July 31, 2007

Bear Sterns Collapse

Part of the reason why the Great Depression was so Great was because people that trusted banks etc with their money, lost their money to the institutions who were supposed to be able to return a persons investment. Fast forward to today, and we hear about the case of the Bear Sterns hedge fund:

The value of the Bear Stearns Asset-Backed Securities Fund has fallen amid a flurry of mortgage markdowns, the Wall Street Journal reported, sparking fears the bank will have to close the fund as it has done to two others.

Bear Stearns (Charts, Fortune 500) has delayed paying back investors' money in the hope that the values of the fund would rise again, a source told the Journal.

The asset-backed fund's value was up 5 percent from Jan.1 to the end of June, the source told the newspaper. The troubled fund reported holds a range of mortgages with only a sliver being of the subprime category, the Journal reported.


Things are going to get much worse. They'll get better because of the Long War





Gold

Some thoughts on gold. While it has been urged by many, including times at this blog, to buy gold, one has to be in continuous dialect with oneself in order to make sure that his or her investments are made in the right sectors of the economy.

Gold prices will collapse with an equities crash as traders sell everything to meet margin calls. Anybody long gold will most likely get stopped out in the confusion. Only when this has been manifested will it be time to by gold and not equities which will continue to be in a bear until 2010. If it was that easy to just buy and hold gold now everybody could become rich and as one that knows the market, this is an impossibility. Perhaps the reason Europe is now selling is to take profits in anticipation of exactly this scenerio...



July 27, 2007

A Bad Week

Wall Street extended its steep decline Friday, propelling the Dow Jones industrials down more than 500 points over two days after investors gave in to mounting concerns that borrowing costs would climb for both companies and homeowners. It was the worst week for the Dow and the Standard & Poor's 500 index in five years.

Investors cast aside a stronger-than-expected read on the economy and maintained negative sentiment that dominated Thursday when the market shuddered amid worries over the U.S. mortgage and corporate lending markets. Investors globally took flight from equities, shifting cash into safer investments in Treasury bonds.


July 23, 2007

CNPC secures control of Canadian oil sands project

The source for this important development is here. Overall, these Chinese movements in the energy sectro shoul dnot be ignored since it is the case that they are trying to make sure that the U.S. will be a good and equal competitor for them.

exploration, pipeline construction and downstream operations.

According to company statements, CNPC said it received rights to explore 11 oil sands blocks in Canada since the beginning of the year.

State media earlier reported that CNPC, the parent of PetroChina, won exploration rights to oil sands in Alberta with exploration operations expected to eventually yield 220,000 barrels of syncrude daily.

The deal marks the first time a Chinese company has secured control of a Canadian oil sands project.

CNPC first set up an exploration and development company in Alberta in 1992, the company said.

"CNPC has been positively cooperating with Canadian firms on the projects including oil sands explorations, pipeline transport as well as oil and gas trading," the company said.


Chile to court Canadian energy firms

Chile is inviting Canadian oil companies to help increase its oil and gas output, Karen Poniachik, Chile's mining minister, said Thursday.

Poniachik said Chile has put up 10 drilling blocks for bid, the Calgary Herald reported.

"This is our first-ever international hydrocarbons bid round and we want Canadian investments in Chile," she said. "We are opening to the world and have signed free-trade agreements with several nations, including China, Japan and South Korea. Only just recently (Canadian Prime Minister) Stephen Harper was in Santiago and he spoke about Canada and Chile being like-minded nations. We need this relationship to grow."

With an annual gross domestic product of 6 percent, Chile is now actively looking for foreign direct investments.

"Chile has been a closed country and things are changing fast there." Poniachik informed that until last month, state-owned Empresa Nacional del Petroleo has signed 21 CEOPs (special operating contracts), the most recent being two contracts with Calgary-based March Resources Corp. that plans to invest $20 million for exploration in the Tamarugal basin.

Gerrit Maureau, president and chief executive of the Calgary-based Canadian Petroleum Institute, said Chile's economic environment is conducive for international investments.

"It is (now) a democratic and stable nation," Maureau was cited as saying in the Calgary Herald. "The economy is growing at a steady pace, and poverty rates have decreased by over 50 percent in the past few years. Also, a literacy rate of 95 percent has meant the creation of a pool of qualified workforce."

