer to the obvious results of subsequent employment loss was to expand “medicaid” as a means of nominally supporting the ongoing unemployment increase.

Although the Russians are now accused of once making a potential “Clinton” regime more dependent on Russian uranium, supported by committed support to the Clinton Foundation, this obvious indiscretion is still being investigated. This Foundation had also provided “Clintonism’s” support to “the Paris climatological treaty, approval of the Iranian “sellout,” and the Trans-Pacific Economic Treaty, which was heavily beneficial to the domestic economies of Southeast Asia; the latter of which only failed as the time ran out for the two-term Obama Administration.

At this point in time, the Democrats and the anti-Trump Republicans are hoping to “win the mid-terms” in November; which are badly needed to give Trump’s major initiatives a chance to pass.

While the fast-unraveling European Community attempts to hang on to the “Socialist slant” of its political direction, which it dominated since Eurocom’s birth in the late 1990's, the ugly face of Neo-Fascism is making a surprising reappearance throughout such scattered Eurocom members as Germany, Austria, and Hungary, for starters.

From its post-Nazi battle cry of “never again,” a new cadre of young political leaders are leading a drive to the Right. Ostensibly motivated by the economic and geopolitical aspects of “social democracy” that have returned political leadership throughout most of Western Europe since Eurocom’s inception, a new brand of Fascism seems to have found dynamic leadership, almost simultaneously.

Although ostensibly driven by the most recent surge of Islamic refugees, and their increasing criminality throughout Central Europe as motivation, a revamped anti-populism has been a major driving force.

Most recently has been the emergence of 31 year-old Sebastian Kurz, whose center-right People’s Party, founded by Austrian ex-Nazis, has gained an overnight edge over the Austrian Social Democrats, who have been in Austria’s leadership since the end of World War II. Combined with the support of the even further right Freedom Party, Kurz will utilize the “anti-immigrant,” low-tax populism, and be tougher on crime to lead Austria’s rebirth of its 1930's Fascism.

A similar point of view is being expressed in Germany’s AFD, an alternative for the German Workers’ Party, which is even more anti-immigrant. Even more assertive than the neo-Fascism of Austria and Germany is Hungarian Prime Minister Viktor Orban, who has totally rejected any vestige of European Socialism, with a platform that reflects a rock hard line on “immigrants, Islam, and internal security.

Although France’s Macron was the first of the young new breed to push his nation in a strong “Rightist” direction, and celebrate the populism of France’s once greatness, there seems to be a wave of “nationalism” that hasn’t been seen in Europe since the abysmal fall of Hitlerism.

But as happened in the period between the two world wars, unfettered Socialism, and open borders inviting Islamism, found excuses for their nations’ failure in the minority Jews, especially in the majority of the German people.

But with Hitler’s satanic anti-Semitism, even the most Nazism extremists, such as Austrian Nazi leader Heinz Christian Strache has not dared to play the Jewish angle. Perhaps since there are few Jews left after the Holocaust, even the worst Rights stopped utilizing this “nationalist” excuse.

In fact, Hungary’s Prime Minister Viktor Orban prides himself in his personal admiration of Israel, and has formed a friendship with its no-nonsense Prime Minister Bibi Netanyahu.

Whether neo-Fascism is the answer to Eurocom’s failure is yet to be seen. But Auratum’s dissolution in the foreseeable future looks like a sure bet.

While vastly improved employment and expanded factory jobs are key priorities in President Trump’s reversal of current dependence on global imports, the unexpected surge of robotics may further complicate these worthy objectives.

While a record number of “hands-on” jobs fulfillment have made job creation increasingly urgent, the sudden upshot in increased industrial robotics has made President Trump’s plans even more difficult than first thought.

In the first quarter of 2017, North American manufacturers spent $516 million on industrial robots, a 32% jump from a similar quarter a year ago, according to a study published by the Brookings Institute. The study indicated that much of such “robots” are ending up in steel and auto manufacturing centers, such as in heavily industrial areas as Indiana, Michigan, and Ohio.
According to the report, there are about nine industrial robots replacing 1,000 workers in Toledo and Detroit plants, three times the figure for 2010. Many of these machines are found in the elements needed for electric cars, developing their heavy chassis, and assembly of batteries, trays, etc., among other tasks. Many such “sorting robots” are also plentiful at red-hot growth Amazon’s massive warehousing and shipping facilities.

But such orders generated in the U.S. are dwarfed by those from China— amounting to some 90,000 units; almost a third of the world’s total industrial robot orders in the past year. Sales to China, for instance, provided 55% of FANUC’s automation units generated in the fiscal year ended in late 2017.

