Et cetera. So, you heard it here, my friends. He is an accomplished investment analyst. He has served as chief investment strategist at Casey Research since 2007. His funds are among the top perform thing the resource sector in the last five years canada. He is a regular contributor to the becomes news network and has been interviewed by cnbc, cbc bloomberg and forbes. Marin has traveled to numerous conflicted and challenging areas, including russia, iraq, ukraine, kuwait, mon goala, kosovo and colombia, among other resourcerich destinations. A former mathematics professor and hello . Okay. How are we doing . Not good. There we are. Were back. Okay. So i think that happened because of my own personal history with mathematic well just floss over that march rein is a former mathematics professor and used his skills to create a resource market tool that analyzes and compares investment variables help has been involved in raising over a billion Canadian Dollars in capital for earl stage and producing resource companies. Marin speaks fluent serbian and croatian and russian and he is a graduate of the university of British Columbia and lives now in vancouver. So mar rein will speak for marin will speak for 30 minutes and then the traditional q a and then an opportunity to get signed books at the end. So with that welcome marin. [applause] what happened through the investments traveled to over 100 countries, canadas Third Largest producing copper mine and one over the founding directors was one of the largest investors and shareholder and then when i got into the internationalization of emerging Energy Market is was the largest investor in the first two round of europes mose successful shale gas company in the uk. So my funds have outperformed the index, so, how did this happen . Ive been talk bit this this colder war for a decade now and ive been going to places to invest to find solutions for countries such as germany or the u. K. Who have been increasing their Energy Dependence on russia. Germany over the last decade increased its dependency on russian oil by 52 , something the media doesnt talk about. But a little over two and a half years ago i had heart attack and had a quadruple bypass so all of the hectic traveling of over 300 days a year over ten years, caught up with me, and i wrote a book called the colder war. We have some great videos on the web site which we explain what the colder war is all about so please visit the web site, colder war. Com after this. So lets just jump into this. I got 30 minutes. The end of the lost decade. The west in our media not just north america but in western europe has demonized Vladimir Putin they make him like the darth vader of the world, compare him to Joseph Stalin. David cameron the Prime Minister of britain, just came out this past week and compared putins russian to the nazis. Theres a lot of misinformation out there. But it is clear that Vladimir Putin has already made his Strategic Moves but not with the sword, but with the Worlds Energy supplies. How did his happen . After the fall of the ussr russia was in shambles. The soviet empire was truly inn crumbles. Russian was an economic basket case. Overnight russia went from over 70 years of communism to capital him, and most in russia had no concept of what capitalism was. They had no idea what to do. The morale in russia was very low, from the strong soviet empire to now begging the west for money. What happened here . Unfortunately it got worse for the russians before it got better. For example in 1994 they lost the invasion the first war in chechneya, the chechen rebels send the russian army back home. After the fall of the soviet union, putin, who was in east germany, went back to st. Petersburg and becames a an sizer on International Affairs to the mayor of st. Petersburg. This where is putin created his inner network who were to travel with him to moscow and spend the next 20 years of his life together. I nickname them the st. Petersburg boys. One of them is dmitry medvedev. He first started as just an assistant to putin in st. Petersburg later on became Prime Minister, then president back to Prime Minister and ran the Worlds Largest gas producer. So in 1996, when putin moved to moscow, he brought over the st. Petersburg boys who would rule over the russian economic sector, the Energy Sector transportation sector and media and political sector. Theyre very important. Ing igor is a deputy Prime Minister. Very important studies of what putin has done their gain his power. So lets look into this. By 1998, putin was the head of the ssb the cold old kgb we know of in the west. And was very unknown on the interNational Stage. Within 12 months putin was given the nod to be the sixth Prime Minister in less than eight years, and as president at the time was boris yeltsin. No one expected anything from putin. But yeltsin took a liking to him and the oligarchs approved of him. Where did that go from . Putin understood that there were five Prime Ministers before him that accomplished nothing. And putin knew that he had to do something drastic something very competitive and something that will get him the National Stage. His first move had to be a big one and he had to succeed. By late september of 1999, putin figured out what that move was. And it was to go to war with chechneya. This time he needed to deliver a quick and decisive victory to the russian people, and that is exactly what he did. Putins plan was scorched earth policy. The russian Army Advanced slowly and in force, using both are till rare and air power against the chechneyan defenses. The result over 300,000 of the 800,000 citizens of chechneya fled from the russian advances and fled outside of chechneya. Putin back then knew the importance of controlling the media. And during that second war in chechneya, no journalists or media were allowed in the war zone. Something important to understand for later aspects. Putin delivered to russia what the people really wanted at the time a quick victory, and people took notice. Then just before midnight on december 31, 1999, yell sin unexpectedly resigned. He appointed putin the president , and everyone was shocked. And the National Stage they were all asking questions, who is this man . In less than 18 months he went from the old head of the kgb to Prime Minister to president. Never done before in the history of russia. So however