Hedging Morals

If you know me, you know I’m not big on Kantian ethics and morals. Nevertheless I found myself in the middle of an ethical conundrum today. If I believe that the new Hamas-Fatah alliance and trouble in Iran will result in greater perceived risk for Israel then it makes sense that I short the Shekel and sell Israeli government bonds. The dilemma arises in that once I own the position I make money if Israel gets bombed, something that I definitely don’t want to see happen as a Jew with many relatives living there. My moral and monetary incentives are instantly misaligned.

The same is never the case when shorting US Treasuries or dollars – after all with that I’m betting on Bernanke’s babble, not another 9/11 which would have pronounced effects on all global markets - unlike Israel which is too small to affect many countries outside of its region.

In any case I put on the trade. I don't believe that Israel is in a good place right now, and even though I pray that nothing happens I know that's damn unlikely. With Israeli CDS spreads being as tight as they are now any serious militant attack is going to widen them considerably. One could say that the trade is like a call option on my morals (if something bad does happen, at least I'll make money) but I'm not going to go down that path. The bottom line is that when trading, especially with other people's money, you have to put your own (non-collective) morals and individual incentives aside so that you can execute the best possible strategy.

Things are getting interesting...

…might be time to make a move. Long LNG.

Qatar Shows Interest In Natural-Gas Cartel
By JAMES HERRON, WALL STREET JOURNAL
February 13, 2007; Page A2

Qatar's interest in exploring the creation of an OPEC-like cartel for natural gas adds another major producer to a group that includes Russia and Iran. Even so, industry experts say the nascent effort faces significant obstacles, ranging from a fragmented market to a history of noncooperation among the world's biggest holders of reserves.

Russian President Vladimir Putin and Qatari Emir Sheik Hamad bin Khalifa Al Thani said yesterday, at a meeting in Doha, Qatar, that they wanted competing gas producers to cooperate more. Mr. Putin said he would send a team of experts to a natural-gas conference in Doha in April, where they would discuss details of building a cartel. (Putin is serious – he wants to control the world through power and is feeling unstoppable, which is why he feels freedom now to make open anti-American comments. Such words precede actions. Putin is on a Middle East tour for more than one reason.)

The leaders of Russia, the No. 1 gas producer in terms of reserves, and No. 2 Iran have been talking recently about creating a group similar to the Organization of Petroleum Exporting Countries, which manages its output in an effort to sway crude-oil prices world-wide. If such a group were formed, the inclusion of No. 3 Qatar -- a major producer of liquefied natural gas, or LNG -- would give it significant clout. (and the rest of the dominoes fall into place)

But forming such a group could be difficult. Sheik Hamad said he supported the discussions, but he was unsure whether a gas cartel would be able to command the same degree of market control as OPEC does.

Gas demand is climbing amid global economic growth and because it burns cleaner than other fuels. But gas markets are fragmented, in part because transporting gas overseas can be difficult, complicating efforts to form a single global market, like oil, in which a group of producers could hold sway. LNG, which is natural gas cooled into liquid form and shipped overseas via tanker, has moved natural gas closer to a world market, but it remains a small part of global use. (Except Russia has plenty of tankers ready to go and more being built).

Also, gas tends to be sold through long-term contracts. That means a cartel would have little influence on such arrangements, Sheik Hamad said in a press conference in his presidential palace.

Past efforts haven't led to significant cooperation among gas producers. Russia, Qatar and Iran are members of the Gas Exporting Countries Forum, which was formed in 2001 but hasn't met since 2005.

Jonathan Stern, Director of Gas at the Oxford Institute For Energy Studies, said Mr. Putin's talk of closer cooperation among gas exporters isn't the same as a cartel and "doesn't mean a price-setting or volume-setting organization." He said Russia and Qatar, as gas exporters, don't have much in common, and they have much more potential to be competitors, especially in the European market. (Putin can be a very persuasive person in dissuading competition and is more than willing to give generous incentives).

A spokeswoman for the International Energy Agency said a cartel that raises prices "will encourage consumers to reduce demand or switch to other fuels. This is particularly true for gas, which can be substituted with coal and nuclear." (Except coal is under attack in the US and nuclear has tremendous fixed costs, and impossible for developing countries that can still afford Gas/LNG).

Julie Reside, a State Department spokeswoman, said there has been talk of a possible "gas OPEC" for many years, with no result. "I think experience has shown that free and open markets work best for both producers and consumers," she said.

