Ian,
Great analysis. Thanks as always for showing us the forest rather than the trees!

Bullseye.

As per usual.

This graph is definitely one of my five favorites.

Another consequence is military. Oil money, the most important form of commodity money, goes in large amounts to the Muslim world. Not to put too fine a line on it, but the richer they are, the more support they are able to give various groups the US doesn’t like. Saudi support for Sunni insurgents in Iraq (and Saudi Arabia is where most of their money comes from), for example, is made much more feasible by high oil prices. Subsidies to Palestinian fighters against Israel is made more possible. And so, frankly, is money for folks like al-Qaeda and the Taliban.

digg

Great piece.
ANyone want to buy a country – cheap

Hey Ian!
Dugg, thanks Boo

We’re fucked.

Dugg. Thanks BooRadley

Sounds like nominations for the American Freedom Award are in order
1. Phil Gramm
2 Alan Greenspan

and upvote on reddit

Thanks Ian.

Well, it was the House of Saud’s money that financed 9/11…!

At the end of the day, power doesn’t just come from the barrel of a gun, it comes from the economic foundations which make supporting power in all its varieties possible. America is finding out that prosperity bought with fake money is likewise fake, and that fake prosperity leads to hollow power.

You’d think that anyone who understood our history would know this. Traditionally, we were an economic power in spite of not having a large standing military. That changed in the Twentieth Century, for both good and bad reasons, but we seem to have utterly forgotten that keeping a strong military going requires a strong economy.

Sigh.

This gives a whole new meaning to taking it to the mattresses, eh?

I don’t get how we,the little people can fix this. If Congress has all the power,and they have a vested interest in not putting our best interests first,then how will this ever get better? They’ll never outlaw lobbyists,who really yield all the power and write the laws. Congress won’t vote against lobbyists by regulating their industries,just like they won’t vote against their own pay raises.

I know,I sound negative,but honest to god,there’s not much left for them to steal or sell out from under us. Short of total anarchy,what’s left? Voting for good people who care is fine,but they seem to be vastly outnumbered and overruled.

Sorry,I guess I’m just overwhelmed. My husband lost his job after 15 yrs last week and I’m feeling really deflated.

My husband lost his job after 15 yrs last week and I’m feeling really deflated.

(((A Mom Anon)))

As inflation climbs and a loaf of bread costs four pounds of money what have you gained

Good thing Katie Coric isn’t logged on, Ian, you’d have to explain this twice more and then again, so she can just see if she’s understanding. You know, microcosmically speaking.

I’m sorry to read that about you’re husband’s job. At the moment, I’m not feeling terribly optimistic, either. I suppose I keep going because the alternative, just letting it happen, is even worse.

Ditto

Know what people shouldm be outraged about as much as gas, or almsot, the price of a fucking gallon of milk. Piss me off.

Great job, Ian. I hung in there with this and glad I did. Just so I could understand it microcomically speaking.

sorry.

Thanks everyone.

I’m sorry to hear that…as if everything else weren’t NOT peachy, you have this too. Not fair at all.
All i can see that we can do is massive protests.
I don’t care if people say they don’t work, you do them until someone notices.

As inflation climbs and a loaf of bread costs four pounds of money what have you gained

certainly not any weight!!

And there will be a lot of people voting for McCain because Obamas middle name is Hussein

Be afraid of stupid people in large numbers.
Prediction:
Things will hold together until Nov.3 and then

Ian, this article furthers your basic argument…

Senate Republicans block heating aid bill

Republicans on Saturday blocked the Senate from considering a bill next week that would nearly double federal aid to help the poor pay heating and air-conditioning bills.

Although a dozen Senate Republicans support the measure, most voted with GOP leaders who would rather spend the time trumpeting their call to expand offshore oil drilling before Congress takes six weeks off for vacation and the presidential nominating conventions

Bernie Sanders sums it up beautifully…

“Do we vote to keep the old, the sick and kids alive when the weather gets cold or very, very hot, or do we spend money on people who make huge campaign contributions? That is part of what this debate is about,” said Sen. Bernie Sanders, an independent from Vermont.

wow – ian’s given us a GUT (a grand unified theory). where to start?