The International Federation of Robotics estimates that by 2019, China’s annual industrial robot orders will rise to 170,000 units; indicating that FANUC will be insulated from any competition in the world’s second-largest economy. That company expects demand in China to outstrip supply, even after FANUC opens a factory in Japan next August. This facility will be dedicated solely to keeping up with China’s economic demand.

The effects and possible consequences of widespread robotization have yet to be analyzed as to the advantages robotics provide. This is happening in the world’s most populous nation, which is already undergoing a massive conversion from agrarian workers to potential industrial employees.

This simultaneous combination of promising “hands-on” job opportunities, while “robotics” lessens dependence on “blue-collar” jobs, might also severely impact the Trump Administration’s emphatic industrial job increase plans; while absorbing the world’s evolution to robotics. This coming year will determine whether this seemingly contradictory employment attempt will be severely hamstrung as the “U.S. industrialization” makes further efforts to move forward.

What historian would ever have forecast the unique forthcoming energy understanding between historically bitter enemies, Saudi Arabia and the post-Soviet Russia.

An international “friendship photo,” featuring Saudi Arabia’s King Salman and Russia’s President Vladimir Putin tells the story graphically, taken in the sumptuous headquarters of the Russian leader. While these once bitter enemies on the world’s religio/political stage would never even talk to each other until most recently, the Saudi OPEC combine realized that it could not maintain its long term benefits; even in a fast-growing global demand market, without the “cooperation” of Russian/U.S. energy pricing, as world demand continues its accelerating growth path.

Since Russia had tentatively agreed to partially cooperate in price arrangements, with OPEC’s leader, a more compatible arrangement between these two former enemies had to be solidified. But just as this arrangement has reached its initial stages, here comes the U.S. on the doorstep of becoming a major international producer of oil, natural gas, as well as its derivatives.

While there have been no arrangements as yet, the Russo/Saudi Arabia cleavage and its attendant Russia animosity, had to be cleared before a more compliant U.S.A. could be brought into a global understanding, regarding international price structures, rather than inviting price wars.

This turn of events has been made possible as President Donald J. Trump has indicated reducing Environmental Protection Agency restrictions, and pressuring done by the “Obama/Iranian” door closer which was bringing that major oil producer back into the game, big time.

Also helpful to a major U.S./Russo/Saudi energy opportunity expansion is the restrictive energy Paris “climatological purity” drawdown to kill off energy expansion.

While oil and natural gas exports from the U.S. will likely become major factors in the years ahead, the motivation of “common interests” will likely mitigate any potential “price wars.” This would surely be developing without such a “three-way” oil and natural gas peace treaty, sure to be forthcoming in the decade ahead.

In the history of major global agreements, whatever commodities and countries have been involved, such universal global understandings have always done much better for each other in a “friendly atmosphere.”

Monday, 15 January 2018 00:18

What is Putin’s Long-Term Russian Goal?

With Russia’s ostensible interference in America’s 2016 presidential elections, increasing questions are being raised as to what Moscow’s long-term aims might be all about.

While most observers may have forgotten, the “pre-Russian” Soviet Union was considered a co-world “superpower,” along with the U.S. from 1945 to 1990. But it took the Soviets’ last “President,” Mikhail Gorbachev to realize that Russia was incapable of maintaining an economic hold on an expanded Russia. Despite its nuclear power, Eastern European satellites, and several Islamic republics, Russia was attempting to duplicate the economic versatility and military strength of the U.S. This was In anticipation of a showdown with the U.S., which had already come close to a military confrontation in the late 1950's, 1960's, 1970's, and early 1980's.

It took the courage of President Mikhail Gorbachev to literally “break up” the Soviet Union, shed such republics as Ukraine, and the Caucasus nations, etc, and attempt to “democratize” the residual Russian nations.

In doing so, he was willing to shed the mantle of “Communism,” give power to the new nation’s parliament “DUMA,” and resist a counterpoint by a military rebellion. In doing so, he turned the presidency of the new Russian nation over to a democratic leader, Boris Yeltsin, who attempted to invoke a Western-style Parliamentary regime, over the new Russia. Unfortunately for this new democratic Russian style, it was beset by the fragmented weaknesses, but none of the strengths of a Western-style republic.

After a decade of the latter 1990's failed attempt, Yeltsin turned the presidency over to his relatively unknown Vice President, Vladimir Putin, a former head of the Soviet Union’s Secret Police (KGB). This brought in today’s Russia on New Year’s eve in 1999. Although today’s well-known patriarch has put an end to the New Russia’s attempt at Western-style democracy, Russia has since taken on the power structure that is increasingly reflective of the dictatorial strength of modern dictatorships. In doing so, Putin has expanded Russia’s Western borders, both in the Ukraine, and its substantial Caucasus borders.

