Hi Chuzz,
"Valuation is a really tough issue. For example, if you look at the oils or the oil service industry based on history they are dirt cheap right now. But there is a reason for this. Oil is dirt cheap and doesn't show any prospect of recovering soon. Much of the world is in a recession or depression, and the third world depends on raw materials and commodities like oil and lumber for cash. But since the market is limited by global economics they respond by increasing their oil output which just pushes the price further down. What happens when Iraq finally starts pumping oil?"
I posed that question to you about a month ago? You are on target and that brings me to the next question.
Of course we understand the need to contain the "Iraq aggressors" from posing a threat to the political stability of the Mid East. However, part and parcel of that public policy is also the question of the economic stability of the region. Which as you well know has far reaching effects on the rest of the world.
I tend to agree with those who say, if Iraq is to ever arrive at self determination, the Iraqi people must be able to shift their focus away from the ugly American and on their own ability to provide economic comfort, relatively free from outside constraints.
One can effectively argue that those constraints were brought on by Iraq's transgressions.
"Do the Iraqis have a case?
A recent UN report revealed that nearly 1 million children are suffering from chronic malnutrition - a 72% increase since sanctions were imposed. Huge increases in the costs of basic foodstuffs and the collapse of the Iraqi currency have made begging common.
The United Nations has now initiated an "oil for food" deal, which allows Iraq to sell some of its oil to buy medicines and essential foodstuffs and lessen the impact of the sanctions on ordinary Iraqis. Western nations have said the oil-for-food deal has given Baghdad enough funds to buy food and medicine, and have criticized Saddam Hussein for building palaces while his people suffer".
Old stuff at this point albeit still continuing.
There are those who say that UNSCAM is dead. That absent an early demise of the present Iraq regime the only way to rehabilitate the Iraq people it to raise the threshold of legally permitted oil shipments (for food and medicine.)
In that fashion, the intellectuals will be in a better position to deal with the ideological aspects of their government, free from the government guided focus on the American and British as the cause of the present economic difficulties.
Perhaps so, yet I wonder if that alone will lead to Saddam's end.
They predict that Iraq for all intents and purposes will be in business (legally) shipping oil within a short period of time (two years or less?)
Yet on the other hand, if the present conditions with regard to the oil market were to continue, as you accurately described, what is the incentive for the free world ( also read friendly and not so friendly)oil producing countries to encourage Iraq's increased oil production?
It seems that we, and those presently producing oil, have no incentive to do much more than maintain the uneasy status quo. By containing Iraq, we in a sense keep a lid on unwanted oil production and further price declines.
Self interest of necessity becomes the first priority. I suppose that holds for every nation. Unless we speak to that self interest in a more inclusive fashion we will always be dealing with the have and the have "nots" and the usual ensuing intrigue.
Giving the present circumstances, what are our chances of truly creating or at least encouraging a global economy that is to a large degree, one that will provide a basis for lasting world peace and prosperity?
Regards,
QT |
