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Chris Cook  

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  • Spare Capacity Theory and the Libyan Disruption [View article]
    @Objective Function

    It's not so much consumption on transport, but more things like profligate use of water desalinated at massive energy cost, and new buildings which come with massive AirCon consumption and so on.

    Also the use of cheap energy for industrial production which then constitutes a hidden subsidy of the price.
    Feb 26, 2011. 06:49 AM | 2 Likes Like |Link to Comment
  • Are West Texas Intermediate and Brent Racing to the Bottom? [View article]
    The high price of Brent represents its use - via the aptly named Brent Complex of contracts - as a financial asset via 'financial oil leasing'

    At the zero bound - with the market thoroughly financialised by 'inflation hedgers' causing the very inflation they aim to avoid - the forward price curves of WTI and Brent have nothing whatever to do with market expectations of supply and demand for oil and everything to do with the forward price of dollars aka the dollar yield curve.

    The smoking gun is here

    If these curves had anything to do with the physical reality we would see the WTI price cross the Brent/BFOE price in Year One and then track Brent at a dollar over, rather than two dollars under the Brent price.
    Feb 16, 2011. 09:31 AM | Likes Like |Link to Comment
  • Continued Upward Pressure on Brent Crude Oil Means More Surprises in Store [View article]
    @ Ferdinand

    Correct. It is very important.

    The chart showing the Brent and WTI curve out for > ten years is the smoking gun.

    If these curves actually had anything to do with people's expectations of the future price of oil, as opposed to the future price of dollars (ie the yield curve), then we would see the WTI curve cross the Brent curve and sit, as it has historically, a dollar or so above the Brent price from about Year One onwards, reflecting the superior quality of WTI.

    But since these curves reflect - at the zero bound - only the forward price of dollars, then the WTI curve sits two dollars under the Brent curve as far as the eye can see.

    This is of course nonsense, and reflects the fact that the market has become completely dysfunctional in terms of its purpose. It currently serves only to temporarily enrich producers at the expense of consumers until the market corrects.

    It will always enrich the casino operators at the expense of all of the casino users, of course. There are at least half a dozen zeroes on this wheel.
    Feb 14, 2011. 12:54 PM | Likes Like |Link to Comment
  • Verizon Patent Proves Internet Radio Is No Threat to Sirius XM [View article]
    I don't think that this is patentable because of prior art.

    I worked for two years with a company that was doing this ten years ago, both for IP TV and IP Radio both delivered via satellite. As far as I know they tied down the intellectual property years ago.

    That doesn't mean the idea isn't a good one.

    One to many broadcast IP data with an internet backchannel is the endgame for convergence.

    Just don't think you can 'own' a utility like this: first to market is what matters.
    Feb 14, 2011. 08:25 AM | 1 Like Like |Link to Comment
  • Oil Will Drive Gold Prices Even Higher [View article]
    @ Michael

    It all depends on the purchasing power parity of the dollar of course.

    I do not believe either that the dollar will survive as global reserve currency beyond 2012 or that the existing financial architecture will survive any longer than that, the two being synonymous.

    A new global financial settlement - a Bretton Woods II - is needed, and I believe that this will be universally recognised as imperative before 2011 is out.
    Feb 13, 2011. 10:25 AM | 3 Likes Like |Link to Comment
  • Oil Will Drive Gold Prices Even Higher [View article]
    A well presented argument, but I simply do not believe that the consumer purchasing power exists globally to support oil prices at higher levels. Even if emerging nations are able to afford higher prices - and I think that energy subsidies to the poor will be unsustainable - their increased energy costs will feed through into the export prices of their processed goods and will reduce demand.

    I think that we will see - in fact we are already seeing - demand destruction driven by substitution and that this is evidenced by high product inventories.

    ie we are running up against Peak Demand, and as a result, what I have seen described as Peak Big-Oil


    I think that commodity prices generally are in a correlated bubble fed by risk averse investors - not the risk-taking speculators responsible for short term volatility and spikes - who are causing the very same inflation which the marketers of the commodity funds are telling them to avoid with an 'inflation hedge'.

    Reflexivity in action.

    IMHO, following the next speculative spike or shock the commodity bubble will deflate, but as long as interest rates are at 0% it won't be long before financial purchases of commodities pump it up again in another iteration of the cycle.
    Feb 13, 2011. 09:05 AM | 4 Likes Like |Link to Comment
  • Why Oil Will Drop [View article]
    @ Carlos

    IMHO Brent is being manipulated big time by producers who are supporting the price at high levels using Index and ETF money through the Brent/BFOE complex.