… i guess with S.3268 – the D’s anti-(oil)speculation bill. the whole thing this past week seemed very strange to me. last month the Ds brought up a stupid energy bill (S.3044) which failed it’s first cloture vote.

then this month the Ds put forward S.3268, which i thought was a much better bill. reid submitted the bill on 7/15, filed for cloture (on a motion to proceed, i believe), and the first cloture vote passed 94-0 on tuesday. then reid file for cloture on the bill itself to prevent any amendments from being considered. this royally pissed off the Rs who then proceed to vote against cloture on friday. wtf?

seems like lots of kabuki, from the Rs for sure and maybe also from the Ds?

Before I forget, I wanted to put up a link. It’s an op-ed that McCain did that was printed (His Senate website has bunches). It was written before the Surge actually started. Mostly the same ol’ happy horseshit. But even he said:
Similarly, the Marines in Anbar province report substantial progress in reducing the nonsectarian, al-Qaeda-based violence that is the predominant cause of instability there.

http://mccain.senate.gov/publi…..6c6a780d65

sorry about the OT. Back to economics.

Thanks for the post. Hugh’s lis is also very useful. The function of the oil futures market is to calculate a good prediction of the future ‘fundamental’ equilibrium price on the flow market. If a large portion of that market is completely unregulated and unobservable, that destroys any assurance that it will perform that function. So the items on Hugh’s list are not examples of opening up more opportunities for market magic, they point to potentially very serious problems with the way the market functions. Shutting them down is not an example of suffocating regulation, it is simply imposing standard rules so that the oil futures market does what it supposed to do.

You need to know how many barrels of oil people are offering for deliver in the future, and at what price. You also need to know either a) that there are contracts to buy the same number of the barrels of oil at the same price at the same future date, or b) if there is a discrepancy, when, how much, to whom those extra barrles promised to buy or sell are going, and why. Most modern futures exchanges have rules that guarantee option a) is always the case. Option b) is almost always against the rules.

We also can’t see if there is any self-dealing or market power being exercised, even we knew we were in an option a) situation. It has obviously happened in fact (initial stages of CA regulation) and can even happen in theory, so even an economist should be convinced. In theory, it can happen when several large players can make simultaneous trades to buy and sell, setting up dilemmas for people in the market that do not have access to as much liquidity (cash money, in other words). If any commenter wants to see the theory, ask and I will post a couple of references.

So, I agree with Ian that we don’t know how much of recent price increases are due to speculation. Even if it speculation has not been a major factor, the Phil Gramm/Enron, and swap exemption and other items on Hush’s list are bad and opportunities for bad trouble.

And remember, Phil Gram thinks everything is working fine, has no regrets, and is still an advisors to McCain, even if stripped of his official titles.

And another point, what should be considered a major factor is partly a function of how high the price is. At low prices the high end estimates of 25% of price might not cause havoc. However, from an historically high price, even a 5% or 10% premium, if sudden and at the wrong time, might create a very big problem. Especially in the midst of an historic financial crisis, and at the beginning of what may be a very severe recession.

So, I guess more and better grass roots congress critters powered by small contributers is one thing we can do to help shut down the Bush/Gramm casinos and myserty meat financial fiascos.

(((A Mom Anon)))

It’s a bad time. But the Congresses in the 20s weren’t much better, in truth. There’s a lag between changing time and kicking the bumbs out or their realizing times have changed. For what little it’s worth I think 2010 will see some significant changes in the House, as will this election. But 2010 is likely to be more populust. Hopefully progressive populist and not conservative populist (they do exist.)

They’ve no shame. Truly if Democrats lose this debate they’re beyond incompetent.

Which is why I’m scared, sadly.

But the real problem is liquidity slop, as has been the case with all bubbles in the past ten years ever since Greenspan slammed the pedal to the metal back in the late nineties and produced far more money stock than there are good investment opportunities.

This is the inverse of the massive transfer of wealth from the middle class to the wealthy, and the unfair distribution of the gains from productivity improvements. If the money were distributed to the middle class and the working poor, it would have stayed in circulation, instead of piling up in the hands of the wealthy. The top 1% of income is highly concentrated in the wealthy, who want very high returns. They ran out of investment options, and turned to speculation.

