According to a Russian friend, Russian news is reporting that the conflict in the Caucasus was instigated by Georgia with material support, in the form of weapons, from the U.S. The motive was to benefit McCain by highlighting the need for foreign policy experience. The fact that the attack took place while Obama was on vacation, resulting in footage of him elegantly relaxing while bombs exploded in an allied country, lends some credence to this theory. The friend also commented on the fact that the American-educated President Sakashvili conducts his press conferences in English.

It's worth noting that two reported attacks on oil pipelines which are of vital importance to Europe have been suppressed in the major media. Still no mention here of the Kurdish attack on the BPC pipeline. And this morning comes this headline: BP Not Aware of Bombing on Baku-Supsa Pipeline. This, despite the fact that BP is the largest sharefholder. Whether or not the attack actually took place, the mere rumor surely merits investigation.

Later: Baku-Supsa Pipeline Shut Down
Gorbachev Op-Ed

On the home front:
FDIC Strained: May Lose 17%
FBI Says it Obtained Reporters' Phone Records

J.O.

I won't have much to say after this. We have to see how things go now.

One other possibility exists: This is another Afghanistan 1979 and theU.S. provoked the attack. There are several reasons why I don't think this likely:

1. The place has much shorter lines of communication and supply.
2. Russians are ethnically dominant.
3. U.S. military is stretched to the limit now. WashPost says US military option not off the table. But with what?
4. I also don't think it likely that Washington is planning a Contra orMujahedeen-style war. There isn't that much time and see Reason 2. Central America and Afghanistan were not home turf. It's a whole different thing to run an insurgency in Russia's backyard. Ask the Chechens.
5. This just looks a lot more like Grenada than Afghanistan.

-- MCR

LATER: Markets reacting slower than expected. Just breaking: Russian troops have occupied a town near the capital (Gori) which signals possible attempt to occupy Tblisi. That would put a whole new level on things. CNN is just reacting now. This is far from over and I still like my analysis. I'll be silent today to see how things develop. We're stillwaiting on Russians to demonstrate full intent. Their military deployment still suggests a wider, longer-term agenda than an In-and-Out. I don't think that has sunk in yet.Just now CNN anchors started saying, "Oh boy... this is getting worse."Oil markets might be cleaning out shorts to reposition. This is still developing

Georgia [Update, Sunday Aug. 10, 2008 -- 5:10 PM, PDT] -- Options running out

It is not possible to overstate how quickly this is escalating. It is clear that US options are very limited, short of nuclear war. Thereare no sanctions anywhere that will cause Moscow to blink. What are we going to do? Boycott vodka and caviar? It has also become clear that the Russians have launched a Blitzkrieg attack which has very specific objectives that have yet to be fully achieved. They now control Georgian airspace and a full-scale cyber attack has paralyzed Georgian C3 (command, control, communications). You can bet that there's a battlefield in space that no one is going to talk about, maybe not until satellites starting falling out of the sky. There is little doubt that Russia will bat .1000 on the battle plan, probably within 2-3 days. This tactic is what Russia prepared for starting in 1946. It's in Russian DNA by now. I'm certain that Russian military commanders are under strict orders to "go for broke" in the region. The second front in Abkhasia and the engagement of the Black Sea Fleet signal that Russia prepared for total conventional war well in advance of the invasion. Therefore the nuclear option has been on the table from Day One. The U.S. pushing back through the Ukraine, which has refused to allow the Black Sea Fleet to return to Sevastopol while the conflict rages, is a limp-wristed move sure to further enrage Moscow. The Black Sea Fleet is going to go anywhere it damn -well pleases.

In the meantime Bush goes to church and a swim meet at the Olympics. It must be difficult for him with his pants around his ankles.

The rhetoric at the UN shows a Russian belligerence unlike any I have seen since Kruschev pounded the table with his shoe. The Russian ambassador is doing everything but saying, "Go ahead, make my day."There's one big difference. Kruschev said, "We will bury you." The Russian Ambassador to the UN is saying, "We have buried you!"