most leaders who achieve such an advanced acceleration of their career would be pretty happy with that. Maybe write a book. Do speeches, get paid for it. Thats not putin. This is just the beginning of his plan. And now putin had his eyes on the oligarchs which he needed to consolidate power if he was to execute his plan. We talk in great detail in the book how putin humbled the ollie gashings. But i want to focus on one. Most important one. After 70 years of communism, almost all the russians were struggling to adopt the principles of the free market society. Theres an old joke in the communist russia we pretend to work, they pretend to pay us. However, not all were totally clueless about capitalism. Enter the individuals who would eventually become the oligarchs. Young, smart aggressive, took rivers, violated russian laws. Most were actually jewish and ill point out why this is important later. They were very rightless. Unfortunately they were not as ruthless as putin and would find out later. Putin correctly recognized that the power of the ollie oligarchs of the russian economic aspect but the ago oligarchs control the pot ticks and thats what putin focused on to change. Mikael spent tangler a russian prison. He was actually the communist ought lead are of russia. However because he saw what was going on he saw that the russian empire was crumb belowing, he wrote a treatise called the man with the ruble, and was it studying the free market business. He was the largest bootlegger of alcohol in russia and the largest bootlegger of hardware and software in russia at the time and violated many, many russian laws at the time. Its interesting heres a guy that was the youth leader of the communist party, switched over did a 180 created a large import company and took advantage of the collapse of the ussr. But what really set him apart from the other smart young guys . He created a bank which was the vehicle that eventually took over the russian oil sector. By late 1989, the bank controlled by cordoffski made money from diverted money. When yeltsin took over. Kordofski was a chief of finance. He profited hundreds of millions of dollars from the voucher debacle. The russian sector had Major Companies and what they wanted to do was make sure every individual within russian had an equal share of the company. So 140 million citizens in russia each person would get a representative share of a company, and the state would own the largest controlling bloc. Unfortunately people didnt know what to do with the shares and there was no real stock market. Well cordofskis bank created a market for these and bought these for pennies on the dollar from people who didnt understand. So they created a market for and it he controlled a lot of the companies through his bank. This is just the beginning of what he entered the billionaires club, and after 1993, through the loop for shares deal that was the key deal. Thats how the bank took control of the russian oil sector. In 1993, yukos was create bid the consolidation of dozens of russian oil and Gas Companies hoping to share the wealth with the russian people. It was eventually the largest producer of oil in russia. Kordfski took crawl by two methods. By 1994 yeltsin needed a lot of money. His Approval Ratings were less than five percent and the eh needed 159 million to meet the weeks budget. So they created a plan where the government would put up the shares of the yukos for the money. Unfortunately the collateral the assets of the company, were worth 25 to 50 times what the principle amount the bank put up. They literally took control of 43 of the bank of yukos for five crepts five cents on the dollar. Within a week yeltsin needed another 150 million. He went to kordofsk. This time the russians got a better deal, selling for 15 cents on the dollar. The whole bill of what kordofski budget it for, he paid it back in three months from the cash flow. A brilliant move for him, disaster move for the russian state. So, what happened here . This perspective really changed putins concept here and how these al gashings withpicking up state businesses for pennies on the dollar. Cordofski brought north american nohow and equipment and people to improve the production from the yukos. We talk about fracking here in north mrs. Before George Mitchell made it famous in the crimean. It was actually happening in russia believe it or not. The cads were fracking way but yet within a few short years of taking crime kordofski became the 16th richest man in the world with a networth over 16 bill. A prime example our the oligarchs control the media. Until putin showed up in 1999. Initially he had the support of most of the very powerful oligarchs. That all changes after the first eflex early 2000. Putin set his eyes on the oligarchs and recognized if he needed to move his agenda forward he needed to get rid of the oligarchs so he proposed a deal to the oligarchs. If you dont meddle in my politics ill let you keep the money you storm from the russian people. A fair neil putins eyes. Now go back to the most powerful oligarc. He challenged putin politically and publicly. If you understand the russian mentality you see the exxon deal who is overseeing it . Putin. The one big this in russian business, its the russian president is seen signing the deal, the bill will be passed. So kordofski took on putin and unfortunately lost but did it with a doubleedged sword approach. The final straw that really ruined kordofski he tried to sell yukon a bidding war between chevron and exxon. Ironically, if kordofski succeeded in selling yukos he would become the larger shareholder of either exson or exxon or chevron but the profit exxon didnt like kordofski and called putin and kordofski tried to get the deal without input from putin and you dont that do that in putins russia. So what happened . Using russian law, they put kor doh fski in prison for tax evasion and seized the asset0s yukos, froze the bank accounts, then they went using russian law an old saying that it can be interpreted whichever way the government wants it to be interpreted and they demand tens of billions of dollars in penalties and tax evasion, but because they froze the accounts of the company, there was no way that yukos could pay that penalty, and the russian state took over those assets. Now, what happened there . Well essentially they went up for auction. Was its fair bid process . Ed exxon or chevron or anyone else bid on it . No. A Shell Company funded by less than 350 u. S. Dollars bid for these assets had no money in the bank account but were awarded the assets of yukos. Within a week they emerged in a Shell Company and to in the book we get into detail who controls the Shell Company. I think you can all figure out who it was. And interestingly enough, it passed with no problems. So what about the individual who agreed to putins plan . Abarometer victim dabromicicn. Had to agree to the plan. The not born in russia and he is a muslim. So putin is very pragmatic. Doesnt matter what religion you are, or where youre born, if you play with putins rules hell let you keep what you have. Win the get into the great game over the 20th century. Lets look at the 19th 19th century. There were 321 global conflicts in the 19th century. 