The cure? Tax the heck out of wealth. The Bush cure? Cut capital gains taxes, cut taxes on repatriated money, and hide everything behind a rolling wave of PR and ideology.

it’s true that us “little” people don’t have much of a say on our own. i guess that’s why we organize to try to amplify the power of our actions. (A Mom Anon)

Went to post a comment and wound up in the hinterland

Truly if Democrats lose this debate they’re beyond incompetent.

i’m not sure they are trying to win the debate – at least not if “win” means to get good legislation passed. it looks more like the Ds are trying to show how they would pass good legislation if only they had more Ds in congress (so that we will vote for more Ds in nov).

i don’t think i agree about the 1% tax on futures trades. but i definitely agree w/ increasing margin requirements. also taxing hedge fund managers earnings as income and not capital gains.

but schumer was a co-sponsor of S.3268. hard to imagine he would have been if those measures had been taken.

Why does every major bill have to pass the 60 vote threshold… Why did Trent Lott rarely ever had to overcome that threshold when he was the Majority Leader…? So WTF?

even stranger – this time it was entirely reid’s doing (as far as i can tell). the Rs wanted to propose a bunch of stupid amendments. but so what? bring them to a vote and vote them down.

here’s the link to specter’s rant thursday night (h/t newtonusr for telling me about it)

2010: Republican talking point. – the dems took over and the world went hell in a hand basket

Apologies about the OT. I know several of you have been following the ICE Postville raid in my neck of the woods.

Potential labor violations etc.

http://www.nytimes.com/2008/07…..1&hp#

Massive protest show that people are taking action. Others witness this and the ball starts rolling. The big problem is MSM will NOT cover the protests or will downplay them. This doesn’t mean it shouldn’t be done. The danger is potential violence by the authorities and, then, they will justify marshall law. What to do?

Road Trip!
And it didn’t cost any gas.
:)
I just don’t have the brains to wrap some of these economic posts.
I know that I have barely enought $ to pay the bills. But, I still do and that’s a good thing. Haven’t had to sell any of the kids our pets…yet.

good question. And why are the GOP Senators still allowed the ‘gentleperson’s filibuster’ where they just announce one, while other business continutes. They made Dodd stand up and talk, even to begin one. If the GOP used the filibuster is used for obviously narrow partisan and electioneering purposes, then they should be made to stand up for a few days and explain themselves to the public.

But the Democratic Congressional leadership has endless excuses to for itself.

For what it’s worth, everything Obama sells on his website is made in the USA.

Is that a start?

Keep the kids. You can always eat them later.

For:

Sharon’s collapse put an end to that, and his successor horribly bungled the plan, then picked a fight with Hezbollah Israel couldn’t win, shattering the myth of Israeli military superiority in the process.

Read:

Sharon’s collapse put an end to that, and his successor horribly bungled the plan, like Sharon before him he picked a fight with Hezbollah Israel couldn’t win. Sharon’s paniced withdrawal of the Israeli invaders from Lebanon shattering the myth of Israeli military invincibility. His successor repeated Sharon’s mistake and the headlong withdrawal of the Israeli invasion force shattered the myth of Israeli military superiority.

Thus far the Hizb vs. Israel score is:

Hizb 3, Israel 0.

I’d like some justifications please Ian for the statements quoted hereunder:

And all during this time the price of oil increased and the time came when the Muslim world could support more than one war against the West—could subsidize Iraqi resistance, Palestinian resistance and Afghani resistance all at the same time.

First I object profoundly to the statement that the “Muslim World” was waging a war against the west.

Please provide evidence that Malaysia and Indonesia the two most populuous Muslim nations were engaged in any form of warfare with what you term the “west” (by which I presume you mean in fact the “North”) once you’ve provided that I’d like to see some evidence that Turkey also was engaged in some form of warfare with the North. Once you’ve done that please move on to provide similar evidence for warlike activity by the Central Asian republics.

Arabs as I’m sure you know constitute about 18% of the world’s Muslim population. Since when has 18% constituded a “world”?

In fact I would like to see some evidence that any state other than Syria, Libya, and very ocassionally Jordan provided assistance to the Palestinians as most of Fatah’s seed money in fact came from the Egyptian Ikhwanis (and they very quickly lost patience with Fatah.)

As to this:

Methods honed in Iraq were moved to Afghanistan and insurgent effectiveness soared along with NATO casualties.

Yes indeed and there is a tiny crossover of personnel. You are missing an extremely point which is that there is a substantial trade in technology transfer amongst NSA military actors. Rather a lot of the carbombs in Irak are based on IRA designs. And as a highly experienced felix (markfromireland) has repeatedly pointed out the technology behind the shaped charge goes back to before the American revolution. There are rather a lot of soviet era shells in Afghanistan. This is NOT rocket science.

