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To: russwinter who wrote (14678)	5/29/2004 9:41:13 AM
From: TheSlowLane	Read Replies (1) \| Respond to of 110194

Yeah, Coxe commented briefly on the soybean story on the call this week. Here's an excerpt from the May issue of Basic Points in regard to commodities: "As leverage is unwound, some commodity prices sink. Yet almost all remain in backwardation, which means that most of the betting is to the bearish side, despite the reams 0f copy dispensed by the Street decrying the "runaway speculation in commodities." When US corporations are carrying three months' supply of oil, copper and nickel in their inventories, it will be time to worry about commodity speculation. Instead, inventories of those key industrial commodities are so lean they are mean to stockholders of commodity-consuming companies. Those who look only at the speculation by investors in commodity futures ignore the obvious fact that producers' forward selling—called hedging, but really a form of speculation—has meant that all that buying by the investing public has been offset as producers bet their company's future production against the financial bets made by speculators. The bearish producers have more demonstrated muscle than the levered speculators, so, on a net basis all that "frenzied commodity speculation" wasn't creating a bubble."

To: russwinter who wrote (14678)	5/29/2004 9:50:48 AM
From: Giraffe	Respond to of 110194

Train wreck is the metaphor of the moment ... "Since the defining moment of the Bush presidency, the preposterous flight-suit, Fox News-produced photo-op on the Abraham Lincoln in front of the banner that read "Mission Accomplished," the shaming truth is that everything has gone wrong. Just as it was bound to go wrong, as many of us predicted it would go wrong--if anything more hopelessly wrong than any of us would have dared to prophesy. Iraq is an epic train wreck, and there's not a single American citizen who's going to walk away unscathed." indyweek.com

To: russwinter who wrote (14678)	5/29/2004 10:09:41 AM
From: loantech	Respond to of 110194

Great post Russ. Thanks for all your work. tom

To: russwinter who wrote (14678)	5/29/2004 10:22:29 AM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 110194

China will have to change its energy policy. If left to its own devices, an extrapolation of recent trends suggests that China's oil consumption could double over the next decade, from 7 million barrels per day in 2004 to 14 million barrels per day by 2014. The problem with this forecast is that China can't afford the resulting cost of higher oil. precisely why i have always thought all the China Pollyannas like Jim Rogers are full of crap. GDP growth at China's stage of development is highly dependent on increasing per-capita oil consumption. but a meaningful increase in same adds significant pricing pressure, thereby limiting GDP growth. Western countries are in a much better position to absorb the higher oil prices--a sad state of affairs since economic "growth" in the West basically means a further expansion of the housing bubble. The choices are relatively simple: China has to become either much more energy-efficient or find a substitute for oil. But it takes 10 years to build a nuclear power industry. China has to act soon if it wants to adopt the nuclear option. Another alternative is to limit the growth of the automobile industry the sheer, casual arrogance of this US-centric position (and coming from a man of presumed Chinese heritage!) never ceases to astound. the US has less than 5% of world population but consumes 25% of the oil. but China, with some 20% of world population, must be castigated for consuming less than 10% of global oil production. US commentators are always pointing at others as the source of "problems" even though the US is the most piggish nation in world history by a long shot. no wonder everybody hates us.

To: russwinter who wrote (14678)	5/29/2004 9:38:10 PM
From: TobagoJack	Read Replies (1) \| Respond to of 110194

Hello Russ, <<… the important China soybean debacle story. Message 20173267 Xie's comment in second story: "China has to become either much more energy-efficient or find a substitute for oil." >> On the soybean issue, the Chinese consumption of soybean is what it is. There was a domestic shortage, and imports were stepped up. As with all businesses that prove to be profitable in China, be they growing oranges (years of lead-time), fried chicken fast food (inconsequential lead-time), making these furniture widgets, producing those electronic gizmos, or, not surprisingly at all, soybeans, entrepreneurs rush in, so much so that prices collapse. In such a, as the Americans would call it, ‘dynamic’, ‘economically free’, and ‘flexible’ atmosphere, capital allocation moves at the speed of Internet. Orders are placed on suppliers, double, triple, and quadruple times, in excess of underlying demand. When real demand is overwhelmed by genuine over-supply, and not so much because of bank intervention, the above mentioned entrepreneurs would inevitably fail to take delivery, because ‘the bank called my loan’ or ‘the dog ate my homework’. Trading, across borders, is a ‘bank eat dog eat bank world’, dark and murky, sometimes profitable, often dire, full of good cheer and anguished screams. As in the days of America in the late 1800s and early 1900s, such free and flexible dynamism is a sign of strength, not weakness, and should be embraced. The Central Bank protecting dog variety of neutered capitalism should not be tolerated. On the energy opportunity, China is in fact charging ahead with a whole host of practical, pragmatic, flexible, and dynamic energy solutions (coal gasification, pipelines, oil exploration, energy resource investment, making ‘friends’ all around, wind, hydro, nuclear, etc), but I for one have no doubt that gasoline price in the US will rise to the required levels to accommodate world energy situation regardless, because oil at USD 40 is simply too cheap. So, either price will adjust and/or demand will fall off, everywhere, except not evenly. Supply? It is what it is, namely finite. Chugs, Jay P.S. I mention energy here … Message 20178427