The Putin “success” reflects a Russia that is being respected and/or feared by most of the European democracies; a close friendship with China, and a limited economic foundation. This is dependent on its oil and natural gas pipelines, and military strength that has catapulted Moscow back into a pro-world leadership role that had been lost to the U.S. in the terminal days of the Soviet Union.

After the U.S. consumption percentage had reached its highest gross domestic product level most recently, (68%), President Trump has promised to bring both “blue collar jobs” and factories back to a much more rational level. Although no particular percentage objective level has been officially announced, it has been expected that a reduction of America’s $18.75 trillion GDP to at least a 50% level could be attained.

This has taken into account the many high-tech, robotics, and service jobs that are bound to add non-traditional manufacturing jobs that did not exist as late as the 1990's decade. Supporting this premise has been the maintenance and expansion of traditional factory jobs, plus a return to the U.S. of the $2.5 trillion that were retained overseas by the increasing number of conglomerates. These have spread their manufacturing capabilities to China, Southeast Asia, Mexico, Germany etc., due to lower cost facilities and the resultant cheaper products, which have swamped America’s shores in the past two decades.

While pressure from the White House has severely curbed the transfer of additional jobs overseas, it is doubtful that the objective to return GDP to the 40-50% consumption level can be achieved by the time of the “mid-term” election target of November 6, 2018.

With the badly-needed addition of GOP Senators necessary to assure substantial Republican support to achieve GOP targets, any shortfall could endanger the Trump manufacturing and factory jobs goal, going forward. What is practically certain is that several additional Republican Senators would make a near-certain Trump production goal an achievable objective during the last two years of his present term.

But one of the unfortunate oddities of the current presidential capability to move his Administration goals forward, is that all Democrat Senators and a handful of Republicans stand in the way of giving President Trump the needed majority to fulfill his major Administrative goals.

If the current imbalance persists, it’s very unlikely that such major objectives as a workable tax plan, infrastructure update, and a major return of factory production to the U.S. will happen.

Under such circumstances, a re-election of President Trump in 2020 could become a very doubtful reality.

While committing hundreds of billions of dollars to transform previously “flared-off” natural gas into “liquid fossil fuel,” the world’s leading energy companies are now faced with establishing global demand.

With a severe shortage at the turn of the past century, U.S., natural gas prices had been as high as $15 per “British thermal unit.” But now, such prices have sagged to as low as $2.50-$3.10 per BTU, while LNG production has risen dramatically. This increased production has resulted in a search for new markets, both in the West, as well as in Asia. Such energy giants as BP plc, Chevron, and ExxonMobil are striving hard to bring LNG into a major expanded demand line.

While BTU prices were less than half that delivered worldwide just a few years ago, prices are hardly high enough today to justify the multi-billion dollars that are still being spent at this time at Gulf of Mexico ports. At least six refineries are now being built/modified to convert this previously flared-off natural gas into liquid natural gas.

To fulfill these massive additional LNG capacities, Shell has already spent $50 billion to become the world’s biggest shipper and producer of LNG. Chevron has recently brought on line two Australian LNG projects that cost over $80 billion. Shell and Exxon say they process more gas than crude oil today, and BP will do so by 2025. This is according to consultant Wood Mackenzie; who warn that large new suppliers are coming online in the U.S., Russia, Australia, and Qatar.

But many countries, such as Myanmar (Burma), Vietnam, and South Africa, don’t have the infrastructure to import and distribute large amounts of natural gas for electricity and homebuilding use. After building all of that LNG production capacity, companies now are forced to look to such less-developed and potentially riskier markets to ship to. Jason Fear, head of Business Intelligence consultancy warns that the next wave of LNG consumers are less experienced, less organized, and politically less predictable.

In the U.S., gas exporter Cheniere Energy teamed up with French utility EDF SA to fund an outlet for its gas. The project has stalled because of existing environmental permitting issues; but Cheniere is not budging from its basic approach. But so far, only one LNG to power project has come to fruition in the U.S.

Meanwhile, energy companies face challenges in finding other uses for LNG. Environmental regulations for cleaner shipping fuels could create an opportunity for LNG. But there are only a limited number of ports in the world, where LNG as a shipping fuel are available. Having indicated these hangups, the overall outlook for LNG looks bright enough to impact liquid natural gas as a major energy fuel in the years to come. But it has a long way to go before a balance between LNG production and demand at profitable prices can be expected to reach a reasonably profitable major business segment.

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