re: ["Goldman Sachs report is the biggest pump attempt I have seen since the 2001 tech bubble."]
Yes it is.....and clearly so.
But, "WHY" it is..... is THE story - that no one here yet understands.
On that note....say hello to:
*** Strange Bedfellows and even Stranger Events ***
Few Energy Investors understand the complete China Story and the role of Oil here.
While most threadsters here are smarter than the average investor...most still view the China Story as begining with WalMart and ending at ramping Oil & Commodity Prices.
WRONG.
The China story today...is the Soviet Union Story of Yesterday.
You won't find the REAL China Story in the Main Stream/Main St research.
The single highest priority in the State Dept and the US Pentagon is the China Economic AND Geopolitical Threat.
...and THAT is and will become a huge component of Oil Prices.
...vis a vie Oil, Natural Resource Commodity's, Taiwan/Japan encroachment, Military Escalation, Trade Practices/Imbalances, Deficits, Currency Pegs et al.
We've just started to see headlines like this:
*** Oil: The Dividing Line of the New Cold War. ***
- that is just the begining.
Strange Bedfellows have met at the crossroads of Economic & Geopolitical Crisis.
Greenspan has backed himself into a trickbox here.
He has created misallocated Bubble after Bubble, via his massive Credit/Debt & Inflation/Liquidity reflation of the US Economy post the Tech Bubble Stock Market Meltdown & the Sept 11th Economic collapse.
Inflation is now rearing it's ugly head....despite the hedonic (read ludicrous) adjustments.
Greenspan must raise Interest Rates and is.... and he (along with the National Board of Realtors) has publically announced his intention of pricking the Housing Bubble etc.
BUT !!!!!!!!!!!!!!
GM is imploding.
AIG is now being called another LTCM-esque "black box" company that no one can figure out.
Warren Buffett being called by investigators to address the complex derivative arrangements with AIG, that he's been so vocal in warning the markets about.
First Mark McGwire & Barry Bonds... now Warren Buffett ?!?!?!?
Today Freddie Mac announced earnings will collapse - 40%, citing interest rate derivative problems (WHODATHUNKIT ?) and it will not file a quarterly (must be nice to be a GSE).
Fannie Mae is already imploding and is being propped up to avoid a LTCM-esque Derivatives implosion.
And what's up with Investment Bankers ?
Citibank has been sanctioned and was told it will not have any further megers approved untill it cleans up it's act.
Morgan Stanley is embroiled in an internal civil-war.
JP Morgan/Chase has derivative exposure that is unprecedented....(see below ***) and it is now EQUAL to US GDP !!!!!!!!!!!!!!!!!!!!!!!!!!!!
Here is a Must-Read DERIVATIVES Bubble Reality Check...from Italy's Mario Lettieri's recent speech in March:
["However, one year later, not only do we find confirmation of what we had written and what I presented in my first intervention, but unfortunately, we must also observe that the systemic financial crisis is producing shocks on the markets in an increasingly significant and negative manner, with increasingly serious and uncontrollable consequences, at a level which clearly goes beyond that of Italy.
The gap between the real economy and the economy based on financial speculation is of an almost inconceivable magnitude.
The leading market of course, is London, which is almost twice as large as the American market.
The BIS declared that it was quite worried because the speculative FUNDS, the so-called HEDGE FUNDS, have an increasing importance in these operations, to the point that 43% of all contracts do not involve a bank, but rather a HEDGE fund or insurance company as one of the counterparties. And this is a worrying fact, since banks, although they can be criticized and need to be more transparent, do offer a minimum level of guarantees, unlike these FUNDS.
Consider what has happened with certain large banks; for example,
*** JP Morgan Chase alone, has increased its DERIVATIVES exposure by about $10,000 billion, almost the size of U.S. GDP.
The total value of DERIVATIVES exposure is thus larger than world GDP:
We are faced with a situation in which, if there were crises that could lead to a crash, the situation would cause a global financial breakdown, with devastating effects on the economy, wealth, and life of many countries.
The most recent report available from the BIS, on DERIVATIVES at the end of December 2004, brings the total of contracts open at the end of June to over $220,000 billion: an enormous, scary amount, which highlights an increase of $50,000 billion more in 12 months!
It is definitely important to emphasize that, at the end of June 2001, according to the official BIS reports, OTC DERIVATIVES were $100,000 billion. Thus, in three years, there has been an increase of $120,000 billion, equal to three times world GDP."]
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US Consumer Debt has doubled into Greenspans Reflation of the US Economy.