73 of those britain was involved in and 50 france. Britain was a world power at that time 5. 2 global conflicts in europe in the 20th century, 53 major global conflict worldwide. Of those, 53, the u. S. Ssr and russia were involved in 38 of them. U. S. A. Was involved in 19 of the 53. Now we see that theres a transition. The more wars youre involved in, the less well you do in the next generation. And the 21st century theres been so far nine major global conflicts, china has been involved in zero of them, russia has been involved in one u. S. A. , anyone can make a guess . All nine. Now, oil in the 20th century became the underpinning of the financial sector, you control the oil, you control power. How did this all start . Petroleum by no means is a modern discovery. Historically it was gathered from national royalties used in babylon in the walls oil is drilled in china, about 400b. C. But our modern Petroleum Era began in the russian emnear 1846. What die mean by modern pet tremendous era in the first modern well occurred in the russian empire. The first oil well in the u. S. Occurred 13 years later titusville pennsylvania. Initially oil is used at a lubricant or to produce kerosene for heating and lighting but with the invention of the internal combustion enjibbing. So baku at the time in the russian empire, today azerbaijan the Baku Oil Fields experienced a 200fold increase in Oil Production. Not 200 . 200 times increase in Oil Production. The population of baku at the time was growing fastest than london, new york and paris combined. Unfortunately, later on for the russians, and the ukrainians, oil wasnt the only thing that came out of the baku. Joseph stalin learned the power of oil and create it his ideas while he was born and raised and his area adult years in baku. So the nobel family took notice of the area, as did rothchilds. Both invested capital to increase pile production. Interesting fact. The nobels we know them for dynamite, the nobel peace prize. They were the inventors of the modern day oil pipeline. That was first put in place in the Baku Oil Fields. Also, the oil tanker invented by the nobels. Also first put into place in the Baku Oil Fields so the russian empire produced 15 of the world residents oil. Things started to change in the u. S. By this time in 1899 a row croatia a gusher produced over 100,000barrels of oil a day and that set off a boom. By 19 10 u. S. Became the Worlds Largest oil producer. Oil war and peace very directly linked. After world war i it was clear to winston churchill, general admiral of the navy and then the Prime Minister and he realized that Great Britain needed to modernize its navy to compete with the modernization of the german military. But to do so you needed to secure a longterm supply of oil that britain would control. Great britain security the supply from iran. And this is critical advantage that the allies had in world war ii. Oil was one of the main reasons hitler attacked russia in the winter and we know how that ended. Russia worked with the u. S. And u. K. To defeat nazis. Something today our media forgetes. Im not here to glorify put it put. Im their lay the facts out so you can make the decision. But history took a dramatic change in july of 1944. Two critical outcomes occurred out of the conference. First, the 44 allied governments agreed maintain a fixed currency versus the u. S. Dollar interestingly enough, russia was never invited to the meeting and never agreed to this but the 44 allied nations who agreed each country pledged to buy and sell the u. S. Dollar to keep the europe si within one percent o agreed upon exchange rate, and if everyone agreed to that the u. S. Government assured the allies the delivery of gold at a rate of 35 u. S. Per ounce of gold if you were to tender your u. S. Dollar. So post conference u. S. Becomes the center of international finance. The arrangement worked until 1967 when Charles Degaulle said timeout. We want our gold here. Here is your u. S. Dollar and gold bars were flying back to paris. Speculators took notice and there was an onslaught on the u. S. Dollar . Nixon closed the gold window on august 15, 1971. At the same time, u. S. Found itself in a major oil predicament. It was immigrant porting over 70 of the importing over 70 of the oil it consumed and happened to be from the middle east. We know about the Arab Oil Crisis in the early 70s. So nixon had a dilemma but came up with a solution. Henry kissinger, who i actually think has a great book out the world order and he also just came out and said, we are on the verge of a new cold cold war. What did they do . They needed to secure the demand for the u. S. Dollar and also secure the supply of oil to the united states. So nixon sent kissinger to saudi arabia and kissinger set up what would eventually be known as the u. S. Petro dollar. What did they do here . Well if saudi arabia would trade oil only in u. S. Dollars and u. S. Debt securities, the u. S. Government in return would promise military support to keep the existing house of saud the saudi family in power, and the house of saud accepted. Then kuwait agreed and eventually the other members of opec followed suit. So u. S. And staudt diarabia and other members of opec had a very strong relationship, and by 1992 because they were pumping oil into the International Markets, the russians who went from 10. 6 Million Barrels oil a day, down to 4. 