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Category Archives: oil

as of yesterday, america is no longer a nation of states, but rather,  a nation hedge fund.

or more precisely, the world’s single largest real estate company, with an initial portfolio of US$700 billion.

while tree hugging hippies are busy throwing rotten eggs ( most probably organic) at wall street, condemning the “bail out” of the very fat cats that caused this mess,….

and while rightwing neocon-nazis throw tree hugging hippies at egg on their face wall street denouncing the “nationalisation” of the country,….

the powers that be have managed to create something that would never ever have otherwise been possible.

america is now the proud owner of its very own real estate sovereign wealthy fund.

the worlds largest.

and its actually no different from other SWF’s out there,…

while the middle east’s SWF’s capitalised on cheap slave(ish) labour and no infrastructure investment, thereby keeping their oil production costs low relative to current market prices,….

and while singapore capitalised on the insanely long slave(ish) working hours of their citizens,……

america has managed to capitalise on its most abundant resource:

land,… in one of the largest and safest economies in the world.

sure,… if you’re a trader, or if your retirement fund just took a massive hit then you would be right to argue that point,….

but, as sordid and as historic as this little episode might be in america’s economic history, there is still nowhere else on earth people would rather put their money,… which explains why everyone and their grandmothers is piling into US treasuries and why the dollar is getting stronger at what would seem to be the shakiest period since the great depression of ’29.

the government now, effectively owns US$700 billion of real estate. how much of the country that is i cant say, but i’m betting that is a bit more than a couple of mouldy retirement condos in florida.

the point to remember is that while wall street is in a rush to dump these “toxic” mortgage backed securities, and while foreclosures may be at a record high,…. a large majority of homeowners are still paying their bills and have yet to default.

so the government is actually getting a pretty good deal. they’re getting a whole boat load of property in the form of securities which is essentially the same thing, and they have the ability to renegotiate the terms. which means that dude A who might be about to lose his house, will probably get his mortgage term extended, thereby making it easier for him to not default.

when things look good for dude A, things will look even better for the government’s portfolio.

should they have bailed out wall street?

shouldnt they have helped out main street instead?

its not for me to argue, and its kind of pointless right now.

besides, wall street couldnt have done what it did without the willingness of main street, but thats an argument of another time.

this is what i find interesting, and if i havent bored you to death already,…

heres something that no one is talking about right now:

had everything gone according to plan, this subprime thing wouldnt have happened.

had everything in the rearview mirror happened infront of us,…. this whole subprime thing wouldnt have happened.

but something changed.

had everything remained more or less constant, predatory lending aside, the homeowners would have been able to meet their mortgage payments.

one basic fundamental component to the worlds whole economy, changed which i believe sparked this whole thing.

oil.

even the most moronic person who cant keep track of his dollars and cents, will have an idea of how much he can pay a month. no matter how bad with money you are, you have an idea of a) how much your rent is and b) how much extra if any you have left over.

and when it comes to the point that buying is cheaper than renting, even at the new rate in a few years time, then you know buying will always make more sense.

so they did.

but while america was busy enjoying her new plumbing, the whole world decided to have a series of panic attacks, one of which was and still is over india and china getting it on too often and producing too many people.

what alot of people didnt add into their calculation was the possible volatility of gas prices.

and when gas prices go up, you have a choice to make:

skip a mortgage payment so you can pay for gas and go to work so you can get paid and then pay your mortgage?

or pay your mortgage, not have enough gas to go to work and maybe get fired, in which case you cant pay your mortgage and will get kicked out?

its a nobrainer.

so payments got late, and later and later as the gas price went higher and higher, until you get to where we are today, with banks having over invested while thinking they were geniusseses. and when it all went blrrrrp they looked at their guys and ask ” how come we didnt see this? arent we meant to be the smartest guys on the street?”

” wait, if we’re the smartest and we fuckered up, then what about those guys? or them? or them?”

hence your crisis of confidence.

anyway, the point of this is:

assuming the government knows that gas is one of the reasons they got into this mess.

then surely whoever the next president will be, their administration will be just as oil-centric as this one.

actually, with the government now holding US$700 bill that could double over time, if they could just keep the oil prices down,….

i would argue that whoever gets in come november, will make george bush look like a tree hugging hippie.

you see, if oil has now become even more important as a result of this rescue package:

then there is no way in hell obama will pull troops out of iraq at even the slightest risk of sectarian fighting which would stop iraq’s 2 million barrels a day flowing out.

in addition, many many more troops will head to afghanistan to secure it once and for all as the final piece in the big central asian pipeline.

offshore drilling? done and doner.

alasakan reserve drilling? certainly done.

hmmm,…

alaska,….

palin,….

conspiracy theorey buffs!

on your marks,….

get set,…

GO!

irony is :

securities that perform well, in one of the most heavily secured securities markets in the world, which just happens to be in one of the most dangerous and unsecured cities in the world.

translation: one of the best places to invest your money right now is also one of the most dangerous.

ladies and gentlemen i give you the iraqi stock exchange:

addendum to universal truth no 15:

joy:

is being in it while everyone else is bleeding on every other market in the world.