The United States has been pushing Russia hard since well-before 9/11, trying to weaken and encircle it. I devoted a whole chapter to that subject in Rubicon. It is clear that the Bush Administration, in its Neocon cock-suredness, mistook Russia's comparatively tepid responses thus far as a sign of weakness. This is a rope-a-dope strategy that the U.S. looks certain to lose unless it can pull a rather large and intimidating hippopotamus out of the hat. The potential humiliation for U.S. prestige is so great that I would bet that the "football" has been dusted off in Beijing while Hu Jintao wonders what happened to his Olympic games. Either the Chinese had advance warning or they did not. If they did, which I suspect, then it's perfect to have Bush in Beijing where both Russia and China can carve him up like a Thanksgiving turkey. If they didn't, then I'm certain that Russia had a huge carrot to put on the Chinese table as the first tanks crossed the border.

Meantime, not a word from Bush or Cheney who -- I'm certain -- are flummoxed and spasmodic. I can see nothing that will prevent the completion of Russia's Order of Battle within the next few days. So it will be a fait accompli. Russia will not pull out voluntarily. Georgia will be occupied, either totally or enough to make sure that it can pose no risk to Moscow -- ever again. Forget the BTC pipeline. And who is BTC's primary owner-operator? British Petroleum. The simultaneous bombing of BTC by Kurdish PKK (Marxist/Leninist) "separatists" in Turkey drives the point home. "We can take out this pipeline any time we want, from any place we want." Investors in Caspian oil are going to start drastically rethinking their decisions. Caspian production is certain to fall and I can now see a possibility that Russia might eventually get what it has wanted more than anything, a return of Kazakhstan, Turkmenistan and Kyrgyzstan into a Russian sphere of influence. If that happens, especially as Saudi Arabia is starting t ofade, Russia will be the energy king of the planet, especially in terms of natural gas.

More importantly, Russia may have just succeeded in breaking theAnglo-American alliance. Russia has just beaten the United States over the head with Peak Oil.

Zbigniew Brzezinski should have remembered that chess is a Russian game.

Still lacking is any apparent response from Georgia's southern neighbors Armenia and Azerbaijan. Azerbaijan has been solidly in theU.S. sphere for a while, but both small countries must be quaking in their boots, fearing that their own southern neighbor, Iran, might get into this from the south. If that happens, all bets are off and Iwould say that nuclear war would be a certainty within days, if not hours. For the moment I believe that Iran will remain silent and just watch with glee, as I am sure it has thus far.

Britain has been officially silent. So has Germany in any meaningful sense. They depend upon Russian energy. There are few voices of consequence to do anything other than make lame sterile pleas for a cease fire. There will be one, just as soon as Russia finishes what it started and we don't know yet how far they plan to go, especially since it seems there is nothing at all to stop them.It is all in the map we drew together.

MCR

Georgia and Russia - a wake up call and a party crash -- Watch oil and gold prices now!

Just as US financial and political powerhouses were celebrating the results of their demand destruction and the "recovery" of our financial markets after the terrifying June/July run-up in oil prices, the Russians went and messed everything up. Even I had forgotten for a moment the Hegelian dialectic which says that if you create (or worsen) a problem (soaring fuel costs), you can solve it and get a result you wanted from the start. In this case U.S. interests got relief for terrified consumers, good news for CNN, CNBC and Wall Street, suppression of rising gold prices and a massive reinvestment of fresh cash in the markets. They found the price point at which Americans stopped (fled from) consuming: $4 a gallon. Yippee, let's go back to talking about windmills, ethanol, offshore drilling and tirepressure. I had forgotten that the last two espisodes of summer demand destruction, both connected to British terror threats, hadn't really accomplished that much in the way of demand destruction. I guess Bush overdid it with the Iran rhetoric. Oops. Can we talk about John Edwards please?

Russia has just brought the energy discussion back to the only real problem there is, Peak Oil. For the moment the Baku-Tiblisi-Ceyhan(BTC) pipeline is its reigning symbol. In six months it might be Nigeria. In six weeks it might be a Cat 4 in the Gulf of Mexico. Supplies are tighter now than ever before. These "tweaks" from opposing sides are producing wild and schizophrenic market fluctuations that threaten to topple the teetering gyroscope of the global economy and its shifting balances of power. I wonder if Zbig Brzezinski can keep up with all this speed chess.