He added, "On the very upside and best estimates, the reserve potential could be 500 million barrels and 5.6 TCF."


Sinopec to export Sichuan gas to other parts of China

China Petroleum & Chemical Corp., or Sinopec, Asia's top refiner, plans to supply Sichuan natural gas to Guangdong province, Hong Kong and Macau by the end of 2009, its parent, Sinopec Group, said.

The National Development and Reform Commission has approved the plan, the company said.

Sinopec's Puguang Sichuan field had proven reserves of 356 billion cubic meters at the end of 2006, local media reports said.

Output from the field is expected to reach more than 10 bcm at the end of 2008 and 15 bcm by the end of 2009, Sinopec said.

Sinopec Corp. and China National Offshore Oil Corp. have secured an agreement with the Guangdong provincial government to set up a joint venture on natural gas supply and transmission, Sinopec said.

Under the agreement, the joint venture will assume the responsibility of investing and constructing natural gas pipeline networks in Guangdong, Sinopec said.

Sinopec and CNOOC will secure natural gas supply to meet high demand in the southern province using resources both at home and abroad, it said.



July 17, 2007

Tumbling Bonds, Great Debt

The big guys (J.P. and Golman, amongst others) are burdened with more debt that they can sell. This is indicative of the wider problems in the U.S. economy. We are a nation of debtors and spenders. It was only time that it caught up with us.

``The private equity firms, being very tough negotiators, are unlikely to let the banks off the hook, said Martin Fridson, chief executive officer of high-yield research firm FridsonVision LLC in New York. ``They'll say that's your problem and that's why we're paying you: To take risk.

As the market began to turn sour last month, Goldman Sachs, Citigroup Inc., Lehman and Wachovia Corp. had to buy $725 million of bonds that Goodlettsville, Tennessee-based Dollar General Corp. was selling to finance Kohlberg Kravis Roberts & Co. purchase of the company for $6.9 billion. All of the securities firms are based in New York, except Wachovia, which is located in Charlotte, North Carolina.

Bonds Tumble

Those bonds are probably worth 94 cents on the dollar, or $43.5 million less than when they were sold on June 28, according to Justin Monteith, an analyst at high-yield research firm KDP Investment Advisors in Montpelier, Vermont. KKR completed the acquisition of Dollar General on July 9.

Bear Stearns Cos. strategists estimate that about $290 billion of deals still need to get funded, including those of Greenwood Village, Colorado-based credit-card processor First Data Corp. and energy company TXU Corp. of Dallas.

The question is ``how much yield are the brokerage firms going to have to eat, said Hintz, who is now an analyst at Sanford C. Bernstein & Co. in New York. ``What they've committed to is not current trading rates in the market. If I have a problem it doesn't mean I can't place the problem, but it's going to cause a mark-to-market loss.





July 15, 2007

Back to the 70's

It is an interesting comparison made in the following article. There are many similarities to the 1970's. Only that now the U.S. has its military on the ground near th eworlds oil hub. It only takes an order...it only takes an order.

This article points to the similarities with the 1970's while talking about the current developments.

Back to the 70s

Resource prices like oil would inflate well beyond current price ranges under such circumstances, just like in the 1970s. But that was not a good time for stock markets as inflation hit corporate profits with rising input costs, real estate slumped and then drifted upwards and those on the fixed income of bonds were really stuck.

Hence energy and resource related financial assets like oil company shares, and precious metals would likely be the best investments in such a scenario. Whatever Dr Bernanke says this looks the direction in which the US and global economy is heading.

The next step should be a stock market crash which would rally the US dollar followed by much lower interest rates which would devalue the greenback. Thereafter inflation would sort out global debt levels and rebalance the world economy.

But most investors are invested for precisely the reverse scenario and so will suffer badly.


Do note that this is not reported in the mainstream.


July 14, 2007

Oil Prices

For the reader always wondering why things are the way they are, the topic of crude oil prices is one that should be on the front of any serious investors cognitive process.

Higher crude prices are a result of strong demand and not of "depletion". The only depletion is in world R/P ratios (reserves-to-production) due to strong global demand since 2002. This is a demand driven market right now that does not have enough RC (refineries capacity). RC has been less than 1% for almost a decade.