I think you need to think this through rather more.

Dubhaltach

Oh, dear heavens. Do you have a job?

With as little tabasco sauce and some pickles, eh?
Jest like chicken?

You noticed. Me too. I had my college student son read this..and his comment was, “We’re in the shitter, Mom..and we put ourselves there. Hope we’re all proud.”

GOP hangs together Dems form circular firing line

I guess this means universal health care is out of the window.

Sorry to read that. I hope you succeed in weathering this storm.

Du

Ohhh

sure you can wrap your head around them. i need to read parts over again a few times. Like Ian mentioned how printing more money was bad, When I was a kid that was my answer to everything. People are poor? Just print more money.

Got the chores done? I went swimming. The weeds will be there tomorrow.

blah, blah, blah.

No disrespect.

highly disrepectful in fact :-)

Ian has quite simply made some completely counterfactual statements in an otherwise good piece.

Think you made some good points
thank you

“In an interview, Mr. Martin said the company had contracted with an outside firm, the Jacobson Staffing Company, to handle its hiring, and new safety officers, including one former federal work safety inspector.” I looked this outfit up; the company has hired a payrolling firm; Jacobson will do all the vetting for immigration, perhaps some training, etc. but THEY will hire the workers. If they are lucky, the workers might get a situation where they will work on Jacobson’s payroll for several months as a ‘training period’ and then get hired by the processor. more than likely, however, what will happen is that they will be promised something like, “if you work out, you might get a job” and they will never get jobs. This is another gambit companies use.

I did some chores, but, I’ve still got some writing homework to do. Am procrastinating. The mister’s got to go to a music rehearsal. I’ll write then. Yeah. That’s it. Ha.
I remember when the kids were young and I’d say, no, we can’t afford that, we don’t have enough money and they would say just got to the atm.
I took a coupla lessons on that before they understood.

McCain is trying to trump up cancelled Obama trip to military hospital into a vile smear.

McCain Ad: Obama Isn’t There For The Troops Unless Cameras Are Around

http://tpmelectioncentral.talk…..re_for.php

—-

Of course, McCain has similar hospital visits cancelled for the very same reason, but if you are a depraved liar and putrid hypoctrite, what they hey?

Needs to be very hard pushback on the “New McCain” who it turns out is a dishonerable, lying smear and fear monger.

How many transparent lies has he told in just the last week. I could not believe he was not ruined by his lies about the surge and the Sunni Awakening. Not only did the Awakening occur before the surge, but in fact the surge did not protect people. A lot of Sunni’s died for it, including the Iraqi who inititated Sunni participation. And, one of the US officers who initiated it. So, not only did McCain lie, he used and dishonered dead heros in the course of his lie.

McCain has really turned into a vicious degraded, ruthless, exhausted crooked old poll, hasn’t he? And desperate. Reminds me a little of Dole, so it might not work, but still, it is dangerous.

There needs to be real sqauk about how vile McCain has become. Need to run a commercial with McCains pledge to run a respectful and civil campaign, then an immediate cut to one of McCain’s recent lies with a truthful narration of the facts to conclude. Need to hit back hard on this kind of stuff. I do not want to see Obama go Kerry or Gore at this point, that would be a disaster.

Dubhaltach – thanks. i had some different bits to question, and was holding off because i had been hoping for ian to continue past discussions on the energy speculation/bubble/deregulation issue. but since you’ve already started the ball rolling….

Ariel Sharon used this period to really put the pressure on, with an eye to enforcing a unilateral two-state solution during the last and probably greatest window of Israeli strength and Palestinian weakness.

i think sharon only became prime minister in 2001? so i don’t see him as the prime mover in israel’s settlement policy in the mid nineties. that was barak (with apparently clinton’s approval) who doubled the number of settlers in occupied palestine. also, i don’t see sharon as enforcing a unilateral two-state solution, unless by that you mean that the palestinians get gaza and the israelis get most (or all) of the west bank.