US Consumer Savings have collapsed and have reached a near "0" savings rate.
US Deficits have exploded.
US Dollar Currency has imploded.
Greenspan needs to raise interest rates significantly...but, if he does....a Derivatives Implosion in which Greenspans Thumb is already in the Dike...lies dead ahead.
So, what alternative to ramping interest rates does Greenspan have to put brakes on the US Economy ?
....maybe Oil ?
In China; they teach that:
Crisis = Opportunity.
That concept has not been lost on either the Pentagon, the State Dept or on Greenspan.
...strange bedfellows ?
- not really.
You are going to see many, many more "strange" events unfold like Goldman Sach's (note: they are THE Largest Energy Derivattives Trader in the World) calling for $105 Oil.
Don't think that US Financial Institutions can be used to intervene in Free Markets ?
- how do you think Long Term Capital Management was bailed out ?
- do you think the Exchange Stabilization Fund is a myth ?
Are you familar with the Gold Carry Trade & Central Bank Gold Sales that were prime catalysts in the Gold Cycle ?
US Financial Institutions are now more "beholding" to the US Government for a variety of reasons...than ever before.
Recent US Treasury Auctions were led by unregistered Carribean Offshore Hedge Funds.
...and you think Oil can not and will not be "manipulated" and used as a Geopolitcal AND an Economic "weapon" ?
You either understand reality, or you don't.
Calls like that from Goldman Sach's today for $105 Oil have nothing ....again; NOTHING to do with the fundamental Oil "commodity" market....NOTHING.
It was a shot across the bow to China.
The US can temporarially sustain a spike in Oil Prices.
China can not.
Time and space here do not allow the expansion of this subject...but, if you do your own "DD" it is not hard to understand.
China is escalating it's Military Build Up and is threatening both Taiwan & Japan openly with War.
Don't think China is a Bush priority ?
atimes.com
Bush wins big as China overplays its hand.
By Jim Lobe
WASHINGTON - The apparent decision by European leaders to delay the lifting of their 16-year-old arms embargo on China beyond June marks a clear-cut foreign-policy victory for US President George W Bush, who made the issue a major priority in his visit to Europe last month.
China itself may have inadvertently made Bush's victory possible. Its enactment last week of an Anti-Secession Law that lays the foundation for a possible military attack on Taiwan if, in Beijing's judgment, it were to move toward formal independence, gave the administration powerful new ammunition against ending the ban - as well as political cover to those European governments that were wary about confronting Bush on the issue.
Europe's decision also marks the latest in a series of Bush administration moves to try to keep rising tensions between China and Taiwan from getting out of control as part of a larger strategy to "contain" Beijing militarily, despite China's fast-growing economic and political influence in Asia."]
Market Fundamentals are no longer driving, or controlling Oil.
Both Bears AND Bulls had better understand this concept.
1. Oil is no longer trading on supply:demand, or market fundamentals.
2. Oil is going to be used as an Economic Weapon of Mass Destruction to bring down the Chinese Economy and more importantly; the Communist Chinese Government.
We are seeing "sabre rattling" in the Oil Markets presently.
It takes very little money to move the Oil Markets compared to Currency, or other Markets....very little.
I'll repeat for those 95% that are asleep at the wheel - anesthetized by Greenspam's Fiat-Feel Good Pump Job and/or the recent run in Energy Stocks.
Short-term: You may make Money even if you are dead-wrong on "why" Oil is ramping.
Long-term: You won't "retain" that Money you made - unless you discover "why" Oil ramped and then "WHY" it's going to Collapse faster than it rose.
Many here laughed at my premis that the USA is going to use Oil as a quote/unquote:
Weapon of Mass Economic Destruction - to topple the Chinese Economy and to bring down the Chinese Communist Government.
History is a marvelous teacher:
Yesterday: It was Ronald Reagan & the "former" Soviet Union.
Today: It is George Bush & China.
Then:
Escalating Defense Spending was used to collapse the Soviet Economy and thus bring down their Communist government - which was the only other Global Super Power.
Now:
Escalating Oil and commodity Spending will be used to collapse the Chinese Economy and bring down the Communist Chinese government - which is the only threat on the horizon to sole US Global Super Power Status.
China props up North Korea.
China and No Korea are the primary suppliers of missle and Nuclear Technology to our Enemies...and ultimately, potentially to Terrorists.
And do not underestimate the Historic Opportunity that the NeoCon's have in crushing Communism here.
Oil is no longer trading on economic, or underlying suppy:demand fundamentals...but, rather geopolitical catalysts and the intervention/manipulation of not so "Strange Bedfellows"...
