Wednesday, 18 June 2008

The ground for the next bubble is being slowly prepared

In the last post, I mentioned a read about Green Environmentalist Gore's through-the-roof hydro bills. To be honest, I do not think Gore cares a penny about the Mother Nature, the effects of so called global warming, greenhouse effects, etc. More likely, Gore is on a mission in one of those crooked big-scale schemes that at the end of the day screw a lot of people, businesses, and countries and that make tons of money or achieve other objectives for their originators.

The Kyoto Protocol, for example, is an important building block in the big long-term environment-related project, whose ultimate objectives are to: (1) limit and control the growth of fast-growing developing economies, including BRIC's; (2) create a potentially big market for pollution rights and related derivative instruments; and (3) prepare the grounds and info support for the next big bubble, which will happen to be the Alternative Energy Bubble.

The macro-size bubbles are not created overnight, it takes time and money to grow them. We all know what happened, is hapenning, or is about to happen to the junk-debt, high-tech, AIDS-research, housing, asset-backed-securities, credit-derivatives, and traditional-fuel bubbles. For every such bubble, there is a well-planned and generously funded informational campaign. I think that harismatic Gore is a pubic figure in one of such campaigns.

We all remember all this bullshit about the new-paradigm perpetual economic growth, the new-age service economies, the Y2K end of the world for computers, AIDS' and SARS' global threat to the humankind's survival, real estate being your investment friend forever, elimination of mortgage risks through pooling and repackaging, global oil shortage, etc. Well, prepare yourselves for the next big one. The big players in the traditional fuel chain are getting prepared for the qualitative shift to the "eco-friendly" energy, and the currently inflated fuel prices is one of the last calls to make big money in this process of transforming from Big Oil, Gas, and Coal to Big Hydrogen, Solar, Wind, and Whatever. They, and the related players in such industries as transportation and auto manufacturing, can finally pull out some of those techs that they have been shamelessly keeping away from the widespread general public use for years and make some serious money.

Here is the cooking recipe for the energy market: First, heat up the good old markets with military interventions, media coverage, active support by loyal jackals in the financial services industry, market manipulations, and a lot of bullshit stories. Second, squeeze the markets and economies with high prices and try extracting the consumer surplus to the last drop. Third, through this process and by orchestrating the instability in the asset and debt markets, destroy the equity value of real-sector and high-tech businesses and buy them cheap, to be used later in your new project named Alternative Energy. Fourth, gradually dispose of the old product and old tools (in this context, coal, oil, and probably natural gas and the related techs, equipment and pipelines) by shifting the residual old market focus to the developing second-tier countries. Fifth, unpack carefully hidden new techs and open the new feeder. Sixth, make tons of money on sales of the new product, related techs and equipment, service support, and (of course) related financial instruments.

It is not to say that the transition process will happen overnight. It will take years, but this next bubble will inevitably come to replace those that have already lost or are losing public credibility. The Ponzy Scheme fiat-money financial system cannot function without new progressively increasing bubbles. The Alternative Energy bubble will be larger than the previous ones. When this new mega bubble bursts a decade or so later, it may be really laud.

Gore's green policy hypocrisy?

It was a pretty amusing read about "frugal" hydro consumption by the big-time green policy advocate, former U.S. vice-president Al Gore. According to the article published by the Tennessee Centre for Policy Research and titled "Energy Guzzled by Al Gore’s Home in Past Year Could Power 232 U.S. Homes for a Month," last year Gore's home "burned through 213,210 kilowatt-hours (kWh) of electricity, enough to power 232 average American households for a month ... Since taking steps to make his home more environmentally-friendly last June, Gore devours an average of 17,768 kWh per month –1,638 kWh more energy per month than before the renovations – at a cost of $16,533. By comparison, the average American household consumes 11,040 kWh in an entire year, according to the Energy Information Administration."

I looked at our last-year hydro consumption numbers, and it turns out our household - resident in a GTA municipality - spent much less than the average US houseold, at the fairly modest level of 4,100 kWh per year, which also happens to be over 50 times below Gore's household hydro consumption. I understand that a big estate requires a lot more electricity than a modest 2,000 sq feeter, but come on - if you claim to be an active environmentalist and if you believe that saving energy will save our Nature, then just live up to your principles and do something meaningful on your own - like downsizing your dwelling or, if you have tons of money, installing solar panels wherever it is possible.