The majority of money going to the Sunni resistance was from Saudi Arabia. It was not officially from the government, but then I never said it was. If you wish to change it to Arab world, I certainly don’t object though that’s not entirely accurate either (Iranians not being Arab), but then I’ve never considered giving money to the insurgency to be something for Muslims, or Arabs to be particularly ashamed of. They are, after all, a resistance movement. No? And large amounts of money moves from Iran into Lebanon and Iraq as well. Some at the government level, much through various charities. When there is more money floating around due to high oil prices, more money gets out. I don’t consider this particularly controversial and I am surprised you seem to be disputing it.

I said nothing to disrespect Hizbollah and you’re misreading if you think I did. Nonetheless, the defeat in 2006 was substantially different than the earlier withdrawal. Winning a guerilla war and winning a stand up fight are two very different things, as I’m sure you well know. The first did not shatter Israel’s aura as having an excellent conventional military. I will point out that I am one of the only people I know, who, when the war started, declared that Israel would lose it.

I said methods were moved to Afghanistan. The technology is not the point, again as I think you know. The strategy is, and the Iraqi strategy is not the strategy used in the previous Afghani guerilla campaign against the Russians. Weapons often exist for a long time, but how they are used is what matters – not their existence. A good example from history is machine guns – in colonial armies they were offensive weapons, but when used in large numbers in Europe they turned out to be defensive weapons. That was not expected.

ian – do you see any chance of anti-(oil)speculation legislation passing congress? the cftc has made a few little moves to actually do some regulating. but after this week’s nonsense i wonder if congress can get it’s act together or are they all too focused on november?

I don’t know if I agree with some of Ian’s points on MidEast politics. But, Sharon and his faction were verty strong supporters in Israeli poltics for more settlements, long before he became prime minister. Is that not correct?

My reply to that is that going right back to the foundation of Israel they’ve been detemined to create a series of Bantustans as a way of driving the Palestinians to the absolute margins. Bantustans didn’t work for the other apartheid regime and it won’t work for the Israelis. I don’t see any difference in the strategic goal between the ILP, on one end of the spectrum and Kadhima on the other. They differ, a little, in their ethnic cleansing tactics but the goal is the same.

Du! How nice to see you! Hope all is well with the family.

Glad to see your experienced eye and mind again.

Oh come on, we are being ridiculously nitpicky. It was Sharon who suggested the fence, and if anyone thinks he didn’t intend to simply unilaterally make that the new border, I have some nice water fed land on a high point in the West Bank to sell you.

And yes, giving the Palestinians the worthless Gaza and taking the best parts of the West Bank was the plan. The key was to do it at the point of maximum Israeli power, maximum Palestinian weakness.

With all due respect, except in the long term it doesn’t matter whether you or I think bantustans work. What matters is whether Israelis, and specifically Israeli leaders think they work. S. African whites kept a much higher percentage of blacks under control for a long time using bantustans and other methods. I have written before that Israel as a religious state is doomed and frankly I think the two-state fantasy is dead too, but y’know, it could take 50 years to end this, and 50 years is a long time if you’re living it. Especially in a Bantustan.

If you don’t increase the marginal cost of such trades you don’t decrease the amount of it. The tax is absolutely necessary, though the exact amount can be argued. Derivatives are trading at way too many times actual world GDP and they need to be slowed down.

The tax money won’t hurt either.

Not till 2011. Nothing serious, anyway. Although if things get really ugly they may be forced to.

even before that… iirc, sharon had some cabinet position in the late ’70s or early ’80s that he used to support the some of the worst of the settlement movements. one of these was gush emunim which early on founded the settlement which became kedumim. in 2002 i had the pleasure of meeting some of the settlers at kedumim, which is probably why i remember this bit of this history (just hope i’ve gotten it mostly right).

ah, i misunderstood what you meant by the “two-state solution” – i took that to mean the creation of a viable palestinian state, even if much reduced from the green line border.

I don’t think a viable palestinian state is possible, except if it’s identical to Israel + occupied territories. No unless you’re willing to move almost all the settlers. They’ve done their best to create “facts on the ground” that make it impossible to have enough water, amongst other things.

In the 1850’s & 1860’s the U.S. violated treaty after treaty with the Sioux Nation – Something the supreme court called the blackest period in U.S. history. The Hearst family got the Homestake gold mines. Do things really change?

dr kirk is upstairs

completely agree – and have since i saw some of those “facts on the ground.” but i’ve been in the minority on that (although it cw may be changing?) and didn’t know your position.

p.s. thank you very much for continuing the speculation discussion – even if we didn’t seem to have a critical mass tonight to have the topic really take off. please don’t take my comments as anything more than extreme interest. i appreciate your give and take in the threads – makes for a more challenging and interesting conversation.