😀

universal truth no 15 – the alternate ending:

supreme genius and supreme stupidity both rely on the same process of thinking outside the universe that holds the galaxy, that holds the solar system, that holds the earth, that holds the continent, that holds the country, that holds the city, that holds the block, that holds the building, that holds the room that holds the box which you are thinking outside of.

exactly which i am guilty of has yet to be determined.

the scenario to come:

warplanes, most likely of israeli origin, swoop down and take out iran’s “peaceful” nuclear reactors.

pilots go “shalom!” and break out the creamcheese bagels for their flight home.

and then?

the question on everyone’s mind is not whether or not a strike will occur, but rather “when” and “what the fuck will the iranians do?”

according to one iranian commander: ” …..our finger is always on the trigger and we have hundreds and even thousands of missiles ready to be fired against predetermined targets,” Gen. Hossein Salami, commander of the Revolutionary Guard ground forces. [Link]

apparently their fingers are also busy with photoshop trying to hide missiles that dont go off [Link}

the photoshoped:

the original:

yes they suck at photoshop as much as they suck at being the biggest automobile producer in the middle east.

see,… you didnt know they made cars did you?

why bother photoshopping?

it doesnt make sense.

but then again not much coming out of tehran ever does make that much sense,… take the interview on fareed zakaria’s gps show on cnn with the iranian foreign minister,… dude said:

“before we discuss the halting of uranium enrichment, we must discuss the agenda for the meeting on the discussion of the discussion of the halting of any uranium enrichment discussion.”

wow….

just,… wow….

no wonder he’s in charge of every government’s bullshit factory,… he just does it so well.

but i digress,…

so what could iran do in the event of a strike?

not much actually, and here’s why:

1- lob firecrackers at israel:

as if israel is not prepared,… chances are there are 10 times more patriot batteries than iranian missiles. add to that the fact that the us military in the gulf will the first to hear about any launch, i reckon the israelis will have time to switch on the patriots, put the kettle on, make a kosher bacon sandwhich, hit record on the vcr for what ever israeli soap that the iranians will be rudely interupting, and head down to the bunker.

the iranians know this,… and it would be very embarassing indeed if their loyal american flag burners through out the arab/muslim world tuned in to watch the great destruction of tel aviv only to be greeted with the scene of israelis sitting in lawn chairs enjoying a “patriot n’ scud misslie” light show.

i doubt the iranians would risk this possible loss of face for a couple of measly reactors they could rebuild.

this is why we didnt hear much about the strike on the syrian facility last september?

.

2- block the strait of hormuz:

incase you dont know what it is, its that narrow bit of sea through which 30-40% of the world’s oil passes.

the most likely result of this would be to send oil prices sky high.

“we will scare the west into submission by making a trip to the supermarket more expensive than a high class hooker on new years eve!” they reckon.

riiiiight,….

iran already has almost no one in their corner. doing this will piss off everyone,…

more importantly they will piss off the people that matter:

joe / gunther / pierre / sven blow suburbia, mr newly middle class chan and his good friend mr surresh of new yuppie bombay, as well as many others around the world.

it has already gotten to the point that the average working man now realises that “something must be done to secure more oil” atleast, until an alternative is found. if a nation’s truck drivers and street cleaners are saying this because they are struggling to put food on their table guess how easy it will be for their governments to launch as many “necessary strikes” as possible.

pushing oil to crazy prices could actually be tehran’s downfall.

and lets not forget the iranians,… they’ve seen whats going on in the gulf, so how long before they start asking when they will see the benefits of high oil prices instead of record inflation and having their gasoline rationed cos iran cant produce enough for its own use.

ultimately, war is about who has more money and who has more gas. iran has some money, but no gas. tanks dont run on iranian rials.

blocking hormuz will force everyone to rally against them, even diehard anti-israeli/american jihadis will start to wonder if this is all worth US$10 a liter orange juice, so again not likely.

.

3- a retaliation strike against us military installations in their neighbours:

hitting kuwait, bahrain, iraq, afghanistan, qatar or even dubai will simply confirm america’s assertion that iran is nuts.

iran hates it when america is right, so just to piss america off it probably wont happen.

to do so would be to become the world’s new north korea,… and from recent events, even north korea doesnt want to be the world’s north korea any more.

.

.

.

so what could happen?

i dont know.

its not like they can do a syria and deny that there was a strike, nor can they say that it was only a military warehouse.

theres actually not much they could do.

unless they happen to have an army of big purple people eaters,…. then we’re all screwed.

.

one thing is certain tho,…

i get the feeling that there is a rift of some sort between the generals and the supreme council.

why?

well the skirmishes that go unreported for one.

the british sailor hostages for another.

its as if the military is saying ” come on if you think you’re hard enough! (cos we want you to bomb tehran and kick those nutcases out)”

the generals arent stupid, and i think 30 years of ayatollah mismanagement is finally starting to piss them off.

.

as usual i could be wrong, so breakout your gasmasks just in case cos it could still go juuuuuust a little bit wonky.

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ITS THE END OF THE WORLD AS WE KNOW IT,…. yet again here on the wonkiness.

the movie above is called A Crude Awakening: the oil crash.

it sums up pretty much everything you need to know about where we are today and what the next 10 years are going to look like,….

only,… it was made in 2006,… 2 years ago,… when oil was an average $50-$70ish a barrel. so bear in mind that this week, 2 years later, it closed at around $128 a barrel.

😐

so double all the bad news you see in the film,… and half all the good news,.. what little there is.

now i’ve read quite a bit about peak oil and the end of the hydrocarbon man, so there wasnt very much new, but it was still shocking, so i think its time i learned to live on a mountain, shoot a gun and grow like potatoes or something.

THE END IS NIGH!

and potato thieves will be shot!