Chapter
Volatilities: Financial, Economic, and Geopolitical
The Dollar and Energy Economics
The Dollar and Middle-East Geopolitics
Energy Economics and Middle-East Geopolitics
Petro-States, Hydrocarbon Dependence, and Resource Curses
Geopolitical Conflicts and the Politics of Discontent
Anti-Americanism and the Dollar
Mounting Debt and Fragility of the Global Financial System
Constants and Variables in the Cycle: 1970s to the Present
Recap of the Main Energy-Price-Cycle Story Lines
The Role of Financial Crises
2 New Middle East: Childhood 1973–84 and Adolescence 1985–95
Oligopoly of International Oil Companies and the Origin of OPEC
OPEC’s Market Power: Economics, Politics, and Volatility
Political Catalysts, Economic Cycles, and Oil-Price Volatility
The Political Economy of Childhood 1973–84
Middle-East Flows of Labor, Capital, and Cultural Norms
Rentier States and Leisure Classes
Religion and Social Norms
Oil Price Collapse and the Politics of Discontent
The Rise of National Oil Companies
Different Nationalization Models: Instantaneous and Gradual
Effects on OPEC Production
Militarism, Debts, and Global Finance
Militarism and Unproductive Use of Capital and Labor
3 Road to the Status Quo: 1996–2008
A New Era of Higher Oil Prices
Changing OPEC Politics and Renewed Oil Revenues
The Politics of Production Capacity
Price War and a Global Recession
Oil Revenues: Collapse and Recovery
Strategic Restraint of Capacity Expansion
OPEC Objectives and Internal Politics
The Speculative Bubble in Oil Futures
The Other Black Gold: Natural Gas
Natural Gas as a Substitute for Oil
Intertwined Geopolitics of Oil and Natural Gas
Competition: Market Shares and Geopolitics – Qatar, Iran, and Russia
The Economics and Geopolitics of Middle-East Discontent
Bin Laden’s Summary of Islamists’ Economic Grievances
The Globalization of Islamist Discontent
Taxonomy of Islamist Groups
Regime Changes and Geopolitical Realignments
Déjà Vu: Overgrown Children of the 1970s?
Absorptive Capacity and Sovereign Wealth Funds
4 Globalization of Middle-East Dynamics
Hedge Funds and Sovereign Wealth Funds
Hedge Funds and Sovereign Wealth Funds
Increased Financial Integration and Contagion
Contagion across Geographic Regions
Contribution to the Energy Cycle
Liquefied Natural Gas and Globalized Energy Markets
Liquefaction, Globalization, and Geopolitics
Competition and Cooperation in Natural Gas Markets
Historical Efforts to Control Gas Markets
Mechanics of a Potential Gas Cartel
Iran and the Role of Sanctions in Shaping Natural Gas Markets
Conflicts, Economic Sanctions, and the “War on Terror”
Heavier U.S. Military Presence and Iraq’s Invasion of Kuwait
The Sanctions Game Continues
September 1 1 “Changed Everything”
Dreams of “The Oil Weapon” Resurface
Escalation of U.S. Military Presence
5 Dollars and Debt: The End of the Dollar Era?
The Dollar as Reserve Currency
Bretton Woods and Beyond: The Primacy of U.S. Debt
Unchecked Growth of U.S. Foreign Debt
Global Economic Growth, Interest Rates, and Debt
Uneasy Symbiosis: U.S. Consumers and Asian Savers
The Decoupling Hypothesis: Hard Landing vs. Transition
Contagion: Sequential Bubbles and Crashes
Minsky’s Taxonomy: Hedge, Speculative, and Ponzi Finance
The New Millennium’s Minsky Moment
Latin America, Japan, Asian Tigers, and China
The Dollar and Bets on Chinese Growth and Oil
The Oil Bubble and “Peak Oil” Theorists
Oil Futures as a Play on the Dollar and China
Global Recession, the Crash of 2008, and Eventual Recovery
6 Motivations to Attack or Abandon the Dollar
The Split Personality of Bretton Woods
Early Attacks on the Dollar
America’s “Exorbitant Privilege” and Geopolitics
Amplified Cycle and Militant Grievances
Middle Classes Sympathetic to Militant Grievances
Petrodollar Recycling and the Dollar-Pricing of Oil
The Beginning of Petrodollars
The Petrodollar Recycling Scheme
Saddam Hussein, Ahmadinejad, and Dreams of Petroeuros
OPEC’s Recent Contemplation of Petroeuros
Saudi Arabia Holds the Peg
Petrodollar Recycling Redux?
