Amateur politicians, and I count myself in that description, sometimes come up with really novel and original solutions to problems.
When I think back to the Greek crisis and then to the Brexit debates, a completely new wave of internet bloggers who decided to elucidate their newly found skills in economics and politics were regularly putting forward ideas on how the problems could be sorted out. And as an “expert amateur” myself, I have to admit that one or two of those ideas had a lot of merit and should have attracted a lot more attention from the professionals.
And then, to make things worse, our professional politicians are now discovering to their dismay that the electorate can no longer be trusted to be clueless and do what they are told to do and are actually starting to think for themselves and are asking some awkward questions about how things are being run.
And when it comes to referendums, well those are turning out to be one disaster after another for the ruling classes. So it’s not surprising that Jean Claude Juncker, the president of the European Commission, has urged EU leaders not to hold more referendums that concern EU matters as he fears that European electorates would more likely take an anti-EU stance:
“Regarding referenda on EU membership, I think it is not wise to organize this kind of debate, not only because I might be concerned about the final result but because this will pile more controversy onto the huge number already present at the heart of the EU.”
It’s not hard to understand Juncker’s distaste for referenda: the EU has been on the losing end of just about every popular vote regarding EU matters. Whenever people in Europe have been given the rare opportunity to vote on Brussels-related business, they invariably vote against Brussels. In fact, the only vote the EU has won this century was in Ireland in 2009, and that was only after the people had first voted against the Treaty of Lisbon. It was the wrong answer and voters were politely invited to reconsider. Or else!
Now we have the second, amateur politician to be the president of the United States. The first one was an actor and now we have a businessman, so I guess you could say that, at least, the quality of amateur being selected is improving.
So it was along this theme of democracy in general and problem-solving by amateur politicians in particular that my radar homed in on some comments made recently to a reblogged article on zerohedge.com. To properly set the scene, I have first repeated the article in question, which first appeared on oilprice.com, and then I urge you to read the comments made by “equity_momo” afterwards.
by Irina Slav (5 Dec 2016)
OPEC’s historical deal to cut production has been sealed, and oil prices have jumped as a result, comfortably above the $50 per barrel mark. According to Lukoil’s vice president, Leonid Fedun, the average price of crude in 2017 could reach US$60 a barrel, thanks in no small part to that agreement.
According to some observers, the effect won’t be so noticeable, and prices will continue to hover around US$50.
In any case, Russia will certainly benefit from the cut agreement, as the chief of VTB, one of the country’s largest banks, said recently. Andrey Kostin said that the decision to cut production will, on the one hand, prop up international prices, which of course is good news for Russia, and on the other hand, it will benefit the ruble, an outcome which was also to be expected given the central place crude oil occupies in Russia’s export mix.
What’s perhaps more interesting is that Russia did not, in fact, obligate itself to cut from essential production. It surfaced last week that the country’s total output had reached a new post-Soviet record of over 11.2 million barrels per day. The precise figure, according to Deputy Energy Minister Kirill Molodtsov, was 11.231 million barrels, and it is from this production level that Russia will take off the 300,000 bpd it agreed to cut to help OPEC in its market rebalancing efforts.
Incidentally, Libya, which has been granted an exemption from the agreement, plans to ramp up its own output by 300,000 bpd by the end of 2016.
To compare, Saudi Arabia pumped 10.6 million bpd in November, and now has to cut 486,000 bpd from that figure. Its friends in the region, including Iraq, Kuwait, Qatar, and the UAE, will cut a combined 510,000 bpd from their output.
Russia will continue to produce crude at the rates it did when prices were lower than they are today—a level that still allowed its oil companies to turn a profit. They might not be too happy about the stronger ruble, as this would negatively affect production costs, but it’s uncertain exactly how big the ruble’s rally will turn out to be.
Russia’s 2017 draft budget had US$40 per barrel as a base scenario for oil prices, according to economist Natalia Orlova from Alfa banking group. Every US$1 above this level translates into around US$2 billion in budget revenues. The budget is currently being discussed.
The country’s budget deficit for 2016 was estimated at over 3 percent by PM Dmitry Medvedev earlier this year, in case oil fell below US$50 again and stayed there long enough. It didn’t, so the budget for the year could be 3 percent or less.
Saudi Arabia, on the other hand, has a deficit that is 20 percent of its GDP for this year despite massive spending cuts. So does Iraq. Kuwait’s deficit is 12 percent and UAE’s is 9 percent. And yet, these four countries will shoulder the bulk of the OPEC cut.
Russia, along with Iran, could turn into the big winner of the agreement, enjoying high output and higher prices, which would allow it to further expand its global market share. Unless, of course, OPEC lies, as former Saudi Oil Minister Ali al-Naimi plainly said at a media event for the promotion of his memoir. “Unfortunately,” he said, “we tend to cheat,” commenting on how OPEC handles its only tool of market rebalancing: production cuts.”
And now for the cherry on the top! This is what “equity_momo” had to say:
Another reader, “LawsofPhysics” was so impressed by that comment that he replied:
“Please seek public office immediately!”
To which “equity_momo” responded:
“The time is not right. There is no helping people who do not want to be helped.
Once the crisis is obvious to a few more layers in society and that there is no turning back, then real change for the better can occur. There are positive signs with Brexit and EU splintering (and Hillary not winning counts too) but the cog-dis is still far too great in for too many people to stand up and be counted.
There’s still 60 million Americans who wanted or were too ignorant to understand that WW3 with Russia was incredibly likely under Clinton. There’s still almost 50% of the population of UK who think outsourcing their liberty to a communist cabal in Brussels is a good idea. Until Cities fall upon very hard times this won’t change. In short, people have too much to lose to really rock the boat. The boat is f**ked though, many will drown. Those that accept their new reality will then be in a position to be helped.”
Maybe amateur politicians are not so ignorant after all.