Petro-Canada (U/A): Up-tick in E&P performance, though see better opportunities elsewhere - Goldman Sachs - October 28, 2005

We believe Petro-Canada is executing on the assets it has acquired, demonstrated by a better-than-expected up-tick in production during 3Q 2005. While the company's growth projects are moving closer to fruition, we see better opportunities from other domestic oils that are more attractively valued and/or have a greater track record of organic growth - specifically Amerada Hess (OP/A), Murphy Oil (OP/A) and Suncor Energy (OP/A). We continue to believe that Petro-Canada will have to make acquisitions going forward for future resource, barring material exploration success in multiple areas. We believe there is greater burden that expansion opportunities in Syria, Algeria, Tunisia, Venezuela and Russia show sizeable return accretion to offset political risk. We rate Petro-Canada Underperform relative to an Attractive coverage view.

EXPLORATION ABROAD, ACQUISITIONS AT HOME

We believe that the company will pursue a strategy of pursuing international exploratory opportunities while looking for ways of expanding its position in North America natural gas via acquisition. Petro-Canada plans 4-5 exploration wells in the North Sea in 2006, in addition to ramping up exploration in Trinidad, Syria, Algeria and Tunisia. The company continues to work towards leveraging its LNG site in Canada into an upstream position in Russia. We believe credit for this project will come over time. In Canada, we believe the company is set in its oil sands position, following its partnership in the Fort Hills project and the coming expansion at Syncrude. The remaining piece of the company's pie is North American natural gas. The company showed good success in 3Q 2005 towards raising US Rockies natural gas production, a positive sign. We believe that the company will increasingly look towards consolidation among US and Canadian Rockies natural gas assets to further stem declines from its existing legacy portfolio.

3Q 2005 EARNINGS IN-LINE WITH EXPECTATIONS WITH BETTER-THAN-EXPECTED PRODUCTION

Petro-Canada's earnings was in-line with our expectations. Adjusted earnings were US$0.97 versus our $0.99 estimate, and operating cash flow of $873 million was slightly below our $909 million estimate. However, the in-line bottom line numbers masked positive operational performance from Petro-Canada's E&P assets. Net production rose quarter over quarter to 329,000 barrels of oil equivalent (BOE) per day versus our estimate of 317,000 BOE/d. Commodity prices were mixed relative to our expectations, and costs were generally in-line. A higher tax rate and lower deferred taxes, combined with slightly weaker refining volumes offset the strong E&P results. Petro-Canada's net debt/tangible capital is at 24%.

UPDATED ESTIMATES

We are updating our 2005 full-year EPS estimate to incorporate the 3Q 2005 results. Our 2005 EPS estimate is now $3.60 ($3.62 previously). There are no changes to our 4Q 2005 or 2006-2010 EPS estimates.

Each of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Brian Singer, Arjun Murti.

Rogue

Exxon Mobil (OP/A): Volatile trading creates buying opportunity for fundamental, long-term investors - Goldman Sachs - October 27, 2005

We reiterate our OP/A rating on Exxon Mobil and believe the uncharacteristic volatility in its shares creates an excellent buying opportunity for fundamental, longer-term investors. If there is ever a company where it is not about the quarter or the most recent incremental data point it is Exxon Mobil. In our view, Exxon Mobil is perhaps the best positioned company to take advantage of the strong but volatile commodity prices. We continue to have significant confidence that its management team will reinvest cash flows wisely, with the goal of maximizing long-term growth in shareholder value. In our view, an under 9X P/E multiple on 2006 EPS is way too low for the stock market's leading company. A 12X P/E would correspond to 44% total return upside to a $80 stock price.

EXXON MOBIL SHARES TRADING AT AN INEXPENSIVE 8.5X 2006E P/E

For a company investors often gripe is "too expensive", Exxon's current valuation looks remarkably inexpensive. The shares are trading at just 8.5X on 2006E P/E and at 6.1X 2006E EV/DACF. While it is true that many oil sector equities look even more inexpensive, the difference with Exxon Mobil is its status as the leading stock in the US market. Certainly, the S&P 500 is not trading at 8.5X its earnings. While we agree that commodity prices are higher than the levels most consider to be "normal" over the long term and that a cyclically lower P/E is appropriate, we believe that as investors gain confidence that commodity prices can stay above normal over the next few years that XOM will garner a higher valuation.

In our view, it would not be surprising to see Exxon Mobil ultimately trade up to at least a 12X P/E on our 2006E EPS estimate of $6.65, which would correspond to an $80 stock price offering 44% total return upside potential. Such a valuation would be consistent with its traditional cyclical peak valuation.

We believe the key catalyst to Exxon shares moving materially higher and regaining positive upward momentum relate more to general sector trading rather than anything Exxon specific. To the extent investors become more comfortable with the notion that commodity prices will stay firm in the years ahead, we believe Exxon Mobil can get re-rated higher, especially since investors likely retain a high level of confidence in Exxon's use of free cash flow. We see the stock as being the low beta portfolio balancer to a basket of our high-beta favorites.

IGNORE QUARTERLY NOISE

There is no change to our favorable fundamental view of ExxonMobil in light of the 3Q 2005 EPS shortfall, which we consider to be quarterly noise magnified by the catastrophic hurricanes. Exxon Mobil reported 3Q 2005 EPS of $1.32, below the $1.38 First Call mean and our $1.40 estimate. E&P performance was largely as expected, with the shortfall coming from refining & marketing (R&M) and chemicals. In R&M, we believe weak retail gasoline marketing results drove the bulk of the negative variance. None of this do we think is material to the outlook for Exxon Mobil shares.

UPDATED ESTIMATES

We have lowered our 2005 EPS estimate to $5.31 from $5.40 to account for the 3Q shortfall. There is no change at this time to our $1.62 4Q 2005 EPS estimate. We have lowered our respective 2006 and 2007 EPS estimates to $6.65 ($6.85 before) and $6.95 ($7.13 before) to reflect a slightly weaker outlook for chemicals than previously assumed. There is no change to our 2008-2010 normalized EPS forecasts of $3.65, $3.88, and $4.12, respectively. Exhibit 1 shows our summary financial model for Exxon Mobil.

I, Arjun Murti, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Rogue

Nelson to oppose move by joint operator CNPC to buy out oil field interest

10/28/05 1:30:00 AM
TORONTO (CP) - Nelson Resources Ltd. said Friday it will "oppose any measures" taken by its Chinese operating partner to buy out its 50 per cent interest in a Kazakhstan oil field.

Nelson, a TSX-listed oil company active in the central Asian country, said it was informed by China National Petroleum Corp. that it intends to take the "necessary measures" to exercise its right to acquire Nelson's half-interest in the North Buzachi oil field, following Russian oil giant Lukoil's purchase of a controlling interest in Nelson.

"Nelson is of the position that no such pre-emptive right exists in the current circumstances," the Bermuda-based firm said in a release.

Last week, Nelson reported that Lukoil Overseas Holding Ltd. had bought 65 per cent of Nelson's common shares from its principal foreign shareholders. Lukoil had made a $2-billion-US offer in September and a definitive agreement was reached Oct. 13.

Nelson, formerly a Canadian-headquartered gold company, is expected to hold a meeting with shareholders on the controversial deal on Dec. 2.

