Did OPEC manufacture the financial meltdown?


The new dollar note,  with thanks to Atlas Shrugs!

Panic on Wall Street, brokers feeling melancholy. Walid Phares, always a perceptive analyst, asserts that “clearly an oil strategy was in the works with a calculated impact on the US economy.”

A rather more convincing cause of the sub-prime crisis, which started the snowball rolling into the financial avalance, is given in the UK’s “Spectator”, athttp://www.spectator.co.uk/archive/features/2189196/clinton-democrats-are-to-blame-for-the-credit-crunch.thtml?SelectedIssueDate=4%20October%202008

“OPEC’s Heavy Hand,” by Walid Phares in Human Events, October 10 (thanks to JW):

Who manufactured the financial meltdown? It wasn’t only Wall Street: OPEC’s heavy hand is felt but unseen by the media and our politicians. In bypassing a narrow economic analysis of the ongoing crisis, we can detect clearly the connection between the dizzying ups in petrol pricing and the slowing of American buying capacity. Though we have to conclude that while it is due largely to both Wall Street’s corruption and politicians’ abuse of the system handed the tools of doom to the middle class, Main Street’s rapid disenfranchisement was manufactured overseas, thousands of miles away, at the hands of many of the members of OPEC, the oil-producing Cartel.

Indeed, as economic commentators tell us (including a strong accusation leveled by real estate tycoon Donald Trump on Fox News against OPEC), the oil powers are behind the instability that crumbled the will of millions of middle class Americans over the past three years.

If we go back in time, we can see that oil pricing by OPEC’s hard core shows clearly that US leadership wasn’t able to convince the top producers from the Gulf to give American oil consumers a chance. Most producing regimes replied that demand — mostly from China and India — was putting pressure on production. Pressed by Washington to produce more, the “regimes” alleged it would affect the selling price and thus minimize their profits, but promised they would try to “be understanding” of US needs in energy.

This attitude gave the producers discretion over price, while Jihadi propagandists roamed the media accusing Washington of putting unbearable pressure “on the region” to follow American injunctions in setting petrol’s prices. Was there a direct connection between the oil regimes and the Jihadi propagandist machine? We have no answer to that now, but clearly an oil strategy was in the works with a calculated impact on the US economy. This charge is still in its early stages, it will be challenged ferociously, but it will stand as long as convincing answers are not provided….


Read it all.


It would be far truer to say that the dreamy belief in the benevolence of Muslim oil-producing states, and especially in Saudi Arabia that was said, as it ruthlessly promoted its own economic interests (calculating, at each time X, the ideal price Y that would maximize the value of Saudi reserves and also insure that current Saudi needs could be met), to be our “friend” and “ally” working to “moderate” prices in OPEC, was based on a complete misunderstanding. The Saudis always calculate how to maximize their revenues over time. They must take into account all kinds of things: demand elasticity, and changes in, and the velocity of changes in, other non-oil sources of energy, as well as the possible non-Middle Eastern sources of oil.

Phares appears to believe that there is some kind of mystery in oil pricing. In this, he echoes those who think, on the other side, that the American government needs to do favors in order to be allowed to buy oil at the market price. There is no need, and there never has been, to do any favors whatsoever for the Saudis.

Further, it appears from the article above that Phares thinks a lower price of oil is desirable. That isn’t true. The price of oil should be high. But it should be high because we, and other oil-consuming nations, have the sense to tax ourseelves, and thus to recapture some of the oligopolistic rents that otherwise accrue entirely to the sellers of oil, such as Saudi Arabia. The higher the price of oil, the lower the demand. The greater the assurance that the price of oil cannot be jerked up and down to prevent investments in non-oil sources of energy, the more certain and the larger those investments will be, and they are needed. The only way to insure that the price of oil goes steadily up is for oil-consuming nations to put steadily rising taxes on the use of oil. What they do with the money is another matter, but all such tax money should, sensibly and ideally, go to help pay for nuclear plants, for initial subsidies to wind and solar power, to subsidies for a rebuilt national railroad grid, and for urban mass transit systems.

There is not a conspiracy by the oil states to damage the Americans through raising the price of oil. They are keenly aware of the need to insure that the price is not raised so high that the move out of oil goes so swiftly that it will leave them with reserves in the ground with their value much diminished. But the Muslim oil states are not our friends, either. They are malevolent. They are our enemies, or rather, since we are Infidels, they do not wish us well. And they do spend hundreds of billions (Saudi Arabia alone has spent a hundred billion dollars) on building mosques, madrasas, conducting campaigns of Da’wa, and building up a network of Western hirelings to do their bidding in the West.

That is the real problem. And misperceptions of Saudi or other Muslim oil-producers’ power to cause damage, get in the way of recognizing that as the real problem — that the Money Weapon from oil needs to be diminished, and can only be diminished if oil-consumers raise, through taxes, the price of oil.

Posted by: Hugh [TypeKey Profile Page] at October 13, 2008 8:29 AM

4 thoughts on “Did OPEC manufacture the financial meltdown?”

  1. “Hugh” seems to read Walid Phares sharp piece more than Phares meant. He made Phares say things based on “its seems” and “he meant” that he never wrote or said. I credit Phares with the strategic view of raising the issue to begin with and making the functional differences between those Islamist regimes who play with the West a game of grand maneuvering. “Hugh” seem to portray Phares as a new kid on the block. Well I don’t know when “Hugh” began to play Jihadi studies, but Phares began his analysis three decades ago, ie, in 1979 with his first book. Go slowly when you try to play with Phares reasoning in these affairs. For it is not as simple as “we-are-infidels-therefore-the Muslims-are-after-us.” That is first grader thinking. The issue is how are these regimes maneuvering to defeat the West not the if they are..

  2. I doubt OPEC created this mess-for one thing, oil prices are finally dropping to more normal levels at long last and those greedy bastards are not enjoying that. For another, this mess was domestically long in the making. You hand out mortgages like candy to anyone with their hand open regardless of creditworthiness then sooner or later you will get burned.

  3. No – OPEC does not really have the ability to do this – despite hoots from the morons in the middle east. This disaster was of our own making and I hope that fools responsible are punished. After the bail-out this week, trading continued as normal – the idiots haven’t even tried to understand the mechanisms behind the crash and there is every danger that unless some serious homework is done major problems will follow.

  4. Cut to the chase: Islam has used oil profits to speed our demise. Muslims must be laughing (all the way to the bank) at liberals refusing to allow drilling off our shores. We are paying the price of stupidity…or serendipity…to think anything muslim is “peaceful.”

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