5 millionbarrels of oil a day and saw Oil Prices Drop by over 75 they had the big pinch we discussed that in the book. The uss crumbled. So all this set the stage for the slavic warrior to take power. Im calling Vladimir Putin a slavic warrior and its something important for the western media to understand. To most russians in russia he is the slavic warrior. Putin was born in 1952 in lenin grad. He started from very humble roots but his father really implanted Vladimir Putin at a young age with really grandiose ideas. Now, who was his grandfather in n his grandfather was the personal chef for lenin, and then when lenin passed, to leninys wife and then Joseph Stalin liked the cooking so much that he became and actually outlived Joseph Stalin. National the stories that the personal chef of stalin had and he shared that with Vladimir Putin with young vladimir. Out putin had a lot of inspiration, not just from his grandfather but his Favorite Movie growing up is called the shield the sword. The russian equivalent to james bond. He wanted to be a spy. He also became a world competitor in judo. So he enrolled in the Law Department at the statement university of lenin grad. By 197 a 5 he was ecruded by an agent and looks east german and hi german accent was undistinguishable, so he was sent essentially what putin calls, and i quote himself, a specialist in human relations. We in north america call it a spy. So when putin got to st. Petersburg after the collapse of ussr, he didnt hang a photo of president yeltsin like everyone else did. He put up a picture of peter the great. Thats who putin most relate to he does not relate to the modern failed politicians of russia. He wants to pick up where peter the great left off and take russia to a new level. So after putin consolidates the power from ollie gashings and takes control the transportation banking, media the politics within the nation putin now has to deal with external forces, first started with the rose revolution in 2003 in georgia and then the orange revolution in the ukraine in 2004. What is interesting about these revelations they were furnishedded by western forces from the ngos. George southerlies admits to funding ggos to bring down the satellite states around russia. So, what happens here . Well 2004, you shen co wins the election and over six years i did business in ukraine the government of ukraine went forward without problems from moscow. But what changed . In 2010,ow shiancoes she wanted to become president. What happened . Moscow friendly president , yanukovych split the vote and became president. So now he pledged to play eu off of russia. He was trying to get the best deal for russia and played both of them off. Unfortunately that came to backfire on him. By late 2013 the tensions building between pro describe pro russian camps led to the orange crush is a call it or the revolution, because the city square there is called maddon, and the battle erupted and unfortunately resulted in over 4,000 people who have died to date because of this. Eventually hundreds of thousands of people marched in protest, and as i stated unfortunately it turned deadly. The acting president , yanukovych, fled to russia and an interim government, appointed an swim president and eventually poroshenko was elected. Now, lets get to the details of putins plans. Why is ukraine important to putins russia . Theres four key pillars to this. Number one pipeline. Half of the natural gas that russia experts to europe goes through ukraine. They want to bypass that by using the south stream. That is why crimea is so important. Number two deep sea offshore oil and natural gas deposits they want to develop in the future. Number three deep sea warm port for the russian navy. But heres one the media is not talking about, the fourth and very important, if ukraine joins the eu, they have an advantage by bringing in importing goods without tariffs. That will eat into the russian market because the russian market has contracts with the existingi is states, as ukraine does and now the russian manufactured goods will have competition at lower price from the european goods. So its about putin also protecting his domestic economy. So lets get into the putinizeation of oil. Its a word i invented because people like catchy phrases like that. But essentially, if you really want to know where the fundamental basis, please visit the web site, colder war. Com. We have many videos we created about the putinization of oil and natural gas and other resources. So i break down in great detail tee types of Oil Heavy Oil light oil sweet, sour. For todays talk ill just clump it together as oil. So putin nurses understands resources and the importance to russias foundation to a promising future. In 1997 he wrote his ph. D thesis o. This topic. Lets put russia as a country into perspective. Im canadian. Russia is over two time owes size of canada and canada this second largest land mass nation in the world. Russia is probably at the top of the world, if not number two, per square kilometer of resource endowment. Its not just oil. Its natural gauze urainam, copper iron ore, south dakota inc. Most importantly what is interesting, 2014, a lot of media approached me and say but russia is a dying society elm that not truth. 2014 i this first year since 1992 that the russian birth rate is competing its death rate. And interestingly enough, the russian Poverty Level has declined under putin. Its unemployment has declined under putin. Theyve doubled their gold holdings, and they have much less debt than the western world. So lets look into this. Russia has anywhere between five to ten percent of the worlds proven conventional oil resources. Theres a difference between conventional and unconventional. The success that we have experienced here in north america is unconventional. Its taking a drill rig vertical, going hazardal horizontal and fracking. Unconventional is the source rook for the conventional deposits. The russians havent even started their unconventional development. Their close friend of mine runs the Largest Service company in russian and says its not even funny how much resources they have. Theyre Still Producing what we call the cheap oil or theees oil. North america is now going for unconventional because the cheap oil is gone. So where does this take us . Arctic oil is very important to putins grand rapids grand plan. Hence, the increase in the navy exposure in the arctic and as canadians we are into worried and