“If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn't. And contrary wise, what is, it wouldn't be. And what it wouldn't be, it would. You see?”
― Lewis Carroll, Alice's Adventures in Wonderland / Through the Looking-Glass
In the story, Alice's Adventure In Wonderland, Lewis Carroll takes us into a place where everything is turned upside down. “...everything would be what it isn't.”
That's as good a definition of the Biden Administration as I've ever heard. In a most perverse sense, every time Biden goes after Putin financially, his strategy is thwarted. And ultimately comes back to inflict harm on the US.
Three cases in point.
The first financial caper that the President instituted was his dreadful energy strategy. Although not, at the time aimed directly at Putin. Within hours of becoming President, Biden began the long process of cutting back on the nation's supply of fossil fuels.
The litany is well known to regular listeners of this podcast. Stop the Keystone XL pipeline, halt any new leases, and to the extent possible halt all drilling on federal lands. That's about a quarter of the country's oil reserves.
In short, it's been an all-out war against America's oil and gas. And the results have been spectacularly successful. Causing the price of gasoline to increase by 33% in just a year. Outside of the OPEC oil embargo of the 1970s, this is one of the steepest rises in the price of gasoline, ever.
And it plays right into the hands of Vladimir Putin. Who's nation's primary export is...you guessed it: oil. Estimates are that Russia's cash flow, just for this month of April, should raise nearly $10 billion. And Bloomberg Economics estimates that Russia could earn an extra 321 billion dollars extra on these higher oil prices.
And much of the credit needs to go to our financier in chief, President Joe Biden.
But Biden's largess toward Russia doesn't end with just oil. In international finance, he has been equally generous. Told Putin that Russia was no longer welcome on the Swift System, the primary system for international transactions. And a totally dollar-denominated system.
Biden was essentially driving Putin into the waiting arms of China. And there competing CIPS systems. Where Putin can sell oil for Russian Rubles. And gain a reserve status, with the accompanying float, for his own country's currency.
A sure win for Russia, and for China.
And finally, just this week Biden has pulled yet another contrary rabbit out of his hat. When he refused to accept a half a billion-dollar bond payment from Russia.
The actual circumstance of this bond payment is really interesting. As we've noted Russia had been cut off from SWIFT. The principal international transaction vehicle.
But SWIFT is the only vehicle for Putin to make those bond payments in US Dollars. Biden say's no deal. So it appears that what will now happen is that Russia will not be allowed to make a series of interest payments as we roll through the rest of this year.
Ah-ha! Say's this Administration Russia is going to default on all those bonds.
Back to you, says Putin as this latest move by the US, will likely mean that Russia can keep literally billions back in Moscow. It's like getting a bond holiday. Money Russia can use elsewhere.
And if I understand correctly, there's a little matter down in Ukraine, that might be costing a lot of Rubles.
So there you have it: higher oil prices, international transactions in Rubles, and a bond interest holiday. All brought to you by our Financial Strategist, Joe Biden.
Putin must think he's dreaming.