Storm Before the Calm in Georgia

You know I'm rarely a fan of Purin's policies, but their retaliation to Georgia's attack on South Ossetia is a clear case of doing the right thing for strategic reasons. Sure it helps Russia in terms of securing invaluable alternative pipelines (precisely why they won’t get support from China, at least not for free), but at least Russia will be smart enough to utilize them once the situation stabilizes.

Conversely, the US is just now starting to even attempt to get any benefits from Iraq’s oil because we were so damn scared about giving credence to the hippie “blood for oil” propaganda. This is even though Iraqis desperately need the oil money, as well as help in creating modern machinery to extract and transport it. Naturally we should be able to pick American companies for this, and they should be compensated for their services. Does this help Exxon, et.al.? Of course – and the U.S. government too thanks to disproportionate taxes. Are the Iraqis better off? Indubitably, and they can solicit new bids once existing contracts expire.

For the world to call Georgia a small peaceful nation is a half truth – it is, in fact, quite small. Georgia was the original aggressor in this conflict, and Misha’s much-talked about Western education did him little good, as he was unable to predict the obvious outcome of attacking a region favored by Russia. While Russia certainly cares far less about collateral damage than Western nations, Georgians have been engaged in outright genocide for some time as anyone familiar with Ossetia will tell you.

Fortunately for the US and European propaganda machines, however, most people thought Ossetia was Borat’s whore sister until these recent news, and Putin with his sidekick doesn’t need much help in looking like a supervillain.

Of course while NATO and US can send over all the sideline troops they want, their commanders are [hopefully] not stupid enough, to actually engage Russia – in which case I’ll be blogging from the nearest nuclear shelter. A stern warning is all that the UN can give Russia, and Putin is well aware of this. As I said before, Putin’s activities over the past 2 years have really been testing the limits of his power, and now it seems he’s found an area of slightly more resistance than killing a former spy. All this means is that Mother Russia will wait for some time before officially adopting the new “independent” territories.

Unless the UN can get China to throw their full support behind them they have little alternative than to be angry spectators.

clipped from afp.google.com Russia's military said it would carefully monitor a "build-up" of NATO naval ships in the Black Sea, amid anger at Moscow's recognition of Abkhazia and South Ossetia , regions that broke from Georgian control in the early 1990s. "Certainly some measures of precaution are being taken.... Let's hope we do not see any direct confrontation in that," spokesman Dmitry Peskov said, adding: "It's not a common practice to deliver humanitarian aid using battleships." Russia's ambassador to NATO, Dmitry Rogozin, warned that any NATO attack on the Moscow-backed regions would "mean a declaration of war on Russia." In a departure from Beijing's usual firm support for Moscow, Chinese foreign ministry spokesman Qin Gang was quoted as saying: "China is concerned (about) the latest development in South Ossetia and Abkhazia." President George W. Bush said Russia should reverse its "irresponsible decision." Medvedev appeared unapologetic, saying on Tuesday: "We're not afraid of anything."

They never learn

Western firms will keep lining up at Russia's oil teat for a drop of black gold, no matter what they have to endure to get there, or how little substance they'll get from the deal before Russia thanks them for building the infrastructure by kicking them out on their ass and taking the enterprise over. I'm amazed at the gullibility and stupidity of these major corporations. You'd think they would learn after Sakhalin.
Ironically, in an earlier Bloomberg article BP stated they would love it if Gazprom bought out the current Russian partner's stake in the business. Right - because having a firm that has already established a clear policy on ethics in regard to foreign business (Page Intentially Left Blank) and is responsible for making billionaires out of most people in the government, including the current President, is a far better partner than 3 oligarchs who just want you to pay them off better.

clipped from online.wsj.com Robert Dudley, head of BP PLC's Russian joint venture TNK-BP Ltd, abandoned Russia Thursday for an undisclosed location after Russian authorities refused to issue him a new work visa. His move could mean that BP loses control of a company that accounts for a quarter of its global oil production and 19% of its reserves. Since the conflict between BP and its Russian partners dozens of TNK-BP foreign employees have been forced to leave Russia after difficulties renewing their visas. The company also has been subject to a flood of tax, police and other probes. In an interview, Tony Hayward, BP's chief executive, denied the dispute threatened the British oil major's presence in Russia. Western businessmen and governments had been watching the TNK-BP dispute for signs of the direction Russia was moving under Dmitry Medvedev, the new president, who has said he wants to improve the rule of law in Russia, especially for business. The fate of BP's landmark Russian venture was seen as a litmus test.

Speculator Scapegoats

So both sides of the political fence are suddenly blaming “speculators” for the move in oil prices. Of course I know why (big oil, bigger lobby vs. a vague and easily vilified group).

But how does this make any sense to someone with half a brain (i.e. 3% of the electorate):

1. How do you define speculators?
1. If Big Oil wasn’t speculating Grandma Millie would have her lights on and high-earning big oil traders wouldn’t have a job. I can create a black box model that will look at real-time S&D and put in the equilibrium trades in real time. Yet all big oil companies pay the most to their traders …who are only there to hedge?
2. All the biggest energy funds & prop desks in the world couldn’t put enough volume through to drive the price up that much compared to the volume that the “hedgers” do. Furthermore, how many “speculative” funds do outright directional bets instead of spreads?
3. The only thing close to a “legit” hedger is an airline/trucker type business if all they do is buy a bunch of CL12s and chillax.
2. Isn’t this locking up the free market?
1. Speculators shouldn’t have any inside information (unlike the big oil “hedgers” who by definition do), so aren’t they just providing “efficiency” to the market? Even my nemesis, Fama, would agree with me here. In fact, without speculators providing liquidity the true hedgers would be fucked and the market would be at the mercy of the faux hedgers.
2. Furthermore, arbitrary regulation of speculators goes against the very principles of capitalism. To stop someone from buying a good at the current price in the market just because you think they’re paying too much is so pinko it could be a gay groom’s dress in California. Hey, if they’re all wrong then the commodity bubble will burst (which I think it will, but not until >$150 oil at least) and magically gas will be $2/gallon again.

Now everything I've outlined above is very basic, so there's a good chance I'm missing something. If so, by all means make me a fool and point it out. Otherwise it looks like we're in for Big Government (just not for those who need the regulating) no matter who wins in November.

Lord Browne is Putin's Gay Lover too!

So when I said BP is bending over for Putin, I was apparently a lot closer to the truth than I thought. Guess living in SF really makes your gaydar sharp.

KKR Ends Anti-Coal Campaign

Chesapeake was merely a pawn in the master plan of His Holiness Mister Henry Kravis who, in an admittedly Carlyle-esque move, ordered the ads to make sure the hippies were on his side for the TXU deal, now that the law has quietly favored him he doesn’t need the campaign anymore.

clipped from online.wsj.com The founder of a group that ran a series of newspaper ads attacking the coal industry for selling a product that they called "filthy" says the campaign is ending. Rep. Nick J. Rahall (D., W.Va.), chairman of the House Committee on Natural Resources, called the ads an "absolute insult" to coal miners. He said the Clean Sky Coalition, which ran the ads, was set up by the chairman of Chesapeake Energy Corp. Mr. McClendon said there were other members of the coalition, but wouldn't identify any. ads ran in Texas newspapers in February during a fight against a Texas utility, TXU Corp., which was planning new coal-burning plants.