Is there anything better that the C-Span Congressional Chronicle (Beta version)? Nice get, selise.

I know all of you hate Specter’s freaking guts – he talks a good game but falls flat when it’s time to stand up – but he speaks his mind, which is a helluva lot more than I can say for our team.

Doc Murphy is upstairs…

but he speaks his mind

good point – when the kabuki obscures, and i’m confused… the benefit of having someone say what they think from the house or senate floor is a good thing. wish we had more of it.

You’re missing my point vis a vis the Hizb victories. The first two proved Israel was not invincible. Running away is a well known tactic engaged in exclusively by the losing armies in any war.

The most recent Hizb victory proved that the IDF weren’t able to win in a conventional war either. Thereby shattering the myth of superiority.

I was being very precise when I said technology transfer. Technology transfer at least as it used in my profession (bomb disposal officer and now a field activity analyst) involves transferring the expertise to use the technology effectively. There’ve been some alarmingly effective innovations in Afghanistan involving vastly more effective kill boxes.

I said methods were moved to Iraq. The technology is not the point, again as I think you know. The strategy is, and the Iraqi strategy is not the strategy used in the previous Afghani guerilla campaign against the Russians. Weapons often exist for a long time, but how they are used is what matters – not their existence. A good example from history is machine guns – in colonial armies they were offensive weapons, but when used in large numbers in Europe they turned out to be defensive weapons. That was not expected.

Oh I think I think I understood you Ian. Let’s deal with Iran first:

Iranian money (and weapons?) have been going to the Sunni resistance? To their sworn enemies? I’ll grant that the arms trade doesn’t give a damn about who they sell to so some weapons from Iran probably have made their way into the hands of the likes of IAI and 1920 brigades. Iranian government money, Iranian government arms and materiel or other assistance such as logistical support. No.

Same objection to Iranians funding any of the groups associated with either Fadhila or the Jaish al-Mahdi. Not going to happen because not being fools the Iranians tend to think in rather long timespans and the short-term gain is far outweighed by the long term costs of strenghtening the groups in Irak who hate your guts. It is very difficult to describe how intensely Iranians are detested in Irak.

Where the Iranian money has gone to is Badr. Not surprising when you think about it.

I’m not entirely convinced about the “Sunni” groups getting the lions share of their money from Saudi either. Yes some got a lot from Saudi individuals and foundations, also a fair bit from the Emirates. That has gone mostly to groups like the black banner brigades not to Ba’ath groups who had a hell of a lot of money and materiel salted away already. A lot of what is reported as “Al-Qaeda” activity is in fact Ba’ath.

No it doesn’t matter what you and I think about the bantustan policy and the time frame could well be right – it was one of your profession who said in the long run we’re all dead not one of mine :-)

Is there anything better that the C-Span Congressional Chronicle (Beta version)?

oh, and yes – now i want the same thing for ALL congressional hearings.

and when we get that, i will be agitating for good quality mp3 podcasts, and decent audio streaming for folks on dial up, and searchable transcripts in html and pdf. all available same day, ‘natch.

what comes after that i’ll have to think about. *g*

Laura thanks. Back for a week then off again. Erdla and the horde children are at our summer place in the archipelago but following a phone call from me are travelling back tomorrow. I am looking forward to that. :-)

“At the end of the day, power doesn’t just come from the barrel of a gun, it comes from the economic foundations which make supporting power in all its varieties possible.”

Not at the end, at the beginning. One has the army one can afford. One does not have the economy to fund the army one wishes for.

A lot of what is reported as “Al-Qaeda” activity is in fact Ba’ath.

I’ve wondered about that especially since Col. Dhaib, has been making some noise recently…

Correction, I meant Al Duri…

The Ba’ath never went away. Booting ‘em unceremoniously from every single position and following it up with the death squad campaign against former officers (especially air force and the Medina division) well, I understand the reasons why, but the thing about the Ba’ath is that when the going gets tough the Ba’ath get nasty. They don’t believe that stuff about being good losers as far as they’re concerned you play to win and the only rule is win

The GZG is certainly dragging their feet on the de-Ba’athification law, along with every other nationalist bill like the Provincial elections, Oil, etc…!