However, the acquisition of a controlling interest in Nelson, according to CNPC, constituted a "transfer of the company's participating interest" under a 2003 joint operating agreement between CNPC and Nelson subsidiary Nelson Petroleum Buzachi BV, Nelson said Friday.

"As a result, CNPC asserts that the corporation did not comply with the provisions of the joint operating agreement in connection with Lukoil's purchases," Nelson added.

"In that regard, CNPC is asserting that they have certain pre-emptive rights to acquire the corporation's participating interest under the joint operating agreement" and that any transfer of that interest to another party must be done in accordance with that agreement, Nelson said.

CNPC had said it will take the "necessary measures" to exercise its right under the agreement, but Nelson said it was not aware of any formal legal proceedings.

The oil-gas firm said it would oppose any measures taken by CNPC, as Lukoil's acquisition didn't breach any terms of their agreement.

Nelson (TSX:NLG) started to acquire its half interest in the oil field in December 2003. Nelson and CNPC formed a joint operation company to operate the field, Buzachi Operating Ltd., which is managed equally by the two partners.

Lukoil and CNPC most recently battled over Calgary-based PetroKazakhstan Inc. (TSX:PKZ), which closed its $4.2-billion-US takeover by CNPC on Wednesday - China's biggest foreign acquisition.

The tug of war over the Canadian oil-gas company - all of whose operations are in Kazakhstan - ended this week when an Alberta court approved CNPC's bid for the company despite Lukoil's objections.


© The Canadian Press, 2005

Rogue

CEF....This will be a good one to buy for 2006 on an oversold condition. It's currently overbought and I feel it could pull back to the $5.20 level or so on a gold price correction.

Rogue

CHAR/NLG.to....I dont recall any premiun whatsoever paid above the 6 month average trading price for Nelson Resources.....CHAR's parent.
I understood they simply paid the 6 month average trading price?? It was a "takeunder" as opposed to a takeover.

rogue

Some serious questions about the 9/11 SCAM....

http://tvnewslies.org/html/where_the_hell_is_your_9_11_pr.html

TvNewsLIES Challenges
Believers of the Official Version of 9/11:


Where the Hell Is YOUR Proof?
Jesse, Editor - TvNewsLIES.org - October 2005

THE BACKGROUND

To this day, there has been no independent official inquiry into the attacks of September 11, 2001. The Kean Commission, with which most Americans are familiar, was based on the Bush/PNAC version of events. It was charged with probing the breakdown of intelligence prior to the attacks and making suggestions for improving communications among the competing agencies involved. The Commission, formed after more than a year of opposition by the Bush administration, did not…repeat...did NOT…investigate or report about the causes of the attacks.

Far more important – to this day there has not been a single piece of evidence presented to the public that corroborates the official government version of the most devastating attack in our history. Think about that. For more than four years, scores of credible experts have challenged the explanations offered by the Bush administration, and yet not a shred of evidence has been offered by the US government to support the official version of events they claim took place on that day.

Even more absurd is that fact that not a single official inquiry has attempted to respond to, discredit, or refute the questions that have been raised. On the contrary, both the American government and the complicit media have dealt with the every single challenge to the 9/11 explanations in two ways. They either totally ignore them or dismiss them out of hand as ridiculous conspiracy theories. Most of the well-researched and revealing findings by independent investigators are unknown to the vast majority of Americans.

THE BELIEVERS

Time and time again, when I come across close-minded Bush supporters, I witness the effects of an unexplainable phenomenon: a highly dangerous variation of HIV – a condition I call the Hypocrisy & Illogic Virus. Strangely, the most severe symptoms of this condition seem to manifest themselves during any and all discussions of the events of 9/11,

The disease is easily diagnosed by the appearance of two disabling features: the need to approach all issues of national importance with an air of shameful hypocrisy, and the absolute inability to use any form of logic during discussions of such matters

Collectively, people afflicted with this disorder approach 9/11 as one person. They all blindly believe what they have been told by their government. They all adamantly refuse to listen to any questions that have been raised about inconsistencies in the official version that simply don’t make sense. And if they engage in any dispute about these discrepancies, their arguments are illogical to an extreme, and they are simply unable to follow any rational argument to its conclusion.

The sad reality is that there is no way to convince these brain-washed believers that there may be something more to the story of 9/11 than what they have been told. That’s not too surprising, since most of these people still buy into the Bush/PNAC reasons for invading Iraq. They blindly accept whatever they are told and close their minds tightly to any other information, no matter how factual. They cannot be reached. There is simply no way. The disease is far too endemic to treat with any ordinary approach. They believe as they do, and that’s all there is to it.

So, let’s turn the tables and put the burden of proof on them!!!

I believe that I, and every single person involved in the independent 9/11 research community must ask one question of the people who still believe the official 9/11 story. We must demand that those who accept the Bush/PNAC explanation of the events of that terrible day answer a single question:

“WHERE THE HELL IS YOUR PROOF?”

You claim that the President and his handlers have told you the truth. You refuse to consider the information we show you that punches huge holes into the official version. You refuse to check out the information for yourself. You tell us what we have uncovered is false. Okay, we’ll buy that, we’ll concede that you’re right...and that all of us are wrong.

In fact, we’ll take it all back and admit the errors of our ways IF you do something first. Show us YOUR proof. Tell us why we should believe the story you have swallowed, and show us what you have to back up your claims! You’d better have something more than a borrowed smirk when you tell us we’re way out in left field. You better be ready to answer just one simple question:

Where the Hell is YOUR proof, true believers? Where the Hell is it?

THE BATTLE

I’m not sure why the independent research community has not yet taken this approach. Why does the burden of proof always fall on the researchers when the evidence they present is ignored? Why is it their burden to convince the non believers that there are legitimate questions about 9/11 that remain unanswered and hard evidence that we’ve all been fooled, big time?

The facts about 9/11 that has been uncovered are dismissed by people who apply unbelievably skewed logic to their opposing argument. They believe a story when the only proof they use to validate the story is the story itself. That’s it! All they know is what they have been told. News reports, video, witnesses, whistle blowers, their own eyes and even common sense contradict their beliefs. Still, these people continue to accuse the researchers of being either crazy or traitorous. What kind of convoluted reasoning has infected such a large segment of the nation?

This is a battle for truth. It’s not a debate over conflicting philosophies. It is a battle between those who are searching for facts and those who choose to deny that a search is necessary. How long do those in blinders have to be engulfed in flames before they believe an independent researcher who warns them of the increasing heat?

The level of denial and resistance can only be explained by understanding a very basic human response: sometimes truth is too painful for people to deal with. In this case, the perpetrators of 9/11 understood that most Americans could not permit themselves to consider the involvement of people within their own government in the dastardly attacks of that day. They could never allow themselves to even consider such a possibility, even though people within the administration had openly professed that just such an event would benefit their cause!

Those responsible for the tragedy clearly understood this aspect of human psychology. That is why they can hide in plain sight without fear of discovery, regardless of how much new evidence is uncovered, and regardless of how many legitimate questions are raised about their connection to the attacks.

As a result, the only effective battle cry at this point must be: Where the Hell is YOUR proof?

I take part in or observe countless discussions on 9/11; often in Internet forums. I read the posts and hear the responses of thousands of people who have not spent five minutes looking at the four years of evidence that has been uncovered by independent researchers. Amazingly, the same people feel fully qualified to dismiss new evidence with an insult or to present their own un-researched, amateurish conclusions. They know nothing about any information that might have been revealed while their heads were buried in the black hole of the mainstream media. But they constantly and vehemently insist that they do.