From the remarks of most threadsters here...few have a realistic handle on the fragility & imbalances of the Chinese Economy.
The US Economy can far better handle a "temporary" spike in Oil Prices than can the Chinese.
Ramping Oil Prices will serve much of the same effect to slow the US Economy as the necessary hiking of Interest Rates...which are already creating crack's in the Derivatives Markets.
US Foreign Geopolitical and Domestic Economic Policy have reached a rather interesting crossroads....and Oil is the common denominator that is going to create strange bedfellows and even stranger events...
- Here is a Headline Theme that we'll be seeing more of :
Oil: The Dividing Line of the New Cold War
atimes.com
["How fast and far China will fall is an open question. But one thing is certain: China is huge, and when it falls, it will not fall alone.
The result of even a mild recession could knock 1 million bpd of consumption off the top in just China, and a deep grinding collapse could possibly eliminate Chinese imports altogether.
Such a development would dramatically diminish international crude oil prices.
In 1997, the Asian financial crisis knocked out 6 million bpd of demand; prices fell by nearly three-quarters as a result."]
...6 Million bpd knocked out of demand in the last Asian Contagian.
As they say...the cure for High Oil Prices - is High Oil Prices.
History ~ Then & Now:
Learn from it... or be destined to repeat it.
Oil is the catalyst for today's COLD WAR.
Then - it was the Soviets.
Now - it is China.
Oil is not trading on it's fundamentals...you can be wrong about this fact and still be making money here and into the near future...but, ultimately coming to grips with that fact and even more importantly; realizing - "WHY"...will ultimately determine both "if"...and "how much" money you get to keep...for Oil will ultimately Collapse even faster than it rose.
Still don't think the China Story is "fragile" and at a flashpoint ?
read:
spiegel.de
The Chinese Miracle Will End Soon"
SPIEGEL Interview with China's Deputy Minister of the Environment
Interview conducted by Andreas Lorenz
Translated from the German by Patrick Kessler
DER SPIEGEL 10/2005 - March 7, 2005
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TAIWAN issue could lead to WAR,says China
Beijing's ANZUS WARning
By John Kerin
The Courier-Mail (Australia)
08mar05
thecouriermail.news.com.au
["You have to pull out a map for this one but it's worth it. China claims sovereignty (and oil rights) over all waters leading out to the edge of Asia's continental shelf. This then would include every square foot west of the southern third of Japan, everything west of the Korean peninsula and all the waters around TAIWAN. When China chooses to enforce this claim, as is apparently happening now, it is a certainty that all hell will start to break loose in the region. This may be the reason for a US Naval exercise last year involving five aircraft carrier battle groups.
It is on this shelf that small but very significant deposits of oil and gas are known to exist from northern Japan all the way south to the Spratly islands near Vietnam, the Philippines and Indonesia."]
["China has announced a 12.6% increase in its defense budget for next year, pushing it into an overt arms race with the US. - Reuters, March 4, 2005 "]
["China has begun placing nuclear-capable ballistic missiles on some of its submarines for the first time. - The Washington Times, December 3, 2004."]
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China Enacts Law to Stop TAIWAN Secession
Mar 13, 8:50 PM (ET)
By Christopher Bodeen
apnews.myway.com
BEIJING (AP) - China's national legislature on Monday overwhelmingly approved a law authorizing a military attack to stop TAIWAN from pursuing formal independence, a day after President Hu Jintao told the 2.5 million-member People's Liberation Army to be prepared for WAR.
The measure was approved by a vote of 2,896 to zero, with two abstentions at the closing session of the annual session of the figurehead National People's Congress' annual session.
"We shall step up preparations for possible military struggle and enhance our capabilities to cope with crises, safeguard peace, prevent WARs and win the WARs if any," the official Xinhua News Agency quoted Hu as saying Sunday.
Hu's comments, made to military delegates at the national legislature, appeared aimed at underlining Beijing's determination to unify with democratically ruled TAIWAN, which split from the Chinese mainland in 1949.
Also Sunday, Hu was appointed as chairman of the government's Central Military Commission, a largely symbolic move that capped a generational transfer of power. He already heads a parallel party commission that runs China's military.
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One final thought vis a vie - Oil being used as an Economic WMD:
Just as water has no fixed shape there is no one best military tactic.
Varying tactics according to your enemy to bring victory is best.
– Sun Zi
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...better be thinking outside the box & getting the Big Picture right here people.
This aint your grandfathers oil market no more....
$lider~ |