The Paradox of Pegged Currencies
Export-Oriented Growth in Asia: The Japanese Experience
Petrodollars Tip the Balance
Pegged Currencies and “The Balance of Financial Terror”
Foreign Direct Investment and “Convergence”
Medium-Term Sustainability of Bretton Woods II
Balance of Financial Terror
The Threat of Renewed Protectionism and Mercantilism
Perceived Fairness of Trade Policies
Resource Economics of Oil-Exporting Countries
Globalization with Multiple Currencies: Bretton-Woods III?
From Bimetallic Standards to Multiple Currencies
Multiple-Currency Anchoring vs. International Lender of Last Resort
Multi-Currency Anchoring Would Not Prevent the Cycle
7 Resource Curses, Global Volatility, and Crises
Continued Regional and Global Resource Curses
Stock Market, Financial, and Construction Bubbles
Education Cities as White Elephants
Financial Centers, “Islamic Finance,” and Other White Elephants
The Global Resource Curse
Petrodollars and the Investment Cycle
Continued Global Dependence on Oil
The Most Recent Cycle in Oil Prices
Emerging Economies, Car Ownership, and Oil Demand
Shifting Source of Oil Demand Growth
Future U.S. Oil Demand: The Ultimate Wild Card
U.S. Legislation and Its Potential Effects
Oil Supply Dynamics I – The International Oil Companies
Oil-Supply Dynamics II – The Growing Power of OPEC and NOCs
National Oil Companies, Price Distortions, and Excess Oil Demand
Biofuel – Hopeful Myths and Discouraging Facts
Pessimistic Forecasts of Renewable Energy Contribution
Global Conflicts, Radicalisms, and Terrorism
Geopolitical Strife and Energy Prices
Return of the “Oil Weapon” Possibility
Iran, Israel, and the Arab World
Renewed Middle-East Arms Race
Continued Geopolitical Strife: Inevitable and Intentional
Serial Amnesia, Greed, and Financial Crises
Serial Amnesia, Greed, and Hubris
Financial Crises, Recessions, and Limits of Keynesianism
Intelligent vs. Panic-Mode Keynesiansim
Regulatory and Policy Cycles
Peaks and Troughs: The Need to Ameliorate the Cycle
Economic Growth Leads to Sharp Rise in Energy Prices
Very High Oil Prices Cause Recessions
Recessions Reduce Oil Prices and Eventually Lead to Recovery
Reversal of the Financial Accelerator and Geopolitical Forces
Free-Market Capitalism and Growth
Cycle Attenuation and Balanced Growth
Technical Solutions and International Cooperation
Myopic Expectations of Controlling Myopia
Attenuating the Energy-Markets Cycle
Sins of the Colonial Past
Mistrust and Dysfunctional Energy Policies
Economic Ramifications of Global Recession
Mutual Benefits of Cycle Attenuation
Energy-Source Diversification
Ongoing Efforts and Transportation-Sector Challenges
Energy Market Regulation and Multilateral Intervention
International Cooperation in Oil Markets
Coordination and Regulation Failures 2003 –8
Rebuilding Regulation and Coordination Frameworks
Petrodollar Recycling and International Lender of Last Resor
Limits to Pre-commitment Role of IMF
Rediscovering the Intent of Sovereign Wealth Funds
Benefits and Risks of Model-Based Counter-cyclical Investment
Managing Geopolitical Conflicts
Breaking the Vicious Circle of Violence
Avoiding Counterproductive Strategies
Oil, Dollars, Debt, and Crises
：The Global Curse of Black Gold
Disclaimer: Any content in publications that violate the sovereignty, the constitution or regulations of the PRC is not accepted or approved by CNPIEC.