Without requiring a thimbleful of supportive evidence, these people continue to accept the official story of 9/11. That hypocrisy simply has to end just as our silence in the presence of that hypocrisy has to end. And it has to end now.

THE BLINDED

The ball now must be thrown to the nay sayers, the folks in blinders who believe everything they are told by the WH and its media mouthpieces. They must be held accountable for their unfounded beliefs by challenging them for convincing proof that we are wrong. There is no room here for even a fraction of the challenges that should be made. Still, we have to start somewhere, so let’s at least call for responses from the politically blinded to what follows:

Where the HELL is YOUR proof that PNAC’s call for a ‘catastrophic and catalyzing event like a new Pearl Harbor’ was only an unbelievably astounding and timely coincidence rather than a statement that should have raised reasonable suspicion?
In the late 1990’s members of the Project for a New American Century wrote a treatise in which they foresaw a strategic “transformation” of the U.S. military into an imperialistic force of global domination that would require a huge increase in defense spending. “The process of transformation,” the plan said, “is likely to be a long one, absent some catastrophic and catalyzing event—like a new Pearl Harbor.” The members of this group, known as PNAC, were appointed to many high level positions in the new Bush administration. Only months after they came to power, the United States experienced a new Pearl Harbor. That has never been publicized or explained as anything other than mere coincidence.

Where the HELL is YOUR proof that Al Qaeda actually planned and carried out the attacks of 9/11?
In 4 years I have not seen a single bit of proof that Al Qaeda was involved in those events. I have seen some snap shots of Arab men at an airport. I was told a slew of things about these men. I was told that the passport of one of the alleged hijackers miraculously floated to the surface of the rubble, unscathed by the heat that had obliterated thousands. I was told way too much about these men for me to believe that the story was not prepared in advance. Two days was not sufficient time for that kind of information to be uncovered and declassified by our government. Not only did that reek of black ops, but to this day almost nothing of what we were told about he nineteen hijackers has been verified. The tape of Osama bin Laden shown by the government raised questions about the actual identity of the man in the film. As a matter of fact, I watched the so-called confession I with a person whose native is Arabic. He told me that the English translation was misleading. While he rejoiced at their success, nowhere in the tape did Osama admit involvement in the attacks!

Where the HELL is YOUR proof that Dick Cheney was NOT conducting drills on 9/11 that paralyzed Air Force responses to the real attacks?
There is irrefutable evidence that Dick Cheney was running a completely separate chain of Command & Control via the Secret Service on the morning of 9/11, assuring the paralysis of Air Force and its ability to intercept the hijacked planes. The Secret Service has the technology to see the same radar screens the FAA sees in real time. They also have the legal authority and technological capability to take supreme command in cases of national emergency. In fact, Dick Cheney was the acting Commander in Chief on 9/11. When publicly asked about the exercises, that involved simulated attacks by hijacked planes against the WTC, Cheney refused to comment, claiming the information was classified.

Where the HELL is YOUR proof that Tower 7 collapsed as a result of the attacks?
I have not seen even a single computer model explanation as to how or why Building 7 collapsed in the exact same manner as the two Towers that were hit by airplanes. As a matter of fact Building 7, which sustained no impact at all, was not mentioned in the Kean Commission report at all. The FEMA report of the collapse remains inconclusive, unable to offer a reasonable explanation for the collapse. Larry Silverstein, owner of the complex publicly claimed he gave permission for Tower 7 to be ‘pulled,’ a fire department term for demolished. Demolition of such a building would have required weeks, if not months of preparation. No explanation has ever been given for this baffling anomaly.

Where the HELL is YOUR proof that ‘put’ orders placed on the two Airlines involved in the attacks were mere coincidence?
I have never seen the names of the people who placed those orders. I don’t know that their identities have been uncovered of if they have been questioned. I have not seen anyone vindicated of any foreknowledge of 9/11 after making investments that would only pay off if the specific airlines involved were to experience a drop in stock prices.

Where the HELL is YOUR proof that Porter Goss knew nothing about $100,000 that was wired to Mohammed Atta?
I cannot fathom why the person who was sitting with Porter Goss (our current CIA Director) on the morning of 9/11, and who had wired Mohammed Atta $100,000 just prior to the event, was never investigated. This could be the smoking gun of smoking guns (if you believe that Atta was involved) that has been covered up from the start.

Where the Hell is YOUR proof that Donald Rumsfeld did not organize an illegal military group that would “provoke terrorist attacks which would then require ‘"counter-attack" by the United States?
Here’s what I know: In the Los Angeles Times, military analyst William Arkin described a secret army set up by Donald Rumsfeld, similar to those run by Richard Nixon and Henry Kissinger and which Congress outlawed. This "super-intelligence support activity" was designed to bring together the "CIA and military covert action, information warfare, and deception". According to a classified document prepared for Rumsfeld, the new organization was known as the Proactive Pre-emptive Operations Group, or P2OG. It was formed to provoke terrorist attacks which would then require "counter-attack" by the United States on countries "harboring the terrorists". Doesn’t that sound exactly like what happened on 9/11?

That’s all I have room for, so I’ll sit back and wait for someone to send me some proof, assuming that a single person out there knows where the Hell it is.

THE BOTTOM LINE

The bottom line is simple: I have not seen anything at all that makes me believe the official story of 9/11, which, when considered on its own merits, is so implausible as to be considered a bad joke. Anyone who reads David Ray Griffin’s book, The 9/11 Commission Report Omissions and Distortions, needs to go no further than the first chapter before this becomes crystal clear. At that point it becomes very difficult to decide whether to laugh at the ridiculous nature of the official story or to scream with disbelief that the American public still buys into it.

So, once again, I ask the people who refuse to explore the findings of the independent research community, - the only real investigation into the events of September 11th 2001 - where the Hell is YOUR proof?

To those of you who will try to discredit and ridicule this article on forums or in calls to right wing radio, I say this: Research the events of 9/11 in depth, come up with YOUR proof that the official version is credible, or just shut up!

You have a helluva lot of research to do before you are qualified to intelligently debate the events of 9/11 with anyone who has spent more than four years in the independent research effort. Don’t bother to cite official sources to back up your points, since most of them have been debunked. Try to understand that you can not use the authors of the official version to support their own validity. It’s a dumb tactic.

The researchers have done a great deal of valid work. They have been trying to attract your attention so that you can examine it for yourself. They are not asking you to take their word for anything…they just want you to look at and think about what has been uncovered. Do it for your own good, not theirs. Stop arguing against their credibility until you have seen what they have seen, and until you know what they know. Do some homework, then come and talk, but be prepared to show us where the Hell you found YOUR proof, and why we should believe you.

Once again, keep in mind that THE KEAN COMMISSION DID NOT CONDUCT AN INVESTIGATION INTO 9/11! It was not their assignment! They were tasked with making recommendations to improve national security based on the official story. They were not asked to find out what happened. They went in with an official account of the events, and were asked to make their recommendations based on what the Bush/PNAC administration wanted the public to believe happened on that day.

Independent researchers are the only people who have investigated the events of 9/11. They have uncovered and presented mountains of evidence that totally expose the official account for what it is; a cover-up, nothing more.