On the de-Ba’athification law the latest version had some very nasty provisions in it. To get an amnesty you had to register with the interior ministy………………..

Re the top of this post on oil futures markets, James Hamilton has another go at estimating equlibrium price/quantity on flow market. His reasoning seems OK to me. But, he is still using US inventories to evaluate stock accumulation, which seems like a mismatch when trying to figure out the world market -expecially when world inventory shows significantly higher stocks relative to recent past than US data for most of last 18 months. But, there are good data here. Hamilton is sticking with
mostly all fundamentals story. But then he stuck with no housing bubble significant for national economy line for far too long also. And, for a famous economist, missed some technical “funny stuff” in his regressions results that he used to support his conclusions.

But he might be right this time. He certainly knows more about how futures markets work than 90% the purorted experts I see in the media.

http://www.econbrowser.com/arc…..s_and.html

But in fariness to Hamilton, the world stock data show stock declines from very high levels precisely when big price increases started early this years. So, using worldwide inventory data would not produce evidence that he is wrong.

Oof! Btw, on the Oil law, will the Kurds actually come around and support the nationalization of their oil to the GZG… I’m sure an ice cube in hell has a better chance, eh?

Our local baker opens in a few minutes so I am now about to go out and get some coffee and bread and juice so that I have something for breakfast when I get up. Got to keep my strenght up as tomorrow is going to busy with the horde kids and my partner in crime Erdla.

Something along those lines. Keep an eye on the Basrah union situation too. By all accounts that’s about to get nasty.

*poof*

Aloha, Du! Always nice to have the family back home…! Enjoy!

Ok, let’s get specific:

Muslim Money:

Iranian Persian to Shia militias and to Hezbollah
Sunni Arab money, primarily from Saudi Arabia: Sunni Militias, Palestinians
Iraqi money pre-war: To Palestinians

Did the PIE of money available for Palestine decrease when the Iraq war happened and support switched to the resistance there. I would be shocked if it is not the case. The article was imprecise, it was not, however, fundamentally incorrect.

All OIL money going to insurgencies against the US or competing power factions. More of it available when oil is multiples of $20 than when it was below $20. Are we arguing about something here other than my using one imprecise sentence rather than breaking it down by group?

Hizbollah: withdrawing from occupations is really not that uncommon and tells you very little about an army’s conventional warfare ability. What was interesting about 2006 was precisely the fact that it was a conventional war “victory” (mostly because of impossible victory conditions self-imposed by the Israelis). I’m not sure quite what we’re arguing about with respect to this. Defeating the Israeli’s conventionally was a greater blow to their prestige than outlasting them in a long occupation and it fatally damaged what was left of Israeli military prestige. It would be the same as if the US pulled out of Iraq, then lost a stand up fight against a smaller third world army — the humiliation would be much greater than getting their asses handed to them in guerilla warfare. The myth of Israeli power is based on the Arab/Israeli wars — their ability to quickly smash conventional forces. Losing that is much more significant than whether or not you think that after nearly two decades of off again, on again occupation you might be able to bleed them enough to make them decide “to hell with it, it’s not worth it.”

My recollection of the first few years of the Afghanistan occupation is that the strategy and method used by the insurgency were different from Iraq. There was a huge transfer of skills and techniques, which was written on repeatedly when it occured. The idea that insurgents in two parts of the world who are resisting the same enemy would share the strategies and techniques that worked best, seems uncontroversial to me. And for most of that period, the Iraqi resistance was inflicting far far more pain.

The proposed super southern province envisioned by ISCI and Hakim…! That I shall, Du!

All fundamentals? What fundamentals does he think explain a $20/barrel drop in a week?

The next fundamental shock: end of the Olympics. A huge area around Beijing switched from coal to turbines to clean up the air, and they’ll be switching back the second it’s over.

I wouldn’t be surprised if oil is under 100 by the end of September/October. Maybe I’ll stick my head out and formally predict it.

OK, you got me, I may be putting some words in Hamilton’s mouth. But I was quite confident that by fundamentals, Hamilton means using oil to produce energy, and conventional money market and futures activities that would effect the price through inventory adjustments. He gave a number of presentations and was an influence on me in my formative years, so I flatter that I understand how he does his economics. I might be wrong.