July 13, 2007

Iran Watch: Yen and not Dollars for Oil

Iran is waging an economic war against the dollar, reported here last December, its moves of trying to wrest away the dollar monopoly in oil sales is now entering into a new phase. We will see what happens. MORE NAVY IS ON THE WAY!!!

Iran wants yen-based transactions ``for any/all of your forthcoming Iranian crude oil liftings, according to a letter sent to Japanese refiners that was signed by Ali A. Arshi, general manager of crude oil marketing and exports in Tehran at the National Iranian Oil Co. The request is for all shipments ``effective immediately, according to the letter, dated July 10 and obtained by Bloomberg News.

The yen rose on expectations for an increase in demand for the currency to buy shipments from Iran, Japan's third-largest oil supplier. Central bankers in Venezuela, Indonesia and the United Arab Emirates have said they will invest less of their reserves in dollar assets because of the weakening currency, while the United Nations Security Council is preparing for another round of sanctions against Iran because of the nation's nuclear research.

``What else can Japan do but to accept the request, once the oil producer sent its wish? said Hirofumi Kawachi, an analyst at Mizuho Investors Securities Co. in Tokyo. ``The tensions between the U.S. and Iran are escalating, and it's Iran's measure to hedge risk.



SOURCE OF ARTICLE




Department of Treasury Disaster Contingency

Fresh off the wire:

The Department of the Treasury today held a post-disaster exercise in conjunction with the local community in Tampa Bay. The post-disaster exercise received very little media coverage but has now been confirmed to have taken place, according to the newsroom at Tampa Bay NBC affiliate WFLA-TV.


The Department of the Treasury today held a post-disaster exercise in conjunction with the local community in Tampa Bay. The post-disaster exercise received very little media coverage but has now been confirmed to have taken place, according to the newsroom at Tampa Bay NBC affiliate WFLA-TV. WFLA-TV was issued a press release by the Department of the Treasury and the local county regarding the drill. For whatever reason, WFLA decided that this post-disaster exercise did not deserve much attention and was not covered on their TV news broadcast.

The lack of media coverage is surprising considering the fact that the U.S. Dollar is registering all-time lows against other currencies, there are fears of a U.S. Dollar collapse and institutions like the Bank for International Settlements are warning of a possible global depression. The Department of the Treasury holding a post-disaster exercise of any sort is in fact extremely significant, considering the current problems with the U.S. Dollar. The language of the press release states that the purpose of the exercise was to test the ability of financial institutions, federal and state regulators, state and local government officials and state and local first responders to quickly get to their feet after any disaster. This is opened ended and indicates that this could have been a drill to prepare for any number of disasters from terrorism to a natural disaster or an economic collapse but the main focus clearly revolves around the financial community. The question is why the focus around the financial community? Are they preparing for something that we don’t know about?

Mike Swenson, host of the talk radio program "Revolution Radio and webmaster of the anti-NWO web site Truth or Lies, called the WFLA-TV newsroom during the first hour of his program Thursday night regarding this exercise after being tipped off about the drill by a caller.

The caller to Swenson's radio program described hearing a broadcast news report on Fox NewsRadio 970-WFLA in Tampa, in which they described a "terror drill" being conducted in downtown Tampa. Further investigation into the matter by the caller revealed little information from other mainstream outlets across the Tampa area.

Further, the caller went on to state that a friend of his, who works in the Verizon building in downtown Tampa, told him that the high-rise building had been shut down for "terror drills". Again, the media failed to report this.


July 9, 2007

Even With Sanctions?

A report released by World Bank economists showed ten economic indices have improved in Iran in the last Iranian year (ended March 20, 2007).
The report named “Economic Development and Perspective of Middle East and North Africa in 2007“ was released in June, Fars reported.
The report is the third of its type that studies economic conditions in 12 regional countries, including Iran, by focusing on their markets in 2006.
The ten indices include rise in production growth rate, improvement in per capita production, reduction of inflation and unemployment rates, improvement in working environment, rise in foreign direct investment and governmental credits as well as rise in hard currency reserves and tourist revenues.




July 2, 2007

Back Again!

Well, for the most part, I am back. It is great to be able ot write again from the comfort of my own home. Vacationing takes a toll on blogging.


Changing LINKS