The Pandemic Shaking the American Empire

To the sociologist, the pandemic has been used as an alibi to justify government failures and policy.

From late 2015 to early 2016, under the guidance of deep state interests (which include the military industrial complex, the financial sector and the plutocratic elite in the United States), the United States attempted to strike at the economic power of many nations that potentially threatened the American empire. These nations included Russia, Iran, Nigeria, Venezuela and Brazil. All of these nations are important oil and gas producers, and all are outside America’s geopolitical sphere of influence.

How Did That Happen?

In conjunction with their close allies, the Saud family in Saudi Arabia, the United States lowered the price of oil through dumping. Accordingly, the reduction in price was absolutely artificial and promoted by American geopolitical interests.

We have witnessed a cowardly and criminal maneuver. Through the unsustainable and wrongful use of shale gas (bituminous shale), the United States was able to guarantee its own energy supply. Oil and gas production derived from shale is highly damaging to the environment. The process requires large amounts of water mixed with chemical contaminants. The gas is extracted by using high pressure to inject this poisonous cocktail into underground rock formations, fracturing the shale. These shale reserves are used for only a few months. In less than a year, all economically beneficial content is extracted.

This process requires an enormous amount of continuous funding. Companies involved in the extraction of shale gas are highly leveraged (apologies for the financial jargon) and increasingly in need of additional investment, which creates an erratic and unusually vicious cycle. Such is the case, that Royal Dutch Shell, a traditional and powerful oil company, withdrew from the shale gas business in 2013.

In short, as far back as 2015, well-informed analysts predicted that shale gas extraction would constitute the next financial bubble, a bubble that would burst and harm the American people and the world, as the real estate bubble did in September 2008, the results of which can be felt today.

In spite of the United States having achieved a leadership position in worldwide oil production in 2014, the situation has now become untenable. From Texas to the Dakotas, from the East to the West, the oil industry`s debt is at its limit. Shale exploration requires strong financial investment. The process is therefore only profitable and stable when oil prices exceed $60 per barrel. The price of oil is currently below $40 per barrel and faces further decreases. The Financial Times and The Economist, both trustworthy neoliberal news sources, have reported that big corporate debt in the United States is twice as high as it was in 2008, the year of the subprime mortgage crisis and the genesis of the current economic decline.

Given that the system has injected approximately $30 trillion into the financial market since 2008 with the goal of preventing a definitive economic collapse, the upcoming calamity is, in fact, about to dramatically explode.

Now, consider this thought:

“Fundamentalists believe that markets tend towards equilibrium and the common interest is best served by allowing participants to pursue their self-interest. It is an obvious misconception, because it was the intervention of the authorities that prevented financial markets from breaking down, not the markets themselves. Nevertheless, market fundamentalism emerged as the dominant ideology in the 1980s, when financial markets started to become globalized and the U.S. started to run a current account deficit.”

If you didn’t know any better, you might think that the author of this commentary was some left-wing, or at the very least, some devoted Keynesian monetary theory professor. However, the paragraph above was excerpted from an article published in The Financial Times in January 2008 by investor George Soros. As one can see from Soros’ comment, not every great financial investor is reckless and financially irresponsible.

The Bubble Is About To Burst

For some time now, geopolitical analysts, the scientific energy field community, information agencies and cautious financial investors have noted the untenable situation of the American oil industry. The groups mentioned above compare this situation to the precarious situation involving high debts incurred by American corporations, which could severely impact local banks in the event of a financial collapse. This is due to the bad debts that have occurred when there is no state regulation. This is a highly chaotic and dangerous situation, which is reminiscent of the financial crisis that occurred in September 2008.

Recognizing America’s cultural greed and carelessness, Russia and Saudi Arabia decided to take advantage of the world’s largest oil producer`s apparent vulnerability. How so? By manipulating the price of oil.

In Saudi Arabia, Crown Prince Mohammed bin Salman is personally determined to remain in power, and has great ambitions to modernize his country. The Saud family controls OPEC and is the group`s largest exporter, even though the state-run Aramco (which finances the crown prince’s ambitions) has been devalued. Therefore, several days ago, the Saud family proposed slowing down oil production to force an increase in oil prices.

The Russians did not agree to reduce production. To the contrary, they proposed increasing oil extraction and supply in an effort to force a further decline in oil prices and directly impact America’s financially strapped oil industry. A spokesman for President Vladimir Putin reported that Russia has a state fund of approximately $170 billion. This fund, according to the Russians, can sustain oil prices at $25 a barrel for 25 years.

Thus, we have entered an oil price cold war between Saudi Arabia and Russia, and both are trying to replace America’s leadership in oil sales; however, for different reasons.

Where Does the Coronavirus Pandemic Fit In?

The conflict at the center of the current global crisis involves oil prices, aggravated by the pandemic, and the delicate situation created by hyper-financed capitalism.

There are three layers to this problem: first, and most obvious, is the coronavirus, which has already slowed down economic activity in China, in many European countries, in Iran (also hit by U.S. economic sanctions) and the United States.

The second layer of the problem involves the ongoing price war, which could increase the chance of a long-lasting crisis in the American economy.

Finally, there is the alarming indebtedness of American conglomerates, twice what it was in 2008, as mentioned above. Worldwide stock exchanges have lost value, pointing to severe structural problems. The system is defective, with no fix in sight.

What about the pandemic itself? The pandemic acts like a chemical catalyst. In chemistry, a catalyst is a substance that increases the rate of a chemical reaction without being consumed by the reaction. The pandemic is accelerating factors that are already in motion and that will result in an American financial crisis.

By the way, there are suspicions that the United States may have created the pandemic as a form of terrorist biological warfare against China. It wouldn’t be the first time Americans used bio-war against their enemies. During the 1980s and 1990s in Cuba, there were numerous biological attacks involving harmful chemical agents against Cuba`s food sources, mainly agricultural areas and fishing reserves. At the time, Fidel Castro`s government increased public spending for biochemical and biomedical research, with the goal of creating professionals capable of responding to American political sabotage.

Currently, information from China reveals a rapid decline of the pandemic in Hubei and throughout the country, demonstrating that there has been an efficient and professional government response. We don`t know if the United States conducted sabotage, but regardless, the virus was defeated by the Chinese government`s precise action, and its capable public agents, scientists and community health care teams.

An Alibi for the Failure of Neoliberalism

Trump in the United States and Jair Bolsonaro in Brazil have used the pandemic as an excuse to justify their misguided and exclusionary policies. Brazilian economic stagnation is being attributed, in part, to the viral pandemic. Furthermore, the Brazilian political right has continued to insist on unpopular reforms as an antidote for the global pandemic. Bolsonaro`s economic minister, Paulo Guedes, had the audacity to say that “we were doing well, starting to take off, when we were hit by this wave,” referring to the pandemic. This dangerous ultra-neoliberal lunatic uses the coronavirus to justify the complete failure of Bolsonaro’s policies and his destruction of Brazil.

As you can see, the right is politicizing the pandemic. Since it doesn’t have plans for the nation, it uses a virus to justify its inaction and inability to deal with current issues.

The pandemic will bring serious difficulty. However, major systemic structural challenges will come from the disastrous results of the American oil bubble, which will once and for all cripple the empire`s influence and lead to a new world hegemony marked by Eurasian leadership, alongside a few European allies. Not only will the pandemic cause individual harm, the virus will strike at the weakened heart of the current global leader.

Those who live through the crisis shall see.