IN THIS EDITION: Olympics Upstaged By The World! Who Would Have Thought? - Goodbye Slobodan
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McDonalds Under Guard In Prague - Photo IMC
Sludge Report #30
Olympics Upstaged By The World! Who Would Have Thought?
Sludge in recent reports has been fairly gloomy about the economic outlook for both NZ and the World. And there is a storm ahead, to be sure. Rising oil prices, a new currency/growth crisis – this time European, alarming direct action petrol strikes, the battle of Melbourne (s11) and now Australian petrol protests too.
And as the weather closes in Sydney, colourful people are gathering in autumnal Prague. S26 is shaping up to be an unusual compliment for European news audiences - a counter-point of daily anti-capitalism to a nightly diet of news from the Ozlympics – with doping, petrol-strikes, the weather and the ozone-hole to the fore.
Sludge is as usual keen to examine what seeds of hope are contained in this melee.
Short term oil prices are going down, a bit, as a result of the US decision to release 30 million barrels of oil from its strategic reserve.
However this is – according to the boffins - unlikely to have any impact on either petrol prices – or heating oil prices. Financial market wisdom in the aftermath of the move tends to indicate that all that is likely to happen as a result of the special order from the White House, is that refining companies will make a bundle.
Meanwhile ever higher stakes are being employed at the main table.
Over the Weekend the G7 and IMF warned OPEC that its actions are causing instability. OPEC in turn warned the US and other G7 nations that releasing strategic reserves – as the US did yesterday - may not necessarily be a wise move to take.
OPEC characterises the US move as an overreaction. It advises the US to save its reserves for when it really needs them – “this is not yet a crisis” – appears to be the message.
But that is no excuse for ignoring the real message.
OPEC is effectively the world’s largest trade union. It is made up of nations outside the “employers” club of nations, aka the G7. And OPEC has decided to change the rules.
It wants something simple. A bigger share of the cake.
In effect this means it wants the West (G7) to lower excise taxes on its production.
It is also pointing out in the most succinct manner possible to Western policy makers that if there is to be rationing of petrol for environmental purposes then OPEC intends to get a bigger slice of the cake.
All fairly simple so far. But as usual there is a complication.
What nobody expected was for OPEC to find itself such an effective alliance as it has with European and now Australian truck drivers.
Add in S26 and the fact that many of the French Farmers (who arguably began the European wave of protests) are vehement anti-McDonalds campaigners, and the circle is completed. Change to one of the tenets of the world trading system is now being demanded by incredibly broad coalition of interests.
Oil barons, farmers, truckers, consumers, the British Conservative Party, the NZ National Party and increasingly organised Labour all want the same thing. They want petrol taxes lowered to avert the coming crisis of a collision between oil price inflation and Western nation monetary policy settings.
Basically the entire global productive sector is effectively united – with OPEC – in asking for cuts in excise taxes.
And the obvious answer for Clinton, Blair, Schroeder, Howard, Cullen, Anderton and Clark can helpfully be found back at the Ozlympics.
Just do it!
While reports indicate elections in Yugoslavia are headed for a impasse if not a coup, Sludge remains confident that Slobodan Milosevic will shortly leave the building.
Why? Because he has it coming. Whether he wins or loses at the ballot it would seem that the world, and now Yugoslavia, is ready to rid itself of this particular nightmare.