If anyone takes the time to really examine that evidence - and I repeat - evidence, he or she will find something very disturbing yet highly probable. The material that has been amassed strongly suggests complicity in the events of 9/11 by rogue elements within American and foreign governments. But the evidence does NOT point directly to a government conspiracy.

It does however, point to direct involvement by several key members of the Bush/PNAC administration, acting on their own, outside the rule of law, without participation in any mysterious governmental conspiracy. Their motives have been clearly established and published by the culprits themselves and evidence of their involvement has been clearly established by independent research.

There is nothing more to be said. The information is out there for the taking. The books have been written, the speeches have been made, the documents have been posted, the documentaries have been produced and the truth has been told. That is as far as anyone doing independent research can go. All that remains is for the believers to respond.

So bring ‘em on! Let’s see if those who swear to the lies they have been told can convince anyone, even themselves that the official version of 9/11 explains to the nation and the world what really happened on that day.

So, where the Hell is YOUR proof, true believers? We’re all waiting to see.

An URGENT Message from the Editor!
9/11-PNAC, 9/11-PNAC - SHOULD BE THE #1 TOPIC OF DISCUSSION
A WAKE-UP CALL THE ALTERNATIVE AND LIBERAL MEDIA:
TO STOP IGNORING 9/11 AND THE PROJECT FOR A NEW AMERICAN CENTURY
They Are Not “Conspiracy Theories” - They Are, in Fact, “Discoveries”
Before you call this a “Conspiracy Theory” read this! Learn the difference between theory and fact!
9/11 – US Complicity: Implausible, or Very Probable? - Questions for the People Who Believe the Official Conspiracy Theory
9/11 - All the Proof You Need
9/11 Facts
WHY AMERICANS REFUSE TO BELIEVE THE 9/11 EVIDENCE!!! - The attacks of 9/11 were so unthinkable that most Americans would refuse to believe the complicity of their own government, even if presented with a mountain of evidence. - Very simply, it is possible to escape blame if you do something that nobody in the world believes you could do.

Rogue

AOL gives up privacy... Hillary, REFCO, and cattle... Greenspan's last plays... fear and intimidation protect Halliburton's bottom line... fear of the Internet... and more
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http://www.theinternationalforecaster.com/trainwreck.php?Id=96&PHPSESSID=e1897038753f6f831aceff5...
The centralized top down approach of the present administration is not working and the public realizes something is wrong. Americans are losing confidence in their government. This lack of faith comes at a time when we face a financial, economic and monetary collapse. If we collapse the whole world collapses with us. The administration, Congress and the public do not want to deal with it. They want it to go away and it isn’t going to go away. Americans are apathetic and they simply refuse to deal with the truth. Our financial and economic situation today is as dangerous as it gets. Let’s hope they wake up soon. AOL has been since its inception an operating entity of the US intelligence apparatus. Their latest admission is that they have formed a partnership with Fatherland Security to permit unlimited surveillance on AOL subscribers, as reported by the US Department of Commerce. They for years have supplied intelligence on subscribers and have allowed government agencies free access. We have told you this time after time for the past ten years.

What AOL did illegally for years was legalized under the Patriot Act, which permits warrantless searches of persons and property. If you use AOL all your personal emails and information is distributed to law enforcement all over the country. American and European business communities are fearful trade secrets may end up in the hands of the Bush crime family and their associates worldwide, never mind the dossiers that are being build upon average American citizens. We have had extensive problems with sending to AOL subscribers for years. AOL has blocked any messages that contain links to sites that AOL forbids you to see. Using software AOL is able to kick back any email that even mentions a forbidden site. AOL members can white-list senders, but it has no effect at all on the pre-filtering that AOL does before the email ever gets delivered. One journalist said AOL bounced 88% of the newsletters that had been sent to subscribers who use AOL, including cs.com and netscape.net. AOL deletes huge quantities of mail prior to delivery.

In August, AOL paid $1.25 million in penalties and costs and has to reform some of its customer services practices to settle an investigation by AG Eliot Spitzer’s office. Three hundred customers said AOL ignored demands to cancel service and stop billing. That has been going on for six years. In similar complaints in April they paid $75,000 to the AG in Ohio. The complaints are legion. A site just dropped all of its AOL subscribers because AOL wouldn’t deliver to their subscribers. We warn you now it is only a matter of time before we have to drop AOL. If you are an email subscriber we advise you to find another ISP. Every week we have problems that you can avoid by changing carriers.

You might go back in history to the Hillary Clinton Refco cattle futures episode. Hillary had $1,000 in her account and bought 10 cattle futures contracts for which normally you would need $12,000 in collateral in the account. Hillary made $100,000 in the account. Her broker Robert “Red” Bone was also broker for the general counsel for Tyson Foods. After an investigation Refco was fined $250,000 for trading practices in cattle futures, then the largest fine ever by the Chicago Mercantile Exchange. That was Hillary’s first and only ever trade. It obviously was a political payoff and Refco was right in the middle of it.

You saw the inflation figures in the last issue and as you well know by now the figures are totally devoiced from reality. They are called hedonic. In 1982, the government changed the way it calculated the housing portion of the CPI. If you use the old method you would find that inflation is 5.3% today and core inflation is 4.3%. This is a far cry from 4.4% and 2.2%, which we are told inflation is today. That is why 10-year US Treasury note yields are headed back to 7% to 8 3/8% soon. That would put 30-year fixed mortgage rates at 8 1/2% to 9 7/8%. That would mean, as it did in the 1989 to 1992 period, that real estate in the 30 hot major markets would fall 40% to 70%. Debt is ten times higher today than in that previous timeframe, which means the correction could be even worse than that.

The question now is what is Sir Alan Greenspan going to do to the economy before he leaves? There is no indication that in the next 100 days that he is going to reduce money and credit. We believe he’ll raise interest rates to 4 1/4% or 1/2% prior to his departure at the end of January. We expect a continuing of the current Greenspan policy. That means the intention is to lower rates in the second half of 2006 to neutralize recession. If they do that we’ll go into hyperinflation as many lose their homes and many enter bankruptcy. Of course, gold and silver will soar. They have no other option. They cannot cut money and credit creation. Even if they did the Fed would monetize debt, which is immediately inflationary to keep the ship from sinking. The economy has already softened with the additional assist from Katrina and Rita. Yes, we’ll get a 1/2% increase in two of the next three FOMC meeting. They’ll be more scandals and our president may well be impeached. They’ll be indictments and more corporate and Wall Street scandals to add to this witches brew. Sell stocks, real estate and bonds. Short the market, be in short-term Treasury paper, if you have to be there and have the bulk of your assets in gold and silver related assets and commodity based stocks, such as copper, oil and gas.

Christy Watts, who was Chief of Contracting at the US Army Corp. of Engineers (USACE), told a Congressional committee that Halliburton regularly threatens government officials who complain about contracting abuse. Halliburton habitually violates contracting regulations and demands employees conceal it from the public. She described a culture of fear and intimidation designed to protect Halliburton’s bottom line.

Ms. Watts told the committee, “One point I need to make very clear: in my 18 years of contracting, I had never, with any other company except Halliburton, been treated in such a demeaning and intimidating manner.” “When pointing out to Halliburton personnel their contractual non-compliance, I was threatened verbally and physically intimidated for performing my job.” She was telephoned in the early hours of the morning by Halliburton officials throwing temper tantrums and screaming at her for awarding contracts to competitors.

