Re: Sanctions are a bitch

Writes Greg Privette:

Hi Lew,

I enjoyed reading yesterday’s Thomas Luongo article “Sanctions are a Bitch”. I liked that it really pointed out how markets always find a way of frustrating the “will” of the political class that rule us. One big downside of course is all their attempts at market control simply increase the cost of trade and hamper everyday life for the rest of us. I had a couple of thoughts about what he wrote.

From the article:

So, it’s no surprise to me to see it being a direct substitute for Venezuelan crude while the U.S. embargoes it. If the Russians gain the market share lost by Venezuela while, at the same time, providing the financial infrastructure — payment clearing, insurance, etc. — for Venezuela to sell their oil to other markets, like India, what, in the end is the net effect of all this sanctioning and war-mongering?

One of the additional effects is transferring a portion of control of our oil dependent economy from the hapless Venezuelans to the far more capable and clever Russians. It makes me wonder if once the Venezuelans find other markets, making this transition permanent, will the Russians begin to demand for payment in Rubles or even gold?

Also from the article:

Nothing, of course. But you can’t tell that to insane authoritarians like John Bolton. These are men who can only think in terms of primary effects and overly-discount the market’s ability to overcome obstacles. And so, they get frustrated by secondary effects, like the simple substitution of Russian oil for Venezuelan oil by domestic refiners.

Unfortunately, when they become too frustrated by their lack of ability to control markets and people in the way they believe they are destined to do, they always resort to their final and maybe preferred method of control, which is violence.

Share