The BTC pipeline, so familiar to FTW and Rubicon readers, carries about a million barrels a day of Caspian oil around Russia to a Turkish port in the Mediterranean from whence it gets shipped to Europe AND the U.S. It happens to run right through Georgia. Mor eimportantly, since it strated operations just a few years ago, it has represented Europe's last (belated) futile hope for energy independence from Russia. Take a million barrels a day offline, or threaten to in a global oil market with no elasticity or swing producers, and watch what oil and gold prices do. The ramifications of this are enormous as the Saudis get pushed nearer the inevitable point at which they have to admit decline as the world will inevitably run to them for another dog-and-pony show of increased production.

I am laughing at all the pundits who were predicting this week that oil would drop back below $100.

This new Georgian conflict is not going away soon and I doubt if it'sgoing to calm down. In fact, the first 24 hours have signalled thatit is going to intensify rapidly. Russian planes have been shot downand there are heavy casualties on both sides. Today, Reuters is reporting that Georgian officials have claimed that Russian attack aircraft attempted (unsuccessfully) to hit the pipeline itself. Clearly it (which runs just south of the Georgian capital, Tiblisi) is threatened and going to stay that way. Europe is almost totallydependent upon Russian oil and especially natural gas to keep from freezing in the winter. That dependence has been worsening every year since (ironically) 2001. Just three years ago Britain surrendered its energy sovereignty to the EU because it couldn't survive without Russian natural gas. So America will be going this one alone (again). Until this war started, Georgian troops represented the third-largest international "coalition" force in Iraq after the U.S. and Britain. Those troops have all just been called home. I tracked U.S. Special Forces activity in Georgia for many years. Georgia's tough little army is a U.S. client, but no medium or long-term match for Russian military might. If -- or should I say "when" -- the pipeline isbreached it will signal a major earthquake along the over-strained east-west fault line that is Russia v. the West. This earthquake has been inevitable for years and I predicted it clearly. This conflict could signal a point of no return which would play into John McCain'seagerly awaiting hands. Brinksmanship is about to be reintroduced to awhole new generation only this time there is no place to "duck and cover".

The war began just as both U.S. presidential candidates were welcoming a breather from the energy crisis which has left them looking like the total incompetents they are. The bombs started falling just as U.S.financial markets were sucking in new cash flows away from gold and as consumers started returning habitually and dangerously to old habits."Hey America," says Vladimir Putin, "Think you have the energy problem under control? Think again." Britain, France and Germany have no choice but to soft-pedal their response. The Ukraine was a bitter object lesson for Europe. This will leave the U.S. and lesser lights standing alone against "Russian aggression". This is the same problem the U.S. always faced over Iran. Neither it or Israel could ever attack Iran because that would have taken oil away from Japan, China, India and much of Europe -- and they would never have stood for it.

We now live in a world governed by the black rule of oil which saysthat he who has or controls the oil makes the rules. The U.S. has no right to complain about this posture. It's the one we defined, adopted and set in motion after 9-11 and the one with which we justified our invasion of Iraq to secure control over the second-largest kown oil reserves on the planet. Remember Dick Cheney's war that would go around the world and not end in our lifetimes?

Be careful what you ask for. What I wouldn't give to be a fly on the wall as Bush and Putin talk"turkey" in Beijing...

Olympics? What Olympics?

MCR


Since Mike wrote that, a related article has surfaced concerning the bombing of the Baku-Tbilisi-Ceyhan pipeline by Kurdish rebels. The timing is striking, no pun etc.

J.O.


Later: MCR has now commented on that news:

Re: simultaneous "Kurdish" bombing of BTC pipline in Turkey with Russia/Georgia war, shutting it down. I hate to say it but this makes more sense...

The Russians have penetrated and run PKK as an asset. (That would be a coup, but I've been out of touch.) They have launched a second-front attack, threatning the pipleine from both sides. If that's the case then this is the worst tension I've seen since 9-11. We may have gone to Defcon 2 already. The message is clear: 'We can take out this pipeline easily from any direction. There's some high stakes bargaining going on and it looks like the U.S. has a bluff hand.

Another option: It wasn't the Kurds -- It's Gladio. If that's it then all I can say is, "Bend over...".