Watts is a self-described Republican, who voted for George W. Bush in both presidential elections. She said the Halliburton abuse occurred in the Clinton years as well.

Her superiors are contemptuous of government. USACE views contracting professionals as a drag on their ability to do as they want and that is loot the system. If a contracting officer speaks out against abuse, “they can expect to be terminated.” When she left USACE they demanded a settlement agreement, which banned her from contacting the US office of Special Counsel. She said the USACE is rife with evidence of fraud, waste, abuse and corruption.

Another USACEE whistleblower, Bunnatine H. Greenhouse said relatively the same thing. Her allegations of contracting abuse are being investigated by the Justice Department and the Pentagon’s Inspector General. After she complained to Congress she was demoted. That shows you how arrogant these crooks are.

This shows you that elitist corporations do anything they want. Corporations now run our government and they do not care what the people think.

For many months the Dow has been trading in a tight range. At the end of last week the Dow was off 8 of 10 days. The down days have been on much heavier volume than the up days. This is classic distribution. We are also now starting to see lower highs and lower lows. We are now well below the 200-day moving average. The S&P that had held rather firmly is now leading the market down. Charts on retail, real estate, housing and banking have all turned down dramatically. The chart on Wal-Mart that makes up 1.5% of the US economy looks like a dog’s breakfast. As well, keep in mind for all intents and purposes, the US doesn’t produce much anymore and housing and banking are dominating the economy. Their charts are plunging as well. Take a look at Fannie Mae, which we have on our short list – it is a catastrophe. Everything is in place for the market to go lower.

America is swimming in debt and there can only be one outcome and that is painful economic and financial readjustment. All you complacent Americans out there are in for a rude awakening. We will go down through 10,000 on the Dow like it isn’t even there, and at 9,450 to 9,500, they’ll be some support, but it will be transitory. During 2006 the market will again test 7,268. We believe it will be broken with a bottom somewhere between 4,200 and 6,200. That should disembowel most of the pension plans.

John Bolton, America’s Ambassador to the UN, predicted that efforts to expand the Security Council would fail. There are 15 nations now represented on the panel and there are those who would like to see it expanded to 25 or 26. The fiver permanent members are the US, Britain, Russia, China and France, and 10 non-permanent members that serve two-year terms and cannot block resolutions. Japan has teamed with Brazil, Germany and India in proposing a 25-member council. Wal-Mart’s proposal to open a bank has sent shock waves through the banking community, especially among small banks. Their initial thrust is an application with the FDIC for an industrial bank, which will process debt and credit cards for its 3,500 US stores. That would save Wal-Mart processing fees. The number of complainant letters to the FDIC set a record at 1,100. What Wal-Mart wants to do is open a branch bank in each store. Congress wants the FDIC to hold hearings. We do not see how their application can be turned down.

Refco processed 654 million derivative contracts for the fiscal year ended February 28, 2005, more than the total traded on the Chicago Board of Trade, the Chicago Board Options Exchange or the New York Mercantile Exchange. During that period global futures market volume rose 31% to $1,144 trillion according to the BIS.

As we have explained often before, the Refco problem is not only with its client accounts but also with their commitments to other brokers. If Refco goes broke no one gets paid. The problem we are looking at is systemic in nature and there is no question there will be default caused by fraud.

We often compared the last recession of 1989-92 to today in the sense of real estate values and debt.

The US comptroller tells us U.S. long-term debt is $43 trillion, or $350,000 for each full time worker. Since the beginning of this year American consumers have no savings and have credit card debt of $9,200. Household debt is now more than 20% of disposable income. We have a current account deficit approaching 7% of GDP. Our government prints money to finance the deficit and consumers and corporations fall farther into debt. As America lives far beyond its means, the Bush administration cuts taxes, while fighting a perpetual war in Iraq. That will soon cost $7 billion a month. We believe Japan will continue to fund US debt as will England. The rest of the central banks we are not so sure about.

Our country is in huge trouble economically, financially, socially and politically. That means investing in America and the dollar by foreigners is going to get more expensive. Lenders have to get paid to assume rising risk and that means long-term interest rates have to go higher and that means the end of the real estate boom that has made more than 50% of the economic gains over the past five years. The changes are underway and there is no way anyone can stop them.

The US runs the Internet and it has no plans to relinquish that control. Our government promised in the late 1990s to slowly give up control of the servers, but that hasn’t happened and isn’t about to happen. Other nations want it controlled by the UN. The question is, which is worse? In mid-November the issue will be discussed at the UN’s World Summit in Tunisia as we reported recently. As you all know, the Internet has already been politicized. The government for years has blocked transmissions, arranged for e-mails and text not to be delivered and have been responsible for sites being shut down.

You don’t find American corporations more reprehensible than Halliburton. They are hiring third-world nationals and hiring them to work in Iraq for $1.56 an hour, while most Americans hired are making $80,000 a year and upward. That is 12-hours a day 7-days a week. These virtual slaves come from the Philippines, Nepal, Pakistan, India, and Turkey. These people work for contractors for Halliburton and Bechtel - that is why there is no work for Iraqis. This is a layered system that not only cuts costs for the prime contractors, but also creates an untraceable trail of contracts that clouds the liability of companies and hinders comprehensive oversight by US contract auditors. In addition, it is impossible to tell how many US or foreign nationals are working in Iraq. The menial wages paid to these people from third world countries working for mostly American contactors may be the most significant factor in the Pentagon’s argument that outsourcing military support is far more cost-efficient for our government and their contractors who hire these slaves. These workers live and eat like animals in 120-degree heat. They have neither safety equipment nor protection from incoming mortars or rockets. They originally are hired to work in Kuwait or other Middle Eastern countries and then are pressured to go to Iraq. They make up 35,000 of Kellogg, Brown & Root’s 48,000 workers in Iraq. For the menial pay they receive many are killed in mortar attacks or are shot. You might say they are expendable. A little over a year ago 12 Nepalese cooks and cleaners were beheaded by insurgents. Nepal has since banned its citizens from working in Iraq.

September’s CPI was up 1.2% with energy inflation at 2%. That was less than expected and there could be higher gasoline prices early in October, a layover from September. In October, car prices will be higher. There is no question September was understated and October will be as well.

Do you want to read more by Bob Chapman? There are 89 previous issues for you to read.


Rogue

AOL gives up privacy... Hillary, REFCO, and cattle... Greenspan's last plays... fear and intimidation protect Halliburton's bottom line... fear of the Internet... and more
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http://www.theinternationalforecaster.com/trainwreck.php?Id=96&PHPSESSID=e1897038753f6f831aceff5...

The centralized top down approach of the present administration is not working and the public realizes something is wrong. Americans are losing confidence in their government. This lack of faith comes at a time when we face a financial, economic and monetary collapse. If we collapse the whole world collapses with us. The administration, Congress and the public do not want to deal with it. They want it to go away and it isn’t going to go away. Americans are apathetic and they simply refuse to deal with the truth. Our financial and economic situation today is as dangerous as it gets. Let’s hope they wake up soon. AOL has been since its inception an operating entity of the US intelligence apparatus. Their latest admission is that they have formed a partnership with Fatherland Security to permit unlimited surveillance on AOL subscribers, as reported by the US Department of Commerce. They for years have supplied intelligence on subscribers and have allowed government agencies free access. We have told you this time after time for the past ten years.

