Conspiracy theorists are generally right that a relatively small number of people run the world and looking at the relationships between these people can tell you why things are the way they are.

However, they seem fixated on the wrong group of people and the wrong relationships, and vastly underestimate the ability of the power elite to remain in power by changing themselves or inviting new people to the club.

There is a conspiracy, but the conspiracy theorists keep missing it, and anyone that talked about the “Washington Consensus” in 2008 really doesn’t understand the people that actually do run the world.

China and Saudi Arabia are now pretty much full fledged members of the great global economic conspiracy. Saudi Arabia has had a club membership since at least World War II, and China got into the club in the late 1990’s.

OPEC agreed to sign a cooperation agreement with the Kremlin and brought oil and gas giant Russia closer into the fold of the cartel. While the consequences for crude consumers are pretty clear the consequences for the political stage are less obvious. It is tempting to assume that OPEC, with the Saudis as the dominant voice within the cartel, would not move on such a historic decision without the nod from Washington. If this is true than why was there a cooperation agreement with Russia?

The Washington consensus seems on a confrontation course with Russia and the conflicts of interest from Kosovo to Iran to Georgia are accruing in the last couple of years. The deployment of a new missile defense system in Eastern Europe certainly did nothing to soothe relations. Some might argue cold war redux is already upon us.

Is it possible that Washington via its Texas nexus is cooperating with Russia on the price of oil and the Washington consensus is disagreeing on such important issues like Kosovo, Iran, Georgia and and missile defense? It seems almost impossible but then again so seemed the invasion of Irak.

Forgot to mention using up all our copper in windmill generators. That would be VERY bad.

Quiet day today, so maybe we won’t get chastised for over posting.

Interesting idea about including engineers and scientists in problem solving. Marx included them in the proletariat for that very purpose.

First I’ll acknowledge they will have the same problem as economists, the first loyalty is to where your paycheck comes from.

But I don’t think modeling ability is the thing they bring to the party. We have this huge disconnect between the financial world and the real economy, and I think that people that deal in real things bring different perspectives and abilities. I’m afraid we may all be running around barefoot and shooting rabbits with homemade bows and arrows before financial people learn the lesson.

Read the New Scientist article and I’ll say that green people give me kind of an orange feeling. There are some things that will work and others that threaten to be our next bubble of mis-allocated investment. And there are a lot of idealogical zealots in that group, which is not really the model of the scientific thought process.

Like solar and windmills. They have potential to be a small contributor as energy sources, but I would hate to see us use up all our steel and silicon just to find out we didn’t get enough energy. Ala corn ethanol and its one to one swap with fossil fuel energy.

Conservation and energy efficiency works, but here we have squandered decades of missed opportunity. It culminated with the biggest residential building boom of all time. There are a lot of inexpensive things to do to make housing energy efficient and groups have been pushing for regulations enforcing good stuff. But that was all shot down by anti-regulatory zealots. Then there’s SUVs and Hummers….But you have to start sometime.

Anyway, if they are going to create money and jobs I’d rather see it spent on stuff that works.

I find this paranoia ironic in that this is their market. It’s far more efficient to pay for your resource requirements than to try to snatch them isn’t it?

That China would like to see some of the profit from the purchase of said resources come back to them is hardly evil. If you know you are going to buy a lot of stuff from someone and you can have a share of the action if you like and you have too much cash on your hands anyway….

As for Norway, they could remember that a decent bit of their wealth comes out of the ground in the form of that nasty green house gas forming stuff. Will they leave it there?

Following on from the solutions to the economic problem Meme, I had a thought that perhaps looking for economic solutions from economists, traders and bankers is a bit like asking the barber if you need a hair cut. Not so much in the case of economists but they look more often in the rear vision mirror than they look ahead.

Nouriel Roubini can at least see what is coming but that is not the same as seeing a way out, far from it. In his last interview he more or less admitted that his proposal of giving a 5% hair cut to FM And FM bond holders would have been politically reckless.

So where do you look for solutions? Perhaps towards the purely technical professions and the sciences. There are engineers out there who are very good at modeling extremely complex problems.

Mr Roubini could probably compose the essence of the problem and hand it to a bunch of different engineers or scientists as a kind of black box situation and then along with some other experts, including foreign policy experts perhaps, select the some of the best ideas to come back. I would put Brad Setzer on the panel too.

I suspect, as Mohammed al Erian suggested, that a fiscal solution (not just hand outs like tax cuts or rescuing FM and FM) will be the way out. The problem has been inappropriate allocation of capital, giving more to people with a proven record of spending it badly is a very bad idea.

The answer is blowing in the wind…probably.

http://environment.newscientist.com/article/dn14701-100-billion-could-yield-two-million-green-jobs.html

There’s this for Norway to consider, if they need to make a big portfolio move in a big hurry.

We could do some three-way hanky panky, where China trades trees for tinto, and Norway saves a whole forest.

8-20-08 9:19 AM EDT
DOW JONES NEWSWIRES

Fannie Mae’s (FNM) and Freddie Mac’s (FRE) ability to repay $223 billion of bonds due by the end of the quarter may determine whether they can avoid a federal bailout, Bloomberg reported on its Web site Wednesday, citing various analysts. Fannie has about $120 billion of debt maturing through Sept. 30, while Freddie has $103 billion. Rolling over the debt “is the single most important factor to their ability to remain liquid,” said Moshe Orenbuch, an analyst at Credit Suisse in New York. “So far, they’ve been able to do that.” Freddie paid its highest yields on record in a debt sale Tuesday amid concern that credit losses are depleting its capital.

What a bunch of killjoys.

http://www.ft.com/cms/s/0/e30472a6-7e79-11dd-b1af-000077b07658.html?nclick_check=1

Au contraire.

If China would take its near $1.3E12 in US reserves and write economic stimulus checks to each its 1.3E9 citizens, they would each receive $1000.

This would solve the US citizen’s problem of relying on creditors to budget for the unruly behemoth we have in Washington, and also be a nice communist thing to do for the People’s Republic of China. It would go a long way in re-affirming everyone’s faith in Communism !

So never underestimate the many ways there are to spend money. They better hurry too in case Obama wins, because he wants to write another check to US citizens. No telling how long that will work!