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Goldman as a “black hand”

  
Analysis, Economy, Education
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And you thought Goldman had it bad in the US. The FT reports: “Many people believe Goldman Sachs, which goes around the Chinese market slurping gold and sucking silver, may have, using all kinds of deals, created even bigger losses for Chinese companies and investors than it did with its fraudulent actions in the US,” read the opening lines of an article in the China Youth Daily, a state-owned daily newspaper, last week.” Matt Taibbi – you have met your match, and the outcome is picturesque indeed  – a vampire squid that slurps and sucks its way to every loose ounce of gold and silver. But fear not, all those millions of ounces in GLD are perfectly safe and sound.

The article continues:

 
 

The article was widely distributed through commercial news portals and the website of government mouthpiece Xinhua News and the People’s Daily, the Communist Party publication.

Referring to Goldman as a “black hand” that “played little tricks carefully designed to gamble with Chinese enterprises”, the article made few specific accusations of wrongdoing by the bank.

The report followed similar commentary and articles published in publications including the 21st Century Business Herald, one of the largest financial newspapers in the country, and New Century Weekly, a liberal magazine. (more…)

India has more cell phones than toilets: UN report

  
Analysis, Economy, Education, Life
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Far more people in India have access to a mobile phone than to a toilet, according to a UN study on how to improve sanitation levels globally.

India’s mobile subscribers totalled 563.73 million at the last count, enough to serve nearly half of the country’s 1.2 billion population.

But just 366 million people — around a third of the population — had access to proper sanitation in 2008, said the study published by the United Nations University, a UN think-tank.

“It is a tragic irony to think in India, a country now wealthy enough that roughly half of the people own phones,” so many people “cannot afford the basic necessity and dignity of a toilet,” said UN University director Zafar Adeel.

Mr.Warren Buffett :Buy and Hold -Failed

  
Analysis, Economy, Education
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From the wires today:

“OMAHA, Neb. (AP) — Warren Buffett’s company reported a 40 percent drop in second-quarter profit Friday because the improvement at Berkshire Hathaway Inc.’s operating companies couldn’t overcome $1.4 billion in paper losses on derivative contracts. Berkshire’s strong performances from its railroad, insurance and manufacturing businesses was overshadowed by the plummeting value of the Omaha company’s derivatives — many of which are tied to the value of four major stock markets.”

From Buffett himself in 2002:

“The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

From Bloomberg recently:

“Buffett’s well known for his criticism of derivatives. Yet Berkshire in recent years has become a big player, with some $60 billion in derivatives contracts. Under any new derivatives regulation, Berkshire would be likely to have to produce collateral for new derivatives contracts it writes. This would limit the attractiveness of new derivatives deals for Buffett, who has boasted that Berkshire rarely does a deal that calls for it to produce collateral. But that’s not why Buffett has been pushing back against the financial reform bill in the Senate. Instead, Buffett says he’s concerned that the legislation would impose collateral requirements on existing contracts — which he says would be illegal. Sen. Ben Nelson, D-Neb., made the same case this week as he defected from the Democrats backing the financial reform bill. Whatever his logic, pushing back on derivatives reform has the interesting side effect of aligning Buffett, with his sterling reputation, with the widely derided Wall Street banks.”

Buy and hold? Buying strong businesses? Derivatives are weapons of mass destruction? Bailouts of many of the components of BRKA? Does anyone have the cajones to criticize Buffett? There has to be at least one emasculated weenie out there who will come on here and tell me that I can’t criticize America’s wealthiest just because he is rich. Right?

The Buffett myth is just that — a myth. If not for the fall 2008 bailouts, he would be on the senior circuit revising history along with Greenspan. Why my stark view on this lovely sunny morning in beautiful Southern California? Cause no matter how many books populate Amazon, all preaching about how you can become the next Buffett, they are all disingenuous fairy tales.

It Would be A Mistake To Think That The Bailout Is Actually A Bailout Of Greece

  
Economy, Education
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The ECB has talked more hawkish than the Federal Reserve but basically they are all money printers. Some are better at it, and faster and have more efficient machines the others are slower but basically central banks, they run a print and print.