    This financial oil leasing.

    enables producers to monetise oil in tank or even in the ground by borrowing dollars interest-free from funds and lending them oil un return.
    Feb 10, 2011. 09:45 AM | Likes Like |Link to Comment
  • Who's to Blame for High Commodity Prices? It's the Producers, Stupid [View article]

    Totally agree that fiat money is a key part of the problem.
    Feb 6, 2011. 07:55 AM | Likes Like |Link to Comment
  • What Are the Implications of Political Unrest in the Middle East? [View article]
    @ X-15

    Surely a large part of that 'aid' never leaves the US and just goes to sellers of arms and equipment?
    Jan 29, 2011. 04:02 PM | 1 Like Like |Link to Comment
  • What Are the Implications of Political Unrest in the Middle East? [View article]
    The Suez Canal is also an excellent source of foreign exchange for Egypt which is the last thing ANY new government would endanger.
    Jan 29, 2011. 03:59 PM | 3 Likes Like |Link to Comment
  • The Oil Market Holds Its Breath [View article]
    @ User 353732

    Exactly so. It's all about oil and gas because that's where the money is.

    The traders who are always being trotted out as being 'concerned' at completely irrelevant pieces of news have a vested interest in volatility. For these middlemen the only bad news is no news at all.

    In a similar way the Vampire Squid and their brethren of investment bank sharks have an interest in selling 'inflation hedging' to investors in the very funds which are a principal cause of the inflation these investors are trying to avoid.

    We're in a correlated cross-commodity bubble, and IMHO it doesn't have much longer to last.
    Jan 29, 2011. 09:38 AM | 2 Likes Like |Link to Comment
  • Jim Rogers Extremely Bullish on Commodities [View article]
    @ elegantstroke

    I certainly agree with him.

    But I am pointing out that the result of investors following his advice is actually to inflate commodity prices against the dollar, which is past its 'sell by' date.

    We must re-base the financial system in my view
    Jan 28, 2011. 08:19 AM | Likes Like |Link to Comment
  • Jim Rogers Extremely Bullish on Commodities [View article]
    @ Plebian

    I could not agree more that what is needed is a financial system based upon value rather than a claim over it generated by banks.

    You seem to think I'm critical of Rogers, which I am not. I am critical of the existing financial system, which is not only completely and utterly dysfunctional but has reached the end of its life.

    We need to re-base the financial system, and in my view this is not possible while rent-seeking middlemen - whether the State or Corporate - are involved.
    Jan 28, 2011. 08:16 AM | 1 Like Like |Link to Comment
  • Jim Rogers Extremely Bullish on Commodities [View article]
    Investors who see $ yielding 0% and the Fed printing money like it is going out of fashion are buying anything but dollars, whether it yields income or not.

    Investment banks etc have obliged by selling investors on 'inflation hedging' and they have piled in to Index Funds; ETFs; ETCs and ETPs.

    The result?

    All organised markets have become totally financialised and correlated, and commodity producers are making out like bandits at the expense of consumers.

    The greedy speculators in search of transaction profits get the blame, but for them it is a less than zero sum game, and while they cause volatility and short term spikes, they do not have the capital to support the price at high levels.

    But even they - like end user producers and consumers - all pay a cut to the casino ie the exchanges, brokers and banks who operate a roulette wheel with six zeroes.

    The cosmic joke is that the very inflation which Jim Rogers is advising investors to avoid will actually be the outcome of following his advice.

    George Soros has a word for this - 'reflexivity'.
    Jan 27, 2011. 09:49 AM | 1 Like Like |Link to Comment
  • Goldman Sachs: The Bull Market in Commodities Isn't Over [View article]
    For as long as Goldman and other investment banks can keep up the shameless hype to back up sales of index funds; ETFs; ETCs and ETPs - so that $ flows into the markets - then the commodity markets will continue to inflate in correlated fashion.

    Sooner or later demand destruction in the real world will burst the bubble, and it will subside again as in 2008 as these funds flowed out.

    Quite likely a speculative 'spike' or shock will prick the bubble, as it did in 2008.

    It really is sad to see that investment banks have come to this and that the markets have become entirely financialised and dysfunctional.
    Jan 27, 2011. 09:35 AM | 1 Like Like |Link to Comment