What AOL did illegally for years was legalized under the Patriot Act, which permits warrantless searches of persons and property. If you use AOL all your personal emails and information is distributed to law enforcement all over the country. American and European business communities are fearful trade secrets may end up in the hands of the Bush crime family and their associates worldwide, never mind the dossiers that are being build upon average American citizens. We have had extensive problems with sending to AOL subscribers for years. AOL has blocked any messages that contain links to sites that AOL forbids you to see. Using software AOL is able to kick back any email that even mentions a forbidden site. AOL members can white-list senders, but it has no effect at all on the pre-filtering that AOL does before the email ever gets delivered. One journalist said AOL bounced 88% of the newsletters that had been sent to subscribers who use AOL, including cs.com and netscape.net. AOL deletes huge quantities of mail prior to delivery.

In August, AOL paid $1.25 million in penalties and costs and has to reform some of its customer services practices to settle an investigation by AG Eliot Spitzer’s office. Three hundred customers said AOL ignored demands to cancel service and stop billing. That has been going on for six years. In similar complaints in April they paid $75,000 to the AG in Ohio. The complaints are legion. A site just dropped all of its AOL subscribers because AOL wouldn’t deliver to their subscribers. We warn you now it is only a matter of time before we have to drop AOL. If you are an email subscriber we advise you to find another ISP. Every week we have problems that you can avoid by changing carriers.

You might go back in history to the Hillary Clinton Refco cattle futures episode. Hillary had $1,000 in her account and bought 10 cattle futures contracts for which normally you would need $12,000 in collateral in the account. Hillary made $100,000 in the account. Her broker Robert “Red” Bone was also broker for the general counsel for Tyson Foods. After an investigation Refco was fined $250,000 for trading practices in cattle futures, then the largest fine ever by the Chicago Mercantile Exchange. That was Hillary’s first and only ever trade. It obviously was a political payoff and Refco was right in the middle of it.

You saw the inflation figures in the last issue and as you well know by now the figures are totally devoiced from reality. They are called hedonic. In 1982, the government changed the way it calculated the housing portion of the CPI. If you use the old method you would find that inflation is 5.3% today and core inflation is 4.3%. This is a far cry from 4.4% and 2.2%, which we are told inflation is today. That is why 10-year US Treasury note yields are headed back to 7% to 8 3/8% soon. That would put 30-year fixed mortgage rates at 8 1/2% to 9 7/8%. That would mean, as it did in the 1989 to 1992 period, that real estate in the 30 hot major markets would fall 40% to 70%. Debt is ten times higher today than in that previous timeframe, which means the correction could be even worse than that.

The question now is what is Sir Alan Greenspan going to do to the economy before he leaves? There is no indication that in the next 100 days that he is going to reduce money and credit. We believe he’ll raise interest rates to 4 1/4% or 1/2% prior to his departure at the end of January. We expect a continuing of the current Greenspan policy. That means the intention is to lower rates in the second half of 2006 to neutralize recession. If they do that we’ll go into hyperinflation as many lose their homes and many enter bankruptcy. Of course, gold and silver will soar. They have no other option. They cannot cut money and credit creation. Even if they did the Fed would monetize debt, which is immediately inflationary to keep the ship from sinking. The economy has already softened with the additional assist from Katrina and Rita. Yes, we’ll get a 1/2% increase in two of the next three FOMC meeting. They’ll be more scandals and our president may well be impeached. They’ll be indictments and more corporate and Wall Street scandals to add to this witches brew. Sell stocks, real estate and bonds. Short the market, be in short-term Treasury paper, if you have to be there and have the bulk of your assets in gold and silver related assets and commodity based stocks, such as copper, oil and gas.

Christy Watts, who was Chief of Contracting at the US Army Corp. of Engineers (USACE), told a Congressional committee that Halliburton regularly threatens government officials who complain about contracting abuse. Halliburton habitually violates contracting regulations and demands employees conceal it from the public. She described a culture of fear and intimidation designed to protect Halliburton’s bottom line.

Ms. Watts told the committee, “One point I need to make very clear: in my 18 years of contracting, I had never, with any other company except Halliburton, been treated in such a demeaning and intimidating manner.” “When pointing out to Halliburton personnel their contractual non-compliance, I was threatened verbally and physically intimidated for performing my job.” She was telephoned in the early hours of the morning by Halliburton officials throwing temper tantrums and screaming at her for awarding contracts to competitors.

Watts is a self-described Republican, who voted for George W. Bush in both presidential elections. She said the Halliburton abuse occurred in the Clinton years as well.

Her superiors are contemptuous of government. USACE views contracting professionals as a drag on their ability to do as they want and that is loot the system. If a contracting officer speaks out against abuse, “they can expect to be terminated.” When she left USACE they demanded a settlement agreement, which banned her from contacting the US office of Special Counsel. She said the USACE is rife with evidence of fraud, waste, abuse and corruption.

Another USACEE whistleblower, Bunnatine H. Greenhouse said relatively the same thing. Her allegations of contracting abuse are being investigated by the Justice Department and the Pentagon’s Inspector General. After she complained to Congress she was demoted. That shows you how arrogant these crooks are.

This shows you that elitist corporations do anything they want. Corporations now run our government and they do not care what the people think.

For many months the Dow has been trading in a tight range. At the end of last week the Dow was off 8 of 10 days. The down days have been on much heavier volume than the up days. This is classic distribution. We are also now starting to see lower highs and lower lows. We are now well below the 200-day moving average. The S&P that had held rather firmly is now leading the market down. Charts on retail, real estate, housing and banking have all turned down dramatically. The chart on Wal-Mart that makes up 1.5% of the US economy looks like a dog’s breakfast. As well, keep in mind for all intents and purposes, the US doesn’t produce much anymore and housing and banking are dominating the economy. Their charts are plunging as well. Take a look at Fannie Mae, which we have on our short list – it is a catastrophe. Everything is in place for the market to go lower.

America is swimming in debt and there can only be one outcome and that is painful economic and financial readjustment. All you complacent Americans out there are in for a rude awakening. We will go down through 10,000 on the Dow like it isn’t even there, and at 9,450 to 9,500, they’ll be some support, but it will be transitory. During 2006 the market will again test 7,268. We believe it will be broken with a bottom somewhere between 4,200 and 6,200. That should disembowel most of the pension plans.

John Bolton, America’s Ambassador to the UN, predicted that efforts to expand the Security Council would fail. There are 15 nations now represented on the panel and there are those who would like to see it expanded to 25 or 26. The fiver permanent members are the US, Britain, Russia, China and France, and 10 non-permanent members that serve two-year terms and cannot block resolutions. Japan has teamed with Brazil, Germany and India in proposing a 25-member council. Wal-Mart’s proposal to open a bank has sent shock waves through the banking community, especially among small banks. Their initial thrust is an application with the FDIC for an industrial bank, which will process debt and credit cards for its 3,500 US stores. That would save Wal-Mart processing fees. The number of complainant letters to the FDIC set a record at 1,100. What Wal-Mart wants to do is open a branch bank in each store. Congress wants the FDIC to hold hearings. We do not see how their application can be turned down.

Refco processed 654 million derivative contracts for the fiscal year ended February 28, 2005, more than the total traded on the Chicago Board of Trade, the Chicago Board Options Exchange or the New York Mercantile Exchange. During that period global futures market volume rose 31% to $1,144 trillion according to the BIS.

