Limiting Demand: Slim's Paradigm

In my article “Mr. Putin’s Economic Theatre of Operation, I cited “limiting demand” to explain a Russian Iranian Oil Deal.

For most people, supply and demand is the simple concept of economics:

If more sellers (supply) show up than buyers (demand), the sellers must drop their prices to sell their goods.  They are competing with other sellers.  The more perishable the product, the faster they must sell it, the more willing they are to drop their prices.

If more buyers show up than sellers, the price goes up because buyers to not want to go home empty handing. Specially if the product is in great demand.  That is the premise.

Now on to limiting demand.

Slim’s Paradigm

“Limit supply and drive up prices. Limit demand, bypass the market, stablise the economy.”  ~ Slim Fairview

Look at what is happening from the standpoint of the two articles I wrote on the subject:

Putin’s Overture in Eurasia Minor

Mr. Putin’s Economic Theatre of Operation

In addition:

China: Not the What the Where.

What is happening? 

Russia and China: Nat Gas Deal

Russia and Iran:  Oil Deal

Russia and Germany: Nat Gas Deal

China and Germany:  Have we forgotten that China and Germany are trading partners?

If Slim’s Paradigm becomes the new normal, all the forecast numbers will have to be recast

.

A few years ago I wrote an article “Energy Independence” (Then What?)  In that article I said that the Middle East must find new customers to protect oil revenue.  China was the obvious choice.

I also wrote, “It is a universal condition. We refuse to accept that all alliances and enmities are transitory.” The Quotations of Slim Fairview © 2014.

The Global Economic Landscape is shifting. Please allow me to present a soupçon of evidence:

NAFTA

OPEC

APEC

EEU

Eurasian Economic Union

And, soon…

A Union of Emerging Nations Economic Unions. 

And, an 

E-20

The world is fragmenting into economic (not military) power zones.  Asia, Middle East, Africa, Europe, Eurasia, Latin America, North America.

One important factor of the new paradigm and the recalculating of the numbers:  it will replace the following, specially regarding China.

“When the numbers are bad, the Wall Street experts gloat.  When the numbers are good, the Wall Street Experts doubt the numbers.” ~ Slim Fairview.

The concept of limiting demand will enable long term economic planning with a reasonable degree of stability by rendering market forces irrelevant.

In addition, we seldom see ourselves as others see us.  Look at us from the perspective of emerging nations.

• ·       Chinese People have suffered poverty and hunger.
• 
  
• ·       Russian People have suffered poverty and hunger.
• 
  
• ·       Americans are rolling in dough.
• 
  

Remember! The perspective of people starving to death in emerging nations.

I will explain what I mean by limiting demand using golf as a metaphor.  

This is a lesson about Economics.  Golf is a metaphor.  The takeaway is: Economics!

Golf Course # 1.

Public (municipal)

Fees: $50, per round in groups of four.

Anyone can play.

The demand exceeds supply.

Many are turned away.

Golf Course # 2.

For Profit.

Anyone can play.

Demand often exceeds supply.

Fees: $50, per round base rate plus extra fees with high demand.

If few people want to play, the fee is $50. As the demand rises, the fees may rise to $100 or $150 per round.  Many can’t afford the higher fees.  Many are turned away.

Golf Course # 3.

Private

Fees: $50, per round.

Demand limited to 500 members.

Not exclusive, not for the rich, not restricted.  Simply Private.

Demand is limited, the fees are always $50, and everyone gets to play.

It should be obvious to all that price increases are more sever among those who can least afford it.  As this applies to food, in many industrialised nations there is a fixed or limited demand and a stable supply, and a marketplace that can blunt the negative impact on the less fortunate.

In the US and other industrialised nations there is certainly poverty and hunger. 

In Emerging Nations:

·       A Flood

·       A Drought

·       A Crop Failure

·       A Migration of Starving Refugees

·       Widespread Famine

·       Global Food Aid (Marginally helpful)

·       Population Displacement

·       Starvation and Death

People lying on stretchers, skin and bones, unable to stand or even sit up because their bones are too fragile to support their weight, mothers clutching to the bodies of their dead babies, do not care if we've had 5 servings of vegetables, the unfairness of golf, and never want to hear, “Childhood obesity in America is caused by poverty.”

As the world moves into Economic Power Zones, survival will come from “limiting demand”.  This is to insure that economic stability will prevail.

Regards,

Slim

slimfairview@yahoo.com

Copyright © 2014 Robert Asken Slim Fairview

All rights reserved.

Mr. Putin's ETO

Mr. Putin’s Economic Theatre of Operation.

In WW II we had the Pacific Theatre of Operation and the European Theatre of Operation.  Germany had the Russian Front. That was the military Option.  That was then, this is now.

Globally, the Military Option is no longer viable.  It has disappeared into the delusional mist of nuclear deterrence taking the Cold War Propaganda War with it.

What we have now are two, new, wars.

1.  The “Nuclear Free” safe wars of skirmishes and atrocities that keep us glued to the television set, freeing us to vent and lament from our safety blanket of nuclear deterrence and enabling us to feel good about ourselves because we show we care. And,

2.  The Real War.  The war I call the Economic Theatre of Operation.

The revelation came amid news reports that the EuroUnion was looking to attract Ukraine and that President Putin announced intentions to form a Eurasian Economic Union.