believe it or not where the Canadian Military spends time is in the arctic. All about resources. Want to understand politics foal the money. More startling are the countries in europe that depend on russian oil. Finland and hungary. Chechneya, belgium, over 50 . Germany, 40 . Netherlands, 40 in the last decade germ enough increased dependence by 52 . Putinizeation of oil is based on two strategies. Vandal tour outside the continent for oil, make deal with the International Markets and most importantly, drill within their own borders especially the arctic. So we all know now that putin succeeded controlling the domestic supply but who controls russians oil sector . Thats roznek who took over the little Shell Company that got all the asset0s yukos . Who controls them . Now, what about opec and russia . Russia will not join opec. Opec has invite russia. Russia has politely declined but russia when convenient and beneficial to russia will cooperate with opec. But what does this all mean . In the last 35 years opec cut production 11 times during any lifetime and on average reduces production by about 1. 25 Million Barrels per reduction. The last time that opec cut production was in 2009. Opec invited russia to the meetings. Russia went know meetings. Opec shared with russia what they wanted to do. And opec decided they were going cut production, making the assumption that russia agreed with opec to cut production. What did russia do . They increased production, they profited from the situation they expanded the market share. Opec lost russia. Now, today, on november 27th opec is meeting again. And its not just russia that opec is at war with. Its also the u. S. Sail sector. Theyve been a swing producer in the International Market so were going to discuss why that is northern a bit. What about the putinizeation of gas . People in the west dont know that russia has 25 of all the conventional natural gas in the world. Remember, thats not including the unconventional. So when you look at it as much as the u. S. Right now produces 62 billion cubic feet per day. Russia thats using conventional and unconventional. Worry just producing from the conventional fields in siberia, 65 billion cubic feet per day. Controls almost all of their narl natural gas. These are all inner circle allies and loyalists to putin. So what does this all mean . In europe, germany depends hundred of the natural gas they consume froms crime russia. Poland 87 , finland, 100 . Even the u. K. , 25 . Now, all this happened with the largest successful shale gas formation was from a Company Called quadrilla. The bullet shales in the u. K. Proved up a little over 100 trillion cubic feet of gas and thats enough gas to supply britain for about 200 years. But they still depend on 25 of their gas from russia. Lord brown, who used to run bp who really understands the issues with russia because of bps investment, he is the chairman of quadrilla so he understands what is going on. Now everything changed. The large E Construction project in the to world, is not in north america or europe. But its the natural gas pipeline from russia to china. Eventually we will see what this all means, but russia, by 2028 will be exporting more natural gas just to china than all of europe combined. More importantly, when you build a major pipeline like that you can twin and it ship to other markets. That will happen. What about lng, liquiwe identified natural gas . Ann in north mrs. Talks about the lng revolution. Ununfortunately the u. S. And canada are five years between russia and qatar and australia on that matter, and when you look at the giant fields that the russians have you look at the giant gas field which has equivalent to a billion barrels of oil, theyre already building these things. More importantly theres something called flng. Its floating lng. The russians have already started building. These are the biggest ships on the planet and you can move into the arctic where theres no infrastructure and the ship is essentially a floating lng sector. Theres one in operation right now off the northern coast of australia. And now lets talk about the putinizeation of uranium. America is the Largest Consumer of uranium in the world. Anywhere between 45 to 50 Million Pounds annually. For the last 20 years, on average, about 20 of americas electricity is generated by a Nuclear Energy. Half of that Nuclear Energy the uranium came from russia. That means that 10 of americas electricity generated of the over the last decade came from russia. Thats one in every ten homes in america. Globally, 71 plants are under construction, 163 planned and 325 Nuclear Reactors are proposed. Almost half of the current primary uranium production on the planet is within russias control. Interestingly enough if you take all of the uranium production in 2013 in america, one Russian Company produced more uranium on american soil than all the American Companies combined. Scary thought. Half of the worlds our rainum resources are within the russian sphere of influence. And most importantly, almost half of the worlds enrichment capacity of uranium is within russias control. All of the growth of the Nuclear Sector is in the emerging markets. That is where putin is focusing his future on. So what does this mean . We bring this altogether and see a judgment day for the petro dollar. Opec and most of the world by the early 70s have been using the petro dollar. However, if putin is successful in his plan it would involve the demise of the petro dollar. We have animations video on our web site. Major oil and natural gas deals or occurring in nonu. S. Dollars around the world. The most recent one with russia and iran russia is going to build eight Nuclear Reactors, provide a lifetime supply of ourianan and using nonu. S. Dollars. But will opec turn their back thon the u. S. Dollar . Thats the key critical question. U. S. Was saudi arabias largest customer for crude oil. That is all changed. Part of the oil wars now opec is at war with the u. S. Shale sector. Sunny because of the success of the north american shale sector u. S. Now are exporting ngls. Theres a ban in america that you cant export crude oil but theres no ban of refined products. What does that mean . U. S. Shale producers are now competing with saudi arabia and qatar and kuwait in the International Markets in the the nlgs. Thats not good for saudi arabia. Their