Re: OT-Pure Insanity

On Tue, 30 Aug 2005 12:51:52 GMT, jeff
<jalowe44INVALID@xxxxxxxxxxxxxxxxxxx> wrote:
>Cliff wrote:
>> "... oil prices surged to a record-high at 70.80 a barrel early
>> Monday .... "
The suppliers -- mainly the mid-east -- have never regarded
pieces of paper with pictures of funny looking people on them as
"real" money. Real money to most of them is gold and silver.
This view was greatly reinforced when George Soros launched the
great currency raid after the American and European central banks
had requested their national central banks to cease currency
speculation / hedging. For insight into how the majority of
Arabs perceive oil prices, download the historical prices for
oil, gold, and silver, convert the price per bbl into gold and
silver, and plot this against time.
For some insight into the Islamic perceptions of "money" see
http://store.yahoo.com/islamicbookstore-com/b6616.html ,
http://www.geocities.com/WestHollywood/Park/6443/Finance/adopt.html
,
http://islamic-world.net/economics/dinar.htm
http://www.bogvaerker.dk/Bookwright/Money.html

As for the run-up in prices. This was long overdue, based on the
simple fact that it is both easier and cheaper to sell one barrel
of oil for 70$ than 7 barrels of oil for 10$. It appears that
the Arabs with their massive financial resources have become
involved in a big way in the petroleum futures and derivatives
markets. This is a exceptionally stupid "investment" in that the
supply and thus the price can be set by one of the players, who
also has several thousand years of family experience in the
bazaar and as traders along the silk road.

> I wish someone could explain to me how the reduction in the capacity
>to process a feedstock results in an increased price for that raw feedstock.
==========================
This assumes that these are the "arms length" processes they used
to be.

A few moments consideration revels that most of the gasoline
producing companies are also in the crude oil business. Indeed,
because of the highly biased U.S. tax structure, a dollar profit
earned overseas and exempt from any taxes is worth considerably
more than a dollar profit earned in the U.S. subject to income,
franchise, and other taxes. This is exacerbated when generation
of the dollar profit in the U.S. entails enormous investments of
time and money into environmental studies, capital investments,
and considerable real/personal property taxes. Thus much of the
oil price run-up is actually transfer pricing to shift taxable US
profits to international tax free profits. BTW - you, I, and all
the other taxpayers will have to make up the tax shortfall this
will cause at all levels of government.

A major contributing factor is the passive (and possibly active)
participation of the U.S. government in the run-up of crude oil
prices. The capital transferred because of the massive imports
of petroleum and inexpensive Chinese manufactured goods is the
main source of capital to purchase the enormous amounts of
t-bills and government bonds at zero or in some cases negative
interest rates, after inflation.

Huge amounts of this import generated capital is also being
invested in commercial paper and corporate bonds that are being
used to support/inflate the housing bubble and sustain the
credit-card consumer binge. I have seen several places that as
much as 40% of Diatech/GMAC capital has come from China in the
last few years.

As long as the US government and the major [nominally] American
corporations are getting their cut, nothing will change, except
that the oil prices will go even higher. [look for 100$/bbl oil
by Xmas]

Note that this is not "free" money, but money that is
legitimately belongs to the people of the countries that are
exporting the oil. It is simply being stolen by their
governments, with a large share going to the god-fathers [U.S.
government and corporations] for "protection."



.

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