Monday there's going to be mayhem on the markets. If there isn't, then we're watching a charade... I doubt that.--

MCR


The possibility that Russia is running the Kurds as an asset seems plausible. See:
Russia Urges Turkey to Show Restraint Over Iraq's Kurds

JO


I got the PKK confused with our old allies from the al Barzani era, another combination of Ks and Ps. The PKK is Marxist/Leninist, always has been.

So what we have here is an out and out Russian smack in the face, or something intended to appear that away. This then, is terribly overt and direct.

Might the Russians be saying, "You just rocked the global economy for your own ends. Now see how it feels."I think the Russians have the stronger hand. China's in on it too I suspect.

There might be good to come from this. It might force the players away from tinkering further and risking an absolutely insane economic meltdown that would crash everybody. It's also pushing Peak Oil much closer to the center of the table.

Remember a few weeks back when I wrote that the biggest tipping point that would start a collapse is official acknowledgment of Peak and what it means. But the sooner that happens, the sooner we stop digging the hole deeper and begin to dig out.

-- MCR

JO adds: MCR has now seen the article posted above about Russia urging Turkey to show restraint towards the Kurds. He writes:

"This makes it look like Gladio...

time will tell. This is through the Looking Glass."

Water
"Every eight seconds, for example, a child dies from drinking dirty water. Every year, a new desert the size of Rhode Island is created in China because of drought. In the developing world, 90% of wastewater is discharged untreated into local rivers. By 2050, 1.7 billion people will live in "dire water poverty" and be forced to relocate.

Women of South Africa collectively walk the equivalent distance to the moon and back, 16 times a day for water."
Secret Report: Biofuel Caused Food Crisis
Bread Subsidies Under Threat as Drought Hits Wheat Production
Economic Collapse Snapshot
Ultra-Deep Water Drilling
Extraordinary Rendition
American University Law Review article
About-Face on Iran
US Exports to Iran Increase in Bush Year

From the department of, "I'll give you something to protest about:"
Italy's Plan to Defuse Uproar Over Fingerprinting of Gypsy Children: Fingerprint Everybody

Impact of Plastic Bags
Looking to Reopen RFK Murder Trial 40 Years Later
The placement of the article says it all: It appeared in the gossip section.

Pickens [Energy] Plan Taps Social Networking
Brothel Offers Customers Gas Rebate

J.O.

European Delegates Preparing for Sustainable Cities
Comment on Above from Oilempire.us
More Realistic Efforts on State/Local Level
Peak Oil Challenges for Local Governments
A How-To Book on Everything from Fly Traps to Water Filters
Khurais Oil Field Journal Brings Doubts on Saudi Reserves to Surface
"...It was impossible to know if the site had been prepared for the journalists’ tour.
...microscopic robots swimming through rock pores deep underground..."
What will that do to the EROEI?
Lieberman: US May Be Attacked on 2009
Military Exercise in Pacific Targets China
Russia Presses New York Bank Over Money Laundering
No Ice at the North Pole
The National Bio- and Agro-Defense Facility: Issues for Congress
Using Cops, Paramedics and Civilians to Gather Intelligence
It moves the police officer away from his core function, to enforce the law, into being an intelligence officer gathering information about people," said Mike German, a 16-year FBI agent now advising the American Civil Liberties Union.
Mike's Letter in Salon

J.O.

Oil Price Drops

Michael C. Ruppert

I did some searching around the net today for explanations about oilprice drops and found a striking theme: Oil prices are dropping because all of the forecasters -- especially after the airlines Wachovia, Fannie and Freddie -- see the economy continuing a major downslide and they know that demand is going to continue to fall because more are unemployed or broke. Now we've known about demand destruction for years since we started pulling it from Goldman Sachs, Merril Lynch and others. We have been on the bumpy plateau for more than two years where spikes slow demand and oil prices easing after that encourages everyone to drive and spend more; the vicious short-lived cycle. So what seems clear from this is that no matter howfar oil prices drop (and I can't see it being more than another $10 for a few months), there isn't going to be any relief at the pump. That would only lead gullible Americans to drive more which would increase demand again. But I'll bet you the airlines and major industry will benefit from the price slack until the next big shock ina few weeks or months.