number one customer is now china and usually a producer goes with what its customer wants. So, what does this all mean . The success of the u. S. Domestic energy has increased output and production, therefore the import of energy from the middle east has become less important to americas foreign policy. But what a lot of people in the media and most americans dont know. It was actually the u. S. Military presence in the middle east that has been subsidizing the European Energy supply that comes from middle east and north africa. This is now significantly at risk. In the last four years we have seen the arab spring, a change of government and a power vacuum that continue with the u. S. Military leaving, and unfortunately for everyone isis and al qaeda are expanding. The war in iraq is nowhere near complete. Its getting worse. Expect the conflict ted ukraine to get worse before it gets better and as the u. S. Pulls out more unstable and volatility in the middle east will increase. What about the shaky house of saud . Late talk about saudi arabia the worlds number two oil producer after russia. And its at great risk. You look at the king right now is over 90 years old. His successor, his brother, is in his late 70s and is not doing well healthwise. There are 7,000 princes who are vying to become the next king in line. Thats not good more importantly, lets look at the demographics of saudi arabia a majority sunni country but all of the Oil Production comes from the east coast. The lahar oil field. Unfortunately the majority of unfortunately the existing saudi arabia regime, the majority of the people within the Oil Producing region, where all of the Oil Production in saudi arabia comes from, are shiites. Over 50 unemployment of adult males in this region and its just a ticking time bomb ready to go. One guaranteed result of any war in a producing region . You know that we dont know who will win we dont know what is going to happen, but one guarantee is Oil Production decreases. Another thing that is very, very important that people dont talk about that could change this choke points of oil. The strait hormuz. And the strait of ma lack campt the. Oliver it. Not the u. S. Companies gas pump. Europe depends on russia for energy and Vladimir Putin has executed a new market for Russian Energy which is in china and the rest of asia. This leads us toward the twilight of the petro dollar. What happens if the u. S. Petrodollars falls . The cost of finance u. S. Government debt will be higher than the currency depreciates, and the higher Interest Rates results. That is the average american debt cost, will be more expensive to service. 100 of gdp, and the middle class and poor will decline much further. That is the best Case Scenario. It could get a lot worse. As derivative markets could become significant victims of the demise of the petrodollars. There are 500 trillion in derivative markets. What is the conservative estimate. A lot of people publish books that are over a quadrillion dollars. I dont know how big that is but i teach calculus. Quadrillion is a big big number. What happened to them derivative markets which by the way Warren Buffett called weapons of mass destruction, if the petrodollars collapses . It will increase. Volatility and instability in the markets. Currency swaps worth trillions of dollars and non u. S. Dollar denominations taking demand from u. S. Dollar. 70 of the handtohand currency, at the 20 bills, actually are held by foreigners. 40 of 100 bills are held by foreigners outside the u. S. And one third of all checking deposits, and 1 trillion and u. S. Dollars are owned by foreigners. If there is the currency collapse based on the fall of the petro dollar you will expect these foreigners will dump these dollars and cause further pressure found on the u. S. Dollar. What has the government done to prevent this . In 2013 the u. S. Government made up 1third of the total military expenditures globally, a little over 640 billion. In the Nineteenth Century and 20th century and 21st century the u. S. Evolve on every major global conflict. That doesnt work well for a country. If you believe in trends of the past so what is the best Case Scenario if the policy doesnt change . Stagflation, high unemployment, negative Economic Growth and rapid price inflation. The biggest loser in this scenario is the middle class. You basically become a working middle class and the working poor. The baby boomers who plan on living on fixed income. The worst case the e. U. Or japan defaults on the debt held by the foreigners. This single event would be the most interesting day in the history of financial markets. And we will all be victims of it. How can you protect yourself from this . Is not something ahead fund manager can do. We all do it. Limit your debts and attempt to become debt free. Simple basic rules. To protect yourself from the demise of the petrodollars by a little bit of physical gold and insurance in case the dollar does crash and you hope that gold, you never actually used it because of gold does go through 10,000 per ounce the world will be in a very bad place. Diversify your holdings internationally hopefully for younger people in the audience, not just one passport or bank account have two passports, try to have internationalized assets, and profit from the colder war. By investing in Companies Run by rate management teams to understand how to bring modern technology to oilfields or gas field uranium fields you could profit from this. You look at what is going to happen in mexico. Mexico will be a game change their. Unfortunately for mexico they have been using profits from the oil sector to fund social programs. 