On the other hand, it is quite possible that Gore's hydro bill reflects some extra business-related costs or that the reported numbers were made up by somebody - you never know what kind of info they are feeding you through mass media these days.

Monday, 16 June 2008

You can check how rich you are

A while ago, a friend sent me a very interesting link, Global Rich List. On this website, you can check how you are ranked in terms of your income in comparison to the other six billion inhabitants of our blue planet. The idea behind this little tool is simple: it is based on the income distribution data from the World Bank Development Research Group (which is an approximate statistical estimate, of course), you just have to select your income currency, enter your annual income amount, and click on the calculation button. If your income is above $47,500 (I would guess it is a starting salary for many college graduates in Canada and the U.S.), you are a proud member of the top 1% group of the world's richest individuals. Who cares if there are other 30-60 million people ahead of you on this list? You are rich, my friend!

Many people are probably whining and complaning every single week that they do not have enough money, that most other people are richer than them, that they can't afford buying many things. After looking at your global income ranking - provided that you live in Canada or in the US, have a university degree and a source of stable income from employment or self-employment - such complaints should cease for good. Living in one of the world's wealthiest countries, you should always be aware that the vast majority of people around the world do not even have basic necessities like clean water, food, and heating - something that most of us in North America and Europe take for granted.

Other side comments: The formula of economic well-being quickly becomes too complicated once you introduce extra variables into the equation. First, even if you make a $100,000 every year yet have over a million dollar debt, your real wealth is probably not that good - the most important thing is not how much you earn, it is how much you spend and save relative to your income. Second, this ranking tool does not take into account how much you have to pay for different consumption items and what portion of your household income you pay in taxes. Third, one should also take into account public sector services and the variety and quality of goods and services that individuals get in different countries.

We pay over 50% of our income in taxes (if you sum up income, payroll, consumption, and property taxes) in Canada, and prices on certain items (like food and housing) in Canada are very high. Yet at the same time we have access to reasonably good healthcare, education, social services, public security, and infrastructure. Overall, we are probably not entirely ripped off by our government, although of course we want certain improvements in the provision of public services and want sound changes in the tax system.

Sunday, 8 June 2008

The irrational market story and market manipulations at play

I think that under the current market conditions pretty much only intra-day trading (without keeping positions overnight) can generate you some consistent money. The alternative to trading would be to stay in cash and wait. The seemingly illogical phase continues, with the markets being manupulated big time by the governments, government agencies and agents, and big institutional players. Once again, the Thurday and Friday market responses reflected in the price of oil showed that very little rational, fair-market behavior is present at this time.

Since when should the garbage words of the Israeli TRANSPORTATION minister about the "inevitable bombing of Iran" deserve any attention? Since when do we not know that the US dollar is going to be a garbage currency over the next several years? We know that this is the case, so why pretend one day that the US dollar has some strength left and will rally and on the other day dump it on the EU CB Head's minor comments? Why believe some bubble-head analysts who seriously tell you the fairy tale that global physical oil demand is currently above global physical oil supply? Why believe analyst prostitutes from the financial services industry who tell you that the oil should be priced at 150, 200, or 400 dollars while at the same time their companies and masters play the commodity and derivative markets to profit off crowd responses to such announcements? Why do the markets believe nonsense unemployment statistics from the US government? The non-farm payrolls did not fall by 49K in May 2008, in reality they most likely fell at least by 200,000-250,000 once you take into account the ridiculous side adjustments, like the birth-death stats loophole. Boy, what a mess in the markets, the US public sector, and the US financial sector.

What is the solution to this mess? First, the feeding of the shameless bankers with easy money should be stopped and rigid controls of the financial sector and of the derivative and commodity markets should be introduced. Second, the private bank named the US Fed should be kicked out and its functions transferred to the Treasury. Third, Paulson should be fired and probably put on trial, along with the other Fed, Treasury, and US administration executives for the economic crimes that they engineered and implemented. The icon Fed head named Greenspan deserves to sit on the front-row bench as a part of this group. Fourth, the US money printing press should be stopped (figuratively speaking of course since most money is created electronically nowadays). Fifth, the oil Texas boy should not be the US president, as the US and global oil interests should not be in control of the US administration. Until he is there and until the US administration shamelessly acts in the interests of the big oil players, oil prices will stay high and market and statistical manipulations will continue. This is a direct example of the moral hazard story at play here.