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The Arab Revolt And The Failed Nuclear Subprime Rout

Politics / Middle East Feb 26, 2011 - 03:22 PM GMT

By: Andrew_McKillop


Best Financial Markets Analysis ArticleMAD – MUTUALLY ASSURED DESTRUCTION
Top and bottom or truth and beauty quarks interest nuclear physicists, but the mutually assured destruction of both the top and bottom, North and South parts of the global economy came very close, and was even programmed until end December 2010. Using the lever of nuclear power and financial assets generated around them, the intended mechanism featured a massive finance bubble driven by a construction spree of new, industry standard, Chernobyl-sized (900 MW and over) reactors right across the Southern emerging and developing countries, through 2010-2020.

The lynchpin target for this socalled Nuclear Renaissance was the entire Mid East and North African region – the Arab world including outlyer countries such as Sudan and the Central Asian muslim republics. As late as midyear 2007, France's Sarkozy could crow about French success in selling nuclear power to his respected or at least petrodollar flush fellow head of state, received with pomp and circumstance at the Elysee Palace (with tent and gorilla bodyguard), Muammar Gaddafi.

The bubble plan, or scheme originated inside a small, shadowy core group of global finance and geopolitical players. The earliest coming out of the plan, or so-called plan to build more nuclear reactors through 2010-2020 than in any previous period took place at the Dec 2009 Copenhagen climate summit. This was its first defeat. Even as vaguely sketched out, or alluded to by the 4 heads of state of leading nuclear suppliers, Obama, Merkel, Sarkozy and Brown (succeeded later by Cameron), it was met with disbelief and outright hostility by leaders of China, Russia, India, Brazil and others. Bruised but undeterred by this first failure to sell the scam, its pilot group stayed at work through 2010. They included George Soros and his foundation, the WorldShift Network including pro-nuclear activists like Al Gore, nuclear boomers coordinated by the WNA (World Nuclear Association) and by a string of finance industry and institutional players led by the IMF, World Bank, the US Ex-Im Bank and major Ponzi scheme finance operators like Goldman Sachs Co. and its finance industry allies. They were frequently joined by the other 3 heads of government of the 7 core nuclear industry supplier countries which founded the present 46-nation NSG-Nuclear Suppliers Group, in 1974.


Understanding why the attempt at floating a massive nuclear finance bubble – probably 10 to 50 times the size of the US subprime bubble – was doomed to either economic failure, or financial failure, or government debt and monetary failure, or all three only needs a flashback to the nuclear industry's first finance bubble and meltdown, through the period of around 1974-1979. But at least as important, we have to add another cause of near-certain failure, along with the menace of massive loss of life, almost open-ended economic loss and environment damage.

Until the Arab youth revolt started sweeping the entire Middle East and North Africa (MENA) region in January 2011, the key geographic region for selling nuclear reactors and creating the new nuclear South – was the MENA. Who today in their right mind, 6 weeks later at end-February 2011, would suggest it is still a nice, progessive and productive, secure and useful idea to sell industry standard, Chernobyl-sized nuclear power plants to countries like Libya, Egypt, Algeria, Morocco, Jordan, Syria, Saudi Arabia, Kuwait, UAE, Iran, the Central Asian republics, or any other civil war-prone country of the region, like Sudan ? At this moment in time any fast forward scenarios for the MENA region are cloudy, but above all troubled. Today, nobody knows the best by date for remaining regimes in place, in these countries. Apart from minor details like nuclear power plants being likely early collateral damage in civil wars of the region with massive destruction potential, the collapse of friendly dictators in the region heavily weakens another basic need of the scam - for the borrowing parties to remain in existence throughout the life of the global Ponzi scheme that was going to be operated, using nuclear assets in the South as the underlying security.

Why the plan or scheme to offload, dilute or dissolve unpayable OECD debt with this scam had to be big, and would have started big, is as simple to understand as flipping through debt and deficit statistics and forecasts for the leading economies of the OECD group. Any so-called “reserve currency” or money, whether paper dollars, paper euro, paper yen or any others, today faces mortal threat of meltdown. The traditional central banker game of turning the printing press and crossing our fingers has been shaken to its core of confidence by the global financial and monetary meltdown, triggered by the US subprime housing scam. The nuclear subprime bubble, we can be sure, was schemed as an operation tens of times bigger.

The scheme was promoted as an energy independence and/or low carbon plan for emerging and developing countries of the South, but under the table featured a huge offload of debt from the OECD super-debt countries which would supply the nuclear tech, the fuel and services – and above all the finance packages. The scam would have spread its wings into government debt, currency and credit default swaps, SIVs (Structured Investment Vehicles) and a string of interest rate and other derived products, only limited in size and arcane complexity by the same cynical imagination of the nimble minds who gave an unsuspecting world the US subprime bubble – and crash.


In market jargon anything that goes North is growing and profitable, while going South means losing money and likely going out of business. Turning this around in geographic terms, the nuclear subprime scam was conceived with a southern base, but for the world nuclear industry going south already happened - and its first asset bubble is a race memory still haunting the industry.

The first time the industry almost died on its feet started exactly when the NSG was first founded by 7 pro-nuclear OECD countries, including the 3 Western members of the UN Security Council. Through 1974-1979 the industry rode a massive upsurge in asset values with reactor costs rising almost daily as the whole nuclear supply chain from uranium mining, enrichment and fuel fabrication through reactor building and waste handling suffered double-digit annual inflation. By 1978 US Westinghouse (now Toshiba-Westinghouse) was forced to declare force-majeure on firstly its uranium fuel supply contracts, and then on new orders, reactor building and completions. Elsewhere in the NSG world, financial meltdown became a threat, then a reality much more dire than core meltdown – as the core business of nuclear industrial players became too hot to handle.

The reason was simple. The 1973-1974 oil shock generated a wave of panic in decider mindsets right across the developed OECD North, at the time the only users of nuclear power along with communist Russia and communist China. The atom in economic folklore became the quick fix silver bullet able to shield their oil-based economies from oil price rises, despite the fact that an average intelligence child with a two-dollar pocket calculator could show, and can show today, that nuclear power saves little oil or no oil at all. Uninterested by such tiring details, governments and corporate deciders stampeded into saving the economy with atomic power. Reactor orders exploded. Inflation followed, and financial meltdown then ensued creating what the nuclear industry still calls its nuclear winter – stretching from the early 1980s until the late 1990s, during which a single reactor order or completion was a hailed and rare event !

Through 1974-1979 the exploding track of reactor and nuclear costs was exactly the same as what has happened through 2006-2011 to date. Selling Nuclear Salvation from high priced oil to know-nothing heads of state, today and recently, was made easy in the run up to and afterglow from the recent all time high barrel price for oil, of US $ 147 on the US Nymex in 2008. This we can note was likely goosed by Goldman Sachs Co. The record price peak likely included a 15-20 dollars special GS Co. premium specifically designed to bankrupt its client and victim, Semgroup Holdings, which was advised to bet, and lent funds to bet on falling oil prices - by Goldman Sachs.


Primed and ready for the second nuclear asset bubble – this time a super-production – the world finance industry teamed with a mix and match of new time, and old time nuclear boomers through the years 2006-2009. This ranged from the loony fringe of global warming hysterics like Jim Lovelock, James Hansen and Al Gore, to Whole Earth Catalog changeling and businessman Stewart Brand completing his coming-out by discovering he'd always loved nuclear power, all along, but had been too shy to say it. More important for the hard sell in the South, heads of state of the 7 key NSG countries, for example Sarkozy and Merkel, soon joined by Obama and Brown, fell over themselves to sell the atom to literally any country at all – in Sarkozy's case to his friend and highly respected head of state Muammar Gaddafi, in 2007.

The list of nuclear-possible or likely countries in the South at end 2010 makes a lurid read. In all cases the projects include (or included, as of end 2010, the probable end of the scam) big or very big civil reactor orders, for industry standard 900MW and larger power reactors. Apart from the MENA and Muslim world we find a bizarre array of crumbling dictatorships, one party states tricked out as democracies, and banana-or-oil republics, such as: Nigeria, Ghana, Bangladesh, Mongolia, Belarus, Pakistan, Indonesia and others.

Through year 2010 in a flurry of mostly closed-door meetings, nuclear industry boomers headed by the WNA and leading lights in the world finance industry honed down their strategy for building and launching the ultimate asset bubble. The reason for Southern tilt was not only the lack of debt and sometimes current account surpluses in these countries, but simple facts of life in the North. In the North, environment militants, knowledge and fear of nuclear power, high costs, and the many alternatives to the atom which now include probablty vast reserves of unconventional gas, made the sales pitch a no-go, compared with the home run in the South. In the background, this was further powered by IMF-coordinated attempts to create new mechanisms for re-indebting the emerging and developing countries, and offload OECD nation debt into a massive new pool of financial paper riding the nuclear asset bubble, along with the flagging green energy asset bubble.

Perhaps the biggest reason we have to thank the cellphone-wielding Fhas Mob youth of the Arab world is therefore this: the potential for launching the new nuclear finance scam is now almost zero in the MENA region – the lynchpin for this attempt at outdoing the US subprime bubble. The life expectancy of the scam, today, is likely not much more than that of a qurk – about 10 to the minus 25 seconds.

By Andrew McKillop

Project Director, GSO Consulting Associates

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.


© 2011 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2022 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


David Thorpe
06 Mar 11, 14:56
Evidence please

An interesting and entirely plausible account, Andrew. But it would be good if you listed your sources or evidence to make it even more plausible.

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