I don't think Joe Consumer is going to be too happy because he or shewill be expecting relief that isn't going to come.-- MCR

Blackouts Spread in 110 Countries
Right on cue.
Questions on Science/Technology/Energy for the 2008 Congressional candidates.
Nigeria and Venezuela to Meet on Oil Prices
Together, a force for the U.S. to reckon with.
Lester Brown on Ethanol Shock
"Consider the grain required to fill one SUV tank with ethanol would feed one person for a year."
Yergin Says Don't Blame the Speculators
Iraq's Oil Fields Open to Bidders
Effect of Wind Farms on Radar
Bill to Ban Nutritional Supplements in Canada
Ruff Times
Interesting insights into economics (including helpful links) coupled with retro views on women.
Govt Says FBI Agents Can't Testify About 9/11
"the government urged a judge to block aviation companies from interviewing five FBI employees who the companies say will help them prove the government withheld key information before the 2001 attacks."
Waxman Says U.S. Embassy in Albania Concealed Info on Arms Shipments
A Quarter of Adults to Face Anti-Pedophile Tests

J.O.

A Kinder, Gentler Holocaust

Peak Oil and the Rebuilding (Or Not) of Ground Zero

Jenna Orkin


"The consequences of Peak Oil - a cascade of bankruptcies including trucking companies which will cease delivering food to the supermarket; riots and looting; every man for himself - are unprecedented. 9/11 was unprecedented, too, until it happened. History repeats itself, but never verbatim.

The match has been struck for the burning of 'Rome' but this time Nero isn't playing the fiddle; he's talking about A-Rod and Madonna. Fascism is on its way only this time with more polish, at least so far; instead of goose-stepping in jackboots, it walks softly and wears a nicely cut suit. The gas chambers are subtler too: The fires that burned the toxic debris at Ground Zero for over three months; the formaldehyde-contaminated trailers that were provided for the victims of Hurricane Katrina, are doing the same job only over a more extended time. And we 'Jews' are swallowing the sweet pablum that the nice man on T.V. is offering (uptick in the stock market today!) Because this new kind of Holocaust 'could never happen.'"
*************************************************************************************


Battles to publicize unpopular issues such as the lethal air quality following 9/11 or the arrival of Peak Oil in 2006 have two phases. The first consists of sailing against the wind. The mainstream press ignore the issue or repeat the government's lies. This is unpleasant but after the arrival of Phase Two, one looks back at it with some nostalgia. For the second phase occurs when the problem has grown so big and ugly, it can no longer be ignored.

Legend has it that Joseph Kennedy knew the stock market was about to crash in 1929 when his shoeshine boy gave him a tip on what to buy. Kennedy sold. The story is no doubt apocryphal (Kennedy was surely planning to sell anyway; the shoeshine boy, if there was one, was just the last straw) but it makes the point: When everyone knows something, it's too late.

So it's with some ambivalence that we note the growing acceptance of earth-changing upheavals ahead. 9/11, Hurricane Katrina, the "Shock and Awe" campaign that morphed into a living example of "the war that will not end in our lifetimes..." One disaster after another has ended not in abatement but in simply being supplanted by a new disaster. Obama's catchword is Change and many will vote for it but how many really expect it? When AOL, not normally considered a tinfoil hat website, publishes a story on people preparing for Apocalypse in 2012, you know The Powers That Be are psyching you for something even if the story, with its Nostradamus-like allusions to the Mayan calendar, has a New Agey tinge, (or should I say "aura?")

The fact that oil plays into our bleak zeitgeist is also accepted even as people sputter in protest, "But what about wind/geothermal/solar/Brazil/hybrids/algae/electricity/bikes/some-genius-coming-along-with-something?" Pick your 'solution' which may be a wonderful thing in itself but will not replace oil in our autophagous economy that depends on infinite growth in a finite world. Nor will it replace those oil and gas products, pesticides and fertilizers, which account for the astronomical spike in population since oil's discovery in 1859 to 6.5 billion.

However, the worst is yet to come. Despite Congress' clueless scolding of "speculators," those speculators are not the main source of the current oil dilemma. Unlike the Hunt brothers in the seventies, oil speculators do not take delivery of, much less horde, oil. Few speculators have tankers of the stuff in the back yard. But when did reality ever trump a populist, vote-gleaning stand?