Russia has sparked concern in the West that it is using its vast energy reserves as political leverage. (No Shit) Mr. Putin has dismissed the criticism, and he has defended moves to raise gas prices on some customers as an effort to put market prices in place after years of lower prices. (That's why he's been doing it now and all at once, knowing full well that it would be ill received, instead of instituting gradual programs years ago).

Putin has a master plan. Russia will be getting very interesting this year leading up to the elections and beyond. Stay on the sidelines or get in the game, either way there will be fireworks and money to be made.

Un Poco Kinky

Idiots Protest Kink.com's Porn Pallace

Protesters complained that Kink degrades the neighborhood, degrades women and
offers "dead end'' jobs that no decent person would want.

The whole statement is absolutely bogus considering the amount of gay “fetish” bars in that very area. Also let's not forget Folsom Street Fair - the world's biggest S&M gathering held just a couple blocks away every single year. I really couldn’t care less about what consenting adults do behind closed doors, but I certainly don’t want to see a man in assless chaps strolling along the sidewalk holding his boyfriend by a leash when I’m driving for groceries. As for offering "dead-end" jobs, you're right - it's much better to be an AIDS-infested hooker, a hobo or a criminal than a porn actress making enough money to live a comfortable middle class lifestyle and getting paid to do what you enjoy.

"This neighborhood is already plagued with enough violence and prostitution as it is.'' said Roberto Hernandez, the artistic director for the annual Carnaval parade.

Here is a fact: porn in no way encourages prostitution – in fact, it reduces it because any prostitute who could do porn most certainly would – it is STD safe (since testing is mandatory) and pays a whole lot more. But Heaven forbid that protesters actually research the facts! And please nobody make the arguement that watching porn makes you more likely to solicit because that's equally outrageous. This goes double for S&M porn since most "fans" can get their jollies off legally by going to one of San Francisco's dungeons (a few of them also located in this neighborhood).

"This is oppressive and inappropriate for our community,'' said Sam Ruiz, executive director of Mission Neighborhood Centers. "It's not OK to promote acts of degradation and violence. We don't want this kind of stuff here.''

Actually Kink.com didn't do any promotion and tried to keep the whole thing fairly nondescreipt. Of course you and your little army of dumbasses did get an article into the SF Chronicle with your protest so now everyone knows what's going on. Thank you for the free advertisement, now please go across the street to Stormy Leather, buy a studded dildo and go fuck yourself.

NYC Fashionweek: Menswear

My take on Menswear from NYC Fashion Week

ICH DONT FINK SO:

Alexander McQueen and Prada are taking a hint from Mugato with their "Derelict" collections for Fall 2007.
Wow Alexander McQueen failed. Eww! Garbage bag vynil suits?
J.Lindeberg (who supplies nearly half my slacks and quite a few shirts) has nothing special at best and some ugly fits at worst for fall.
Dior Homme is great if you’re super skinny and want to pretend you’re a starving artist when in reality you’ve either got a trust fund or a very rich “muse”.
Cavalli is even more scaled down this year, but aside from a few extremely well made jackets the collection is overly feminine (but what would you expect?)
Memo to Yohji Yamomoto, I won’t be turning Japanese anytime soon.


WASSUP:

Dsquared and Bottega Veneta are what high fashion is all about - creativity and edge that you can actually wear with pride.

Thank you Dsquared2 are showcasing an industrial theme with an S&M nippletwist and yeah – it’s hot (aside from puffy jackets – you guys already went there, it’s over!). Always loved their great fit, and their less flamboyant, more edgy designs.
Diesel has really improved themselves in the last two collections, and they are continuing to do so. Love the consistent knife theme, Patrick Bateman never looked that good.

The New Gulags

A Forbes article on Khodorkovsky's Suffering

In many other countries Khodorkovsky would be seen as an unyielding martyr against the totalitarian establishment, or at least a figure worthy of sympathy – but in Russia the majority blindly support Putin and want his enemies squelched. The fun will really start this November as Russian “elections” get underway. The average Russian peasant does not want to worry about politics or the outside world – they would much rather submit completely to a strong authoritarian leader. The only reason that the Soviet revolution happened is because Czar Nicolai was incompetent and of insufficient character to rule with the requisite force. This is the most crucial ironclad fact of Russia – yet so many people continue to forget it or choose to ignore it, and always at a hefty price. Another example of someone who thought he could “save” the Russians is the American idiot from Forbes who got shot – while walking to the metro at night without bodyguards, but that’s another story.