As we have explained often before, the Refco problem is not only with its client accounts but also with their commitments to other brokers. If Refco goes broke no one gets paid. The problem we are looking at is systemic in nature and there is no question there will be default caused by fraud.

We often compared the last recession of 1989-92 to today in the sense of real estate values and debt.

The US comptroller tells us U.S. long-term debt is $43 trillion, or $350,000 for each full time worker. Since the beginning of this year American consumers have no savings and have credit card debt of $9,200. Household debt is now more than 20% of disposable income. We have a current account deficit approaching 7% of GDP. Our government prints money to finance the deficit and consumers and corporations fall farther into debt. As America lives far beyond its means, the Bush administration cuts taxes, while fighting a perpetual war in Iraq. That will soon cost $7 billion a month. We believe Japan will continue to fund US debt as will England. The rest of the central banks we are not so sure about.

Our country is in huge trouble economically, financially, socially and politically. That means investing in America and the dollar by foreigners is going to get more expensive. Lenders have to get paid to assume rising risk and that means long-term interest rates have to go higher and that means the end of the real estate boom that has made more than 50% of the economic gains over the past five years. The changes are underway and there is no way anyone can stop them.

The US runs the Internet and it has no plans to relinquish that control. Our government promised in the late 1990s to slowly give up control of the servers, but that hasn’t happened and isn’t about to happen. Other nations want it controlled by the UN. The question is, which is worse? In mid-November the issue will be discussed at the UN’s World Summit in Tunisia as we reported recently. As you all know, the Internet has already been politicized. The government for years has blocked transmissions, arranged for e-mails and text not to be delivered and have been responsible for sites being shut down.

You don’t find American corporations more reprehensible than Halliburton. They are hiring third-world nationals and hiring them to work in Iraq for $1.56 an hour, while most Americans hired are making $80,000 a year and upward. That is 12-hours a day 7-days a week. These virtual slaves come from the Philippines, Nepal, Pakistan, India, and Turkey. These people work for contractors for Halliburton and Bechtel - that is why there is no work for Iraqis. This is a layered system that not only cuts costs for the prime contractors, but also creates an untraceable trail of contracts that clouds the liability of companies and hinders comprehensive oversight by US contract auditors. In addition, it is impossible to tell how many US or foreign nationals are working in Iraq. The menial wages paid to these people from third world countries working for mostly American contactors may be the most significant factor in the Pentagon’s argument that outsourcing military support is far more cost-efficient for our government and their contractors who hire these slaves. These workers live and eat like animals in 120-degree heat. They have neither safety equipment nor protection from incoming mortars or rockets. They originally are hired to work in Kuwait or other Middle Eastern countries and then are pressured to go to Iraq. They make up 35,000 of Kellogg, Brown & Root’s 48,000 workers in Iraq. For the menial pay they receive many are killed in mortar attacks or are shot. You might say they are expendable. A little over a year ago 12 Nepalese cooks and cleaners were beheaded by insurgents. Nepal has since banned its citizens from working in Iraq.

September’s CPI was up 1.2% with energy inflation at 2%. That was less than expected and there could be higher gasoline prices early in October, a layover from September. In October, car prices will be higher. There is no question September was understated and October will be as well.

Do you want to read more by Bob Chapman? There are 89 previous issues for you to read.


Rogue

Saskatchewan Canada says China eager for its oil and Uranium assets

By GEOFFREY YORK

Tuesday, October 25, 2005 Posted at 9:53 PM EDT

From Wednesday's Globe and Mail

Chinese investors, including state-owned companies, are strongly interested in acquiring ownership stakes in Saskatchewan oil fields and uranium mines, Premier Lorne Calvert says.

With its oil consumption continuing to soar, China has been increasingly anxious to develop a reliable new chain of energy supplies, including foreign oil sources and an expanded domestic nuclear industry. Saskatchewan could be a vital source of supplies for both of these sectors, according to provincial leaders who held two days of meetings with senior Chinese officials in Beijing this week.

Mr. Calvert Tuesday reached agreement with the chairman of China National Petroleum Corp., the biggest Chinese state-owned oil producer, to set up a high-level working group to pave the way for Chinese investment in the Saskatchewan oil patch as quickly as possible. The goal is “to take our conversations to tangible action,” the Premier said in an interview in Beijing last night.

CNPC is keen to invest in the heavy oil sector in Saskatchewan, he said. “They are demonstrating some real interest. They floated some ideas for the actual purchase of [oil field] properties that they would develop themselves. They gave every indication that it's on their option list. And they mentioned the possibility of joint ventures with Canadian players.”

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Officials from CNPC have already visited Saskatchewan three times in the past 12 months, showing their strong interest in the province. A subsidiary of the Chinese company has contributed $500,000 to a $2-million research fund at a Regina-based research centre to study oil recovery techniques.

But one Canadian prize seems to have escaped the grasp of these Chinese investors, at least for now. Despite persistent rumours, there's no sign that Husky Energy Inc. — the Calgary-based oil company with major assets in Saskatchewan — will be sold to a state-owned Chinese company, Mr. Calvert said.

The Saskatchewan Premier, in the midst of an Asia tour, held lengthy talks this weekend with Hong Kong billionaire Li Ka-shing, who controls Husky. With oil prices rising, Mr. Li seems eager to retain and perhaps expand Husky's interests in Canada, the Premier said.

Chinese state companies, including China Petroleum & Chemical Corp. (Sinopec) and PetroChina, are often rumoured to be potential suitors for Husky, and media reports last year suggested that Mr. Li was discussing a possible sale to a Chinese company, although Husky officials denied it.

China's nuclear industry, meanwhile, has a strong appetite for possible investments in Saskatchewan uranium mines, according to Eric Cline, the Saskatchewan Minister of Industry and Resources.

He said the Chinese are beginning to realize that Saskatchewan's uranium is much richer than the uranium in Australia, its main rival. Some Chinese investors have already visited the head office and mining sites of Cameco Corp., the province's main uranium producer.

“As they become aware of the resource in Saskatchewan, I think they're more and more interested,” Mr. Cline said.

“We're at an exploratory level, but the level of interest is indicated by the level of officials we're speaking to. The meetings we're having are at a very high level. Certainly they're looking very seriously at Saskatchewan as a source of uranium. They would be a stable long-term customer for us, because they're going to have a lot of nuclear energy.”

China is also a major customer for two of Saskatchewan's biggest commodities: grain and potash. Chinese demand for both is likely to increase because of the growing affluence of Chinese urban consumers and their rising appetite for more expensive food products, Mr. Calvert said.

Chinese consumers are buying more products such as pasta and beer, for example, which helps creates a market for Saskatchewan's durum wheat and malting barley, he said. Saskatchewan potash, meanwhile, helps China grow its own variations of these crops.


http://www.theglobeandmail.com/servlet/story/RTGAM.20051025.wcalvertt1025/BNStory/Business/

Rogue

China may swap, buy oil assets with global majors
Wed Oct 26, 2005 2:32 AM ET

By Charlie Zhu and Chen Aizhu

SINGAPORE (Reuters) - China may consider trading minority stakes in its Big Three oil companies or part of their refining units for energy reserves held by global majors but will not give up sizable assets in the strategically key state firms.

BP Plc <BP.L> hopes to swap some of its upstream interests for a stake in Sinopec Corp., but Beijing is averse to any deal as bold as BP's 50-50 partnership with Russia's TNK.