3 Million Barrels a day to just above 600,000, major declines. Look at exxon. Americas largest oil company, that is how much you make for production of a barrel of oil isnt in the gulf of mexico or the middle east. It is in germany. These fields have never seen modern technology. And in the russian supplies of energy, take many years to play out it is your responsibility. Thank you very much. [applause] i am here to take any questions. Coming around, thank you. How do you see the impact of International Efforts on controlling Global Warming on the affects on the hydrocarbon fuel markets both gas and oil and will it change this overall picture . Unfortunately it wont. Lets take germany which is trying to be the world leader in green energy for the last five years, year over year the electricity costs increased 25 to the point that is not economic without government subsidies. As a result in manufacturing in germany, leading germany, and they have increased their dependence on former soviet oil by 52 over the last decade so you look at the numbers, about 100 years away from it. It is great political lit service but a politician as grand ideas and fabulous ideas and we are years away from the enemy of solar being night. I finance the largest geothermal plant in the u. S. In the last 25 years. It was difficult to make it economic. And the apocalypse in china with the highest outpouring in the world, china gets away from their coal 70 of global coal convention. They have a big push for Nuclear Energy, a different form of energy and the problem with green energy is it is not based on solar, wind, cold natural gas or uranium. In the back. Thank you very much for your insight and commentary. I have to ask about your opinion of the simultaneous decline of the ruble, the russian stock market, and the price of oil, back down to mid 70s. How long can russia continue to exert influence with prices at those levels coming from the mid teens . We discussed this in the book the colder war how the Global Energy trade slipped from americas grasp because part of the cycle is before the great inflation you have a deflationary and the key for people to understand, saudi arabia, russia, to balance their budgets to keep their social programs happy, they balance between 90 to 105 oil. The russian oil is economic at 40. They have to adjust their budgets their social budget. More importantly the ruble has devalued much more than the price of oil, therefore that is added vantage to the Russian Oil Producers because they make more money because of selling a depreciating currency so that is an advantage. The side effect of the sanctions against russia, hoping to crumble their economy, has pushed them closer to china and the chinese will make it huge deals moving forward with the russians. This is just the beginning of what we have seen. Chinese dont care about obama or america or germany on sanctions. The Chinese Government is about securing their 50 year Business Plan moving forward to secure a stable supply of energy. Yes sir . I believe we are the biggest oil producer, arent we . No. We will be soon. The question there will be will u. S. Shale sector be able to still grow and fight the decline . The problem with the unconventional sector is after your first year of production you have 50 to 75 decline. What the media is saying, we er almost energy independent. That report came from i e a, a 38 page report in the report never said i 2028 america will be energy independent. It said all of these well assumptions happen we will almost become energy independent. And 50 oil will america continued growth in production . No. Can a lot of production in the u. S. Sustain itself at 65 or 75 of yes. You are talking about combining barrels of Oil Equivalent with natural gas and oil. One quick question, things are going so bad and the petrodollars comes to an end why is the dollar rising in the market . What will replace it . They have to stabilize the future first. There is an old joke about the u. S. Dollar is the tallest midget in a room of midgets and the problem is unless the u. S. Foreign policy changes and accept china and russias equals rather than telling the what to do in implementing sanctions which is the worst thing you are going to see the rest of the world move away. Where would you rather go, the euro . The yen . They are more screwed up and the u. S. Dollar but until the new brick bank establishes itself, we are talking a few years out, there will be alternatives where the debt for example for every dollar of debt a government would take in the 50s the u. S. Government sees 4. 6 times growth in gdp. Today for every dollar that you take you see 0. 08 on the dollar of growth. The financial does not work, japan, even though they basically injected 1 trillion yen into the economy they announced yesterday they are in a recession so in the nearterm, the u. S. Dollar is the strongest currency but lets look at the last decade, the last century, it was britain. Things change. Unless america changes their approach it is going to change sooner rather than later. Thank you for your comments and for the book. Use that america has to change its approach. To you provide recommendations . Do you talk about that a little bit . What needs to happen is the next president take what happened in syria. The u. S. Funded the rebels to fight the us awed regime and people forget Vladimir Putin took out fullpage newspaper in the New York Times saying they this is foolish, why are you finding the people you are at war with . That today has come true. The u. S. And canada and the allies are bombing isis which originally were funded using military equipment provided by the u. S. In iraq today. Unfortunately isis is getting stronger and they joined forces with al qaeda. There is no secret to that. Saudi arabia has been funding them. What happens here . Until europe and america and the allies of the west, recognize that russia has there interests, china has their interests and have to work as equals to create a modern solution. Is not russia that has been expanding its military. If you look back 20 years nato has grown in membership nato has been expanding its own agenda so you look at what happened in kosovo and i spend a lot of time in kosovo, you get real perspective of what is going on. Even u. S. Sanctions are not legal according to laws of the u. N. Security council. There needs to be more dialogue and the miscommunication going on globally. That has to start. Do you feel there is any leader present that is a leader now or someone emerging and you feel is taking the right approach . What was interesting, i look just from an investment perspective where i can make money from the Current Situation or current realities. I remember in the election in 2012 when mitt romney set our biggest enemy is americas biggest enemy is russia and obama said the cold war is over. Within a year of that comment, it was russia that stood up to america with the red wine and comment and the rest of the world is taking notice. No one expected Vladimir Putin to rise from the ashes and do what he has done