And it would be a mistake to think that the bailout is actually a bailout of Greece. Greece is a write-off. You can`t have the kind of debt Greece has with Olive Oil income. They have no industries to speak of. They have shipping but the shipping industy does not pay taxes in Greece.

So basically the bailout is actually a bailout of the ECB itself because they already have a lot of paper of Spain, portugal and Greece in their portfolio and a bailout of the banks in Europe. They lent money to Greece, Spain and Portugal, so they are all in the same boat.

Crude to Bust Through on Supply Concerns

  
Analysis, Economy, Education
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Shutdown – Canadian Upgrader

First, there was a fire on Jan. 6 at an oil sands upgrader (that’s where bitumen is converted to synthetic crude oil), which forced Canadian Natural Resources Ltd. to shut production at its 110,000 barrels per day ((bpd)) Horizon oil sands project.

Canada is the top region where the United States gets its crude oil and petroleum product imports. This 110,000 bpd capacity is almost 6% of the U.S. daily import volume from Canada.

Shutdown – Alaska Pipeline

Then, the Trans Alaska Pipeline, which is owned by BP, ConocoPhilips (COP), Exxon Mobil Corp (XOM), Chevron Corp (CVX) and Koch Industries Inc., had to shut down on Saturday Jan. 8, after a leak was discovered at Prudhoe Bay. (Talk about how BP just can’t get a break.)

The 800-mile pipeline carries about 15% of U.S. oil production. Oil producers reportedly are in the process of cutting 95% of output, which is normally around 630,000 bpd. So far, there’s no estimate as to how long the shutdown will last.

Worse Than Hurrican Ivan

These two outages could potentially cut the U.S. crude supply by up to 709,000 barrels per day. That’s about 8% of the U.S. crude import, and around 3.6% of U.S. consumption.

To put it in perspective, this 709,000 bpd volume is more than the disruption caused by Hurricane Ivan. When Ivan hit the U.S. Gulf in 2004, it took down about one third of the oil output in the region, which is around 1.6 million bpd.

OPEC Eyeing $110 a Barrel

Last but not least, several OPEC members are increasinly talking about how the Cartel would not act unless crude crosses $110 a barrel.

This new tightened supply picture, couple with OPEC talks, will most likely turn crude oil to move on its own momentum. As such, there will be new money coming into the market, more upward pressure, and lots of short covering.

Breaking Above $93 on Supply Concerns

From a technical standpoint, there’s a high probability that crude could easily top $91 a barrel as early as Monday, Jan 10, from the current $88.41 price point, before busting through $93 a barrel levels by end of the week on supply concerns. Also look for WTI to outperform Brent during the week.

Sterling, Dubai: a liquidation love story

  
Economy, Education
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In case you were wondering why sterling might be suffering on the back of the Dubai story, Reuters reports on Thursday:

dubaiLONDON, Nov 26 (Reuters) – The Dubai government could be forced to hold a firesale of its international real estate if creditors to two of its flagship companies reject proposals to put near-term debt obligations on ice until May 2010.

International property advisers are bracing for a potential slew of instructions to revalue and sell trophy assets owned by Dubai World and its many property-owning units as the emirate struggles to shrink its $59 billion debt pile.

“We do expect the Dubai government to step up efforts to raise capital via real estate sales, and sales of their UK assets in particular,” James Lewis, a member of the Gulf capital markets team at property consultant Knight Frank told Reuters.       Lewis said Dubai had a better chance of denting its massive financial liabilities if it raided its group portfolio, which comprises international landmarks such as the Grand Buildings close to London’s Trafalgar Square, the Mandarin Oriental hotel in New York and the Victoria & Albert Waterfront complex in Cape Town, South Africa.

“The simple supply and demand imbalance (in Dubai) is horrific, which begs the question of why you would want to buy commercial and residential property there if you couldn’t be sure of letting it,” Lewis said. 

What’s more, they add: (more…)

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