Instead, Chinese state-owned firms will prefer to forge closer ties with the likes of BP, Exxon Mobil Corp. <XOM.N> and Royal Dutch Shell <RDSa.L> via asset swaps or joint overseas acquisitions, bankers and analysts said.

"One possible trend I think we will see emerge is more Western companies being prepared to exchange assets in return for an investment in a Chinese company," said Mark Renton, Managing Director and head of Citigroup's Asia-Pacific Investment Banking.

"That collaboration can take many forms, including joint bidding for assets around the world. It could take the form of an asset swap," Renton, who used to head Citigroup's North America energy group, told Reuters.

By partnering with PetroChina <0857.HK><PTR.N>, Sinopec <0386.HK><SNP.N> and CNOOC Ltd. <0883.HK><CEO.N> in big upstream acquisitions, the foreign oil giants can gain wider access to China's 6.7 million-barrel-a-day market, bankers say.

China, which imports more than 40 percent of its oil needs, craves for more oil and gas reserves. Its oil demand is forecast to grow 7.5 percent next year, versus an expected 3.4 percent for 2005 and 15 percent growth in 2004, the International Energy Agency said.

"Every day we are thinking about how to secure upstream assets," said Li Dongmei, a senior adviser to Sinopec Corp.

Since September, China has clinched two high-profile deals, including the $4.2 billion takeover of PetroKazakhstan <PKZ.N><PKZ.TO> by CNPC, PetroChina's parent, and the $1.4 billion purchase of EnCana's <ECA.TO> Ecuador assets by CNPC and Sinopec Group, parent of Sinopec Corp.

That came after CNOOC lost out in its $18.5 billion cash bid for U.S. producer Unocal to U.S. major Chevron Corp

<CVX.N>.

IRON GRIP

But Beijing will not rush for global assets at the expense of losing its iron grip on state oil majors, illustrated by its rebuff of BP's bid for a big stake in China's top refiner, Sinopec, sources close to the matter have told Reuters.

"The Chinese, by and large I think, would like to control their own destiny," said a top banker at another global bank.

BP, the world's second-largest listed oil company, is still pursuing a close tie-up with Sinopec, sources say, although it had recently sold the small stakes it bought in the IPOs of Sinopec and PetroChina for a huge profit.

Exxon Mobil and Shell have since followed suit, pocketing billions of dollars in profit by offloading their minor stakes in Sinopec. But analysts and officials at the global oil companies have said the share sales did not herald any shift in their China strategy and they remained committed to the Chinese market.

Soon after its share sales, BP started brainstorming its strategy to grow further in China, including the idea of a large-scale joint-venture with Sinopec, a source familiar with the situation told Reuters.

"BP is not talking about a short-term view when talking of investment of this size. It's very much a kind of 10-year plus view about where the real growth is coming from," said Gavin Thompson, China country manager for Wood Mackenzie.

CAUTIOUS OVER RETAIL

Asset trading is not new in the oil sector, but large-scale swaps are few because they are complicated. A successful example is an asset swap between Shell and Marathon Oil <MRO.N> in 2000, which gave Shell a big stake in Russia's Sakhalin 2 field.

BP and other majors, which have injected billions of dollars into mega petrochemical and refining projects in China, can swap stakes in oil or gas fields slated for the Chinese market for interests in some of Sinopec's or PetroChina's downstream assets.

In some cases the Western firms may be able to book oil or gas reserves that have yet to find a market. For instance, BP could offer a stake in the Siberian Kovykta gas field to China.

BP and Shell have sold stakes in gas fields in Indonesia or Australia to CNOOC in return for long-term liquefied natural gas supply contracts with Beijing. More of such deals may emerge as China scrambles to boost natural gas consumption.

While Sinopec and PetroChina have not discounted giving away more of its retail market, it will be cautious about doing so, analysts said. Indeed, the pair are regretting their retail joint-venture deals with international oil majors, insiders said.

China guarantees profit margins for those ventures, all in the country's booming south and east, while profits of their own petrol stations in China are pinched by regulated retail prices.

"In the short term, business partnership between Chinese and international oil companies should still be largely limited to individual chemical or refining projects in China," said a China-based marketing executive for a global oil major.

Rogue

Fascist Ann Coulter Wants to Kill First Amendment

Fascist Ann Coulter Wants to Kill First Amendment

Kurt Nimmo | October 23 2005

I used to think the “conservative” (an insult to real conservatives) Ann Coulter was basically little more than annoying, purposefully going over the deep end, saying hurtful and nasty things about -so-called “liberals” to get attention and sell books.

It is now apparent Coulter is an avowed enemy of freedom and the Bill of Rights, like all fascists. Coulter “criticized the media for being liberal and Democrats for whining about their rights under the First Amendment” at the third annual Ronald Reagan Black Tie and Blue Jeans BBQ held in Alachua County, Florida, the Alligator Online reports. “They’re always accusing us of repressing their speech,” Coulter told her audience, who paid between $25 and $75 to attend the event. “I say let’s do it. Let’s repress them…. Frankly, I’m not a big fan of the First Amendment.”

Coulter finally reveals what many of us have suspected for a long time—the neocons are fascists who believe they deserve special rights—Coulter may keep on writing her slanderous and hackneyed books while “liberals” or anybody to left of her is censored—and deserve by birthright or their warped and murderous ideology to be in positions of power or best selling authors (some folks believe the right-wing billionaire Dick Scaife has bought up Coulter’s books in bulk, thus pushing up her rank up; it is well-known Coulter worked for the Scaife-funded Center for Individual Rights). I don’t know if Coulter is a Straussian but her comments have the same nose-in-the-air elitism demonstrated by the neocon followers of the fascist Leo Strauss (he was mentored by the Nazi Carl Schmitt).

For Coulter, calling for the destruction of the First Amendment comes easily, as it does for all authoritarians and fascists.

“For a long time, we’ve tended to see the primary threat to liberty as coming from the left, from the socialists who sought to control the economy from the center,” writes Llewellyn H. Rockwell, Jr. “But we must also remember that the sweep of history shows that there are two main dangers to liberty, one that comes from the left and the other that comes from the right…. What is the most pressing and urgent threat to freedom that we face in our time? It is not from the left. If anything, the left has been solid on civil liberties and has been crucial in drawing attention to the lies and abuses of the Bush administration. No, today, the clear and present danger to freedom comes from the right side of the ideological spectrum, those people who are pleased to preserve most of free enterprise but favor top-down management of society, culture, family, and school, and seek to use a messianic and belligerent nationalism to impose their vision of politics on the world.”

Ann Coulter, convinced of her talent (actually very marginal—and that’s a compliment) and her place in the neocon hierarchy—and if Strauss taught the neocons anything, it is that they are better than everybody else, they comprise the platoian elite, the rest of us are lowly commoners, cannon fodder—and this is why she believes the First Amendment is not important, in fact she believes it is over-rated and thus she is not a “big fan” of liberty.

It’s time for Coulter’s fawning fans to abandon her and move on to more mature and intellectual literature. Unfortunately, there will always be people who read Coulter and listen to Limbaugh and (remarkably) Michael “Savage” Weiner (who epitomizes the modern American fascist). We can only hope, as Coulter continues to attack the Constitution, the more intelligent of her readers will realize her true nature and begin selling her books at yard sales or donating them to charