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Why The World Is Like A Real-Life Game Of Global Domination

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http://www.theguardian.com/business/commentisfree/2014/dec/07/world-real-life-game-global-domination

Putin gives a speech and the rouble falls. Europe’s central bank boss gives a speech and the stock markets fall. Opec meets in Vienna and the oil price plummets. Japan’s prime minister calls a snap election and the yen’s slide against the dollar accelerates. All these things in the last six weeks of an already fractious year.

There are suddenly multiple conflicts being played out in the global markets, conflicts the global game’s usual rules are not built to handle.

The first concerns a clear game of beggar thy neighbour between China and Japan. Since 2012 Japan has printed money hand over fist, with the aim of kickstarting economic growth. With growth stalling for a third time in the final quarter of 2014 its premier Shinzo Abe printed more. China perceives this as unfair competition, and with its own growth slowing, it responded in late November with a surprise interest-rate cut.

Many see this as the outbreak of a classic currency war, along 1930s lines, where rival economic giants engage in a pointless game of devaluing their own currency – boosting exports but hitting the spending power of their people – to their mutual detriment. By hitting each other’s capacity to export, they edge the region towards deglobalisation.

The second new dynamic is the game of chicken being played over the oil price between America, Russia and Opec. Oil demand is falling because growth in the emerging markets – China, Brasil and the like – is slowing down. Yet supply has risen – by 11m barrels to 92m barrels per day since the global financial crisis began. America has become the world’s biggest oil producer thanks to the rapid rollout of shale and deep sea oilfields. Since June 2014 the price of a barrel of Brent crude has fallen from $115 to $68 – and after Opec met in late November and rejected calls to cut production some analysts predicted the price could collapse to $40. Saudi Arabia and the other gulf monarchies were the key players in the decision to keep production high and prices falling – and few doubt there is politics behind the move. It hurts Russia, Venezuela and Iran. For Saudi Arabia there are scores to settle with both Russia and Iran over their role in crushing the Syrian revolution, and with Venezuela for being Russia’s perpetual Bolivarian cheerleader. As a result, Vladimir Putin has had to admit to his people that a combination of western sanctions and Saudi oil strategy will push Russia into recession next year.

At times like this economists resort to game theory, warning sparring countries that, in a game where everybody is trying to shrink something – whether it be prices or currencies – everybody loses out. So let’s game it out – not in the austere language of theory but of the empire-building “god games” popular on games consoles.

We are in the middle of an economic war, something lots of people haven't experienced. Still at least your house is worth more, so it's not all bad news....

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Always have been. Nice to see a Guardian columnist finally grow up.

The Saudis are pumping to hurt America, not Putin.

What is different this time is that there is no Empire to send a gunboat over to quell the upstarts and that power vacuum is worrying, as someone will want to fill it - at any cost.

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Always have been. Nice to see a Guardian columnist finally grow up.

The Saudis are pumping to hurt America, not Putin.

What is different this time is that there is no Empire to send a gunboat over to quell the upstarts and that power vacuum is worrying, as someone will want to fill it - at any cost.

The US have a few Gunboats IIRC...the issue is that they have been delayed by their public in sending at their masters request, and the master is now spanking the unruly child.

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