The country's fast heading into what we'll euphemistically call a 'recession,' interrupted only by speed bumps like the "economic stimulus package" of a few hundred dollars that many of us received several months ago. The Bush administration's Energy Advisor Matthew Simmons maintains that oil could easily hit $300 p.b. On the financial front, we have the collapse of stalwart institutions like Bear Stearns Bank, sold off at a fire sale price to J.P. Morgan/Chase via a "non-recourse loan," aka "gift," of 30 billion dollars courtesy of the American public. And that was just for starters. Now Merrill Lynch, Citigroup, Fannie Mae and Freddie Mac seem to be following suit.

Yet everyone's still going about their business, if they can afford the gas to get there. And here in New York City, the rebuilding of Ground Zero has been moving right along.

Up until a couple of weeks ago, that is, when the Port Authority's Christopher Ward took a deep breath, quoted the philosopher George Santayana (the thinking man's equivalent of saying a prayer) and announced that the goal of a grand opening by the tenth anniversary of the attacks was... fuggedaboudit.

Maybe all the squabbling parties downtown should just learn to play better together. Or maybe someone with his/her ear to the ground is getting, if we may mix metaphors, cold feet.

For ignore it or not, Peak Oil is here and about those gas prices, you ain't seen nuthin' yet.
Writing for The Energy Bulletin, Jerome a Paris informs us that the relentlessly upbeat International Energy Agency has sobering data it's anxious to release. But they have been told by the Bush administration to withhold the bitter truth until after the election.

The Powers That Be at Ground Zero may not know that precise fact. But they probably have a more acute sense than most of where things are heading. And while it's in their interest to keep up the front as long as possible, they must surely recognize that it's not in their interest to invest in a project whose future is iffy.

The consequences of Peak Oil - a cascade of bankruptcies including trucking companies which will cease delivering food to the supermarket; riots and looting; every man for himself - are unprecedented. 9/11 was unprecedented, too, until it happened. History repeats itself, but never verbatim.

The match has been struck for the burning of "Rome" but this time Nero isn't playing the fiddle; he's talking about A-Rod and Madonna. Fascism is on its way only this time with more polish, at least so far; instead of goose-stepping in jackboots it walks softly and wears a nicely cut suit. The gas chambers are subtler too: The fires that burned the toxic debris at Ground Zero for over three months; the formaldehyde-contaminated trailers provided to the victims of Hurricane Katrina, are doing the same job, only over a more extended time. And we "Jews" are swallowing the sweet pablum that the nice man on T.V. is offering (uptick in the stock market today!) Because this new kind of Holocaust "could never happen."

Iran Ready to Discuss EU's Nuclear Offer
Note Iran's statement that it would never attack Israel.
Does Gold, Commodities Surge Signal Impending War?
How Iran Has Bush Over a Barrel

Russia Presses US Bank Over Money Laundering

FTW Milestones

Sept. 1999 – FTW breaks an exclusive story tying the Bank of New York(BoNY) to the laundering of up to $15 billion in stolen IMF funds and organized crime proceeds from Russia. This cash flow nearly quadrupled the Bank's share prices and resulted in three successive 2:1 stock splits. In a prelude to the Enron scandal FTW also shows how the compensation packages for BoNY execs increased by 600%.

Beginning in 1999 FTW began a series of what would be three stories detailing how the U.S. looted Russia after the collapse of the Soviet Union. Mike's reporting was so accurate that it got him invited to an economic conference in Moscow in March of 2001. Compare what Mike wrote nine years ago with these recent developments in U.S. courts.

Presidential Directive Orders Sharing of Biometric Data
Defense Intelligence Agency Reports Loss of Padilla Video
Southern Californian Residents Gear Up to Fight Secretive Expansion of Blackwater
Willard Report
On Unauthorized Disclosure of Classified Information
Fade to Black: Is This the End of Oil?
the last year has seen major oil companies begin to make more noises about potential problems ahead. Foremost among them has been head of the French oil company Total, Christophe de Margerie, who has declared that world production will never exceed 100 billion barrels a day, a level of demand expected in less than a decade. "The oil companies are changing their tune," says Campbell. "They can't quite say 'peak' in so many words. They don't want to rock the boat."

Mumia Abu Jamal Recognizes Peak Oil
Michael Kane's blog.
The Word "Rape" Banned at Rape Trial
BBC Uncovers Lost Iraq Billions