By fundamentals I don’t think he he would mean market manipulations that could be foiled by the neo-classically assumed invisible army of market entrants that would make a pile through some sort of unspecified arbitrage opportunities. Also, speculation in the sense of trading on expectation of future price changes that will produce profit by resale or financial trades.

(of course, in a sense, those are kinda hard to distinguish from the arbitrage opportunities that economists always assume drive things back to equilibrium. Except, you know, they assume those things happen so fast, and such small departuers from equilibrium that they don’t make a big splash)

But, from what he has written, if China has been madly buying oil in preparation of using those turbines you mentioned, and now they have things set and that demand is off the market, I think he would consider that a market fundeamental.

I’ve thought abot making a prediction too. But I have decided to chicken out. Or since I am a statisitcian, I may be able to get away with the fearless prediction of 95% confidence interval of $100 to $150 in current dollars for next year. Baring Middle East war, mega-volcano, or very bad hurrican season. Or McCain victory, which may be same as Middle East war (or near equivalent).

I cannot believe speculation is responsible for 25% of current price level, or that any Chinese stockpiling is responsible for 25% either.

But maybe the weak evidence of inventory mediated speculative futures market effect, together with temporary surge in demand, and any funny stuff on unregulated futures markets combined is enough, and the I get my statistican’s 5%-of-the-time fudge factor for being wrong.

I am soooo fearless! Commodities prices are random walks in short to medium run anyway, so everything is scenario based.

OK, I stuck my neck out. Your turn.

Yeah, oil demand down is a fundamental. It might have something to do with the drop. So hard to tell when you’re not a player in the market and the market is as opaque as this one.

Heh. I’m not sure yet, my hedge is – under a hundred, by middle of next year. With probably a drop before them.

But you know, I more often regret underbidding my predictions than overbidding them, except when it comes to time frames. I tend to understate how bad it’ll be and assume it’ll happen sooner than it will. Usually because my real guesses are such outliers. I’m trying to break that habit.

All fundamentals? What fundamentals does he think explain a $20/barrel drop in a week?

well, i had an hypothesis to explain it – until i was proven wrong yesterday when S.3268 went down in flames. if speculators were reacting to the possibility of re-regulation, then friday prices should have gone back up. they didn’t. data from link hugh gave us in your previous thread:

2008 Jul-01 140.97
2008 Jul-02 143.57
2008 Jul-03 145.29

2008 Jul-07 141.37
2008 Jul-08 136.04
2008 Jul-09 136.05
2008 Jul-10 141.65
2008 Jul-11 145.08

2008 Jul-14 145.18
2008 Jul-15 138.74
2008 Jul-16 134.6
2008 Jul-17 129.29
2008 Jul-18 128.88

2008 Jul-21 131.04
2008 Jul-22 127.95

Except, you know, they assume those things happen so fast, and such small departuers from equilibrium that they don’t make a big splash

which, i think, would mean we’d never see a bubble.

something weird happened to my comment. trying again:

2008 Jul-01 140.97
2008 Jul-02 143.57
2008 Jul-03 145.29

2008 Jul-07 141.37
2008 Jul-08 136.04
2008 Jul-09 136.05
2008 Jul-10 141.65
2008 Jul-11 145.08

2008 Jul-14 145.18
2008 Jul-15 138.74 —– S.3268 introduced
2008 Jul-16 134.6
2008 Jul-17 129.29
2008 Jul-18 128.88

2008 Jul-21 131.04
2008 Jul-22 127.95 —– S.3268 cloture vote passed 94-0

It’s called work shutdown. It gets noticed very quickly and the politicians usually respond, especially if they are presented as part of the problem, and understand that their job is on the line if they don’t make an attempt to fix the situation.

On thinking it through, I’ll state that I expect under 100 barrel oil by the end of the year, and possibly as soon as Sept/october. $80-90 by middle of next year.

Well, the only fly in this ointment is that we’re not seeing the increase in oil prices inflating the costs of goods and services. Year over year percentage change in the core CPI is just 2.3%.

The reason higher energy prices tend to bring inflation numbers down is because if you’re sending more money to Saudi Arabia and Venezuela to fuel up your car, your spending less money at the mall. As inventory piles up on store shelves, stores lower prices to move it.

Like what’s happening in the housing market. Prices are coming down because of increasing inventory. Less customers in restaurants? 2-1 deals, coupons, etc. That’s what’s happening and that’s why inflation at the core remains tame.

Ian, thank you. This was an outstanding article!