so do i see anyone right now . No but lets all hope that there is someone there. I dont have the answer to that. Thank you for this. I was reading in the Financial Times to be a goal, crude oil has to be 110 a barrel. It was a very graphic image and it should break even point for kuwait and other countries and i also wanted i think there are two American Companies that are already given approval by congress to be able to export the thing is if china and russia are so confident there will be at the mice in the u. S. Dollar in the future, that is why in 50 or 60 years, so confident and extrapolating so much in the future, so many grandiose plans securing resources for different commodities, why are they not holding their own currency . Why are the chinese so confident and the majority of the foreign reserves as well as the others. The first one for the new projects in russia, kuwait, you mentioned other members of opec. The article for the countries to balance the budget. Different from economic return. And no middleclass in kuwait you guys are imported it non slave workers and glorified slaves and you have the royal family. That is very different from russia or other countries like mexico where the state Oil Companies can actually the taxes are used to fund social programs. Is russia not breaking in . Because if you cannot balance your budget your primary commodity going down the prius the commodity. Something like the dutch disease. The dutch disease is based on currency and producing the price of that commodity crashes. U. S. Stock but you have price inflation. In russia their currency was overvalued. Like i stated earlier your currencies depreciated at a greater rate than oil. Russian companies are better off than the opposite dutch disease. We are already tools that your government depends on one commodity symptoms all over africa. But russia is very different. I am just lending if you cannot if you cannot balance your budget. Lets talk about the budget. Russia has 450 million in reserve currency. They tripled their gold reserves under Vladimir Putin administration. The chinese over doubles, and largest gold producer in the world is not america. It is china. China is the largest importer of oil. All bolt is money. Dont fool yourself. Gold is money. Have a question . With the decline of the u. S. Influence on the globe global Energy Market do you see Something Like the Manhattan Project developing replace forms of energy . We talk about that in the book because to do what the Manhattan Project was today in todays dollars would be over a 1 trillion investment from the government ended revolutionize what became Nuclear Energy. Obama tribe that with the green revolution, the guaranteed Construction Loans for companies and it was a disaster. It was a disaster in the tens of billions of dollars. So no. I dont see that being a solution unfortunately. Yes, sir. Just a couple points i want on clarification and things you said earlier. Looking at israel, and was under the impression, noble energy in the leviathan base and. Went to the platform. If you look at a cost to build this infrastructure, mobile cant afford it. During obamas first term they didnt visit israel. Vladimir putin and mad that have were there six times. You see the collapse of russia, over 300,000 russian jewish engineers went to israel and the influence there and they stick with their governments, they had very smart and successful its dyazide is real. When we went to iraq, the military, the u. S. Were there, they took down Saddam Hussein. Interestingly enough Saddam Hussein wanted to trade oil for euros not u. S. Dollars. You went after the new regime came in, there was no mention of trading land nothing but u. S. Dollars but more importantly whos doing all the Service Contracts in iraq, the chinese. And the largest onshore oil, africa oil, and whos doing all the work, fortunately, and exxon in iraq, they were already working in iraq and kurdish oilfields open. The iraq governments said it . To kurdistan. They lose contracts in iraq. Iran and russias supplying them on the nuclear front. I wanted you to expand on that. After the first natural deal with russia and china before Vladimir Putin went to russia he went to iran for Nuclear Power pack. This past week, iran had agreed to have the russians fund, build or supply and operate over 25 years tweet Nuclear Reactors in iran. I returned in march from ten years in baghdad. To clarify one thing about lower oil sector in iraq. As with any other country, subsoil resources belong to the country not to the region parked on the surface. These oilfields in the kurdish region of iraq belong to the country, not the kurds and the law is clear about that. So those Companies Like exxon mobile, who had advisers encouraged them to go make a deal with the kurds, it is quick money and you get it out through turkey, very ill advised because how could the iraqi government, relying over 95 on oil revenues for everything. More port look at the fantastic oilfields, janelle energy is producing 25 40,000 a day the streaming pipelines in kurdistan, how they get the oil out, they are tracking of the oil out. There are a lot of problems. When i got back from iraq im not putting my dollars in too much chaos. The point is some countries do not have diversified economy is and rely too much on what grew out of the message. Mexico. Venezuela has not, saudi arabia has not and none of the major oil producers. Changing the rules because it hasnt been successful. Counter point to your analysis. Looking at what the oil sector is doing in the country and its budget one looks at the diversity of the economy to see if there is resiliency there that can move from one sector to another as ours can for example. That is what we talk in a book like i mentioned Vladimir Putins foundation to his future plan is the resource sector. You cant depend on it. That is what we explain in the book. Thank you very much. [applause] have time for books and signing, etc. We are wrapping up the questions now. Thank you all very much for coming and look forward to seeing you next time. You are watching booktv on cspan2 with top nonfiction books and authors, every weekend. Booktv television for serious readers. Here are some programs to watch on this 3 day Holiday Weekend of booktv. Afterwards pulitzer prizewinning columnist brad stevens weighs in on u. S. Foreign policy