A simplistic interpretation is that Mr. Putin is attempting to defend the Russian and the Eastern European economies from the European Economic Union. However, on slightly closer examination, we see that the EuroUnion Economy is weak.  A better conclusion?  Using some basic B-School analysis, we see that Mr. Putin is taking advantage of a competitor’s weakness to increase market share and to enhance revenue.  However, there is more to it than that alone.

FLASHBACK

The world saw the pictures.

Ronald Reagan at the Berlin Wall, “Mr. Gorbachev, tear down that wall.”

The Wall coming down.

Lech Walesa at the Gdansk Shipyard Rebellion.

Mr. Gorbachev seated atop a tank in Red Square—Fall of the Soviet Government.

America’s unbridled economic success on programmes like, “Lifestyles of the Rich and Famous” and “Dynasty”.

The Promise?  Free Market Wealth and Military Support and Protection.

The Reality?    Far from it.

Nature abhors a vacuum. Mr. Putin is stepping into the breach.

What is Mr. Putin’s Strategy?

1. Move Russia into the 21^st Century

2. Shift focus from inward to outward

3. Build Economic and Military Alliances

·       Iran

·       Crimea

·       Syria 

4. Build Foreign Policy Credibility

5. Restore cultural pride in Eastern Europe and Russia

6. Build on the shared histories and hardships with Eastern Europe.

REMEMBER:

Both Eastern Europe and Russia were ground beneath Soviet Military Occupation.

Both Eastern Europe and Russia were ground beneath German Military Occupation.

Mr. Putin is in the process of or already has cemented an oil deal with Iran.  This is a new focus on the Economic Law of Supply and Demand.

You may call it restricting or limiting access. I call it restricting or limiting demand.  Either way, it is counter intuitive to Freshman Economics.  I will explain what this means in another article.  For now, a deal with Iran stabilizing oil prices and oil revenue is important if not crucial to all parties concerned.

However, we should also consider this:  With the oil deal with Iran, what will be the change in the dynamics with

·       The Eurasian Economic Union?

·       Iran’s relations with Arab Nations?

·       The Relations between Arab Nations and Russia?

NB I did point out that it will become important for the Gulf Oil Producing Nations to act to protect future oil revenues!

Now there are some who can see nothing but RED and are attempting to create a Panic.  However, a closer examination will reveal that Russia has embraced the Chinese Model.

I twice pointed out the difference between Soviet Style Communism and Chinese Style Communism.

Soviet 5-year Plan

Soviet 10-year Plan

Soviet 20-year Plan

CHINA

Hydro Electric Power dam Project

High Speed Computer Project

High Speed Rail Project.

In addition, I pointed out:

China: Rising middle class, rising economy.

India: Rising middle class, rising economy.

USSR: No middle class, no USSR.

USA: Declining middle class, follow the path of the trajectory.

Finally, I am suggesting the Mr. Putin may be the only person reading my blog, because he seems to be alert to the changes in the Global Economic Paradigm.

CHINA

I pointed out that

China has shifted from looking inward to looking outward.

China is establishing economic and political alliances globally.

China is moving into Western Asia.

China will succeed because China will do as we did and not as we say

RUSSIA

Russia has shifted from looking inward to looking outward.

Russia is establishing economic and political alliances globally.

Russia is moving into Eastern Europe.

Russia will succeed because Russia will do as we did and not as we say.

EUROUNION

The European Economic Union does not have a strong offer.

Thus far, President Obama has done a fine job on Foreign Policy.  Egypt and Libya are two examples.  And he had strong allies in each situation. And he was a strong ally in each situation. However, Eurasia is neither a political theatre of operation nor a military theatre of operation.  This is the Economic Theatre of Operation.  Here President Obama’s allies (The EuroUnion) have little economic strength.  And, Chancellor Merkel has little or nothing to offer Eastern Europe.

Eastern Europe saw what happened to Southern Europe

Eastern Europe knows how and why it happened.

Eastern Europe knows that Southern Europe fueled the German economy.

And, they know much, much more.

When I wrote, “Merkel Invades Russia, I wrote about the assault on the Banks of Cyprus where Russia had sizeable sums on deposit.

When I wrote about Merkel’s Ponzi scheme, I wrote about Merkel’s attempt to send Madame Lagarde around the world, “Begging for coppers” Seeking a series of bailouts from a series of sources.

Eastern Europe can easily see that the Chancellor wants Eastern Europe to feed her Economic War Machine at the expense of Eastern Europe.

Merkel’s strategy is too obvious.  Keep the German economy strung until the global economy has its turn round, and then declare victory for her policies and their tenure.

Also, when I wrote “Merkel’s Big Lies", I listed the 10 Propaganda tricks being used by Merkel in her assault on Southern Europe.  This is analogous to the tricks used by industrialised nations to exploit emerging economies.

The only thing left to mention is this:

In addition to the fact that the Military Option is no longer viable, the economic zero sum game doesn't work anymore either.

You can heed my admonition now or wiat 50 years for a global depression.  Not a statistical one—a real one.

Warmest regards,

Slim

If you find anything here to be helpful, please don't hesitate to send me a really tricked out Mac Book and to tuck a few dollars into the envelope along with the thank you note. Slim.

Bob Asken
Box 33
Pen Argyl, PA 18072
Etas Unis

slimfairview@yahoo.com

Copyright © 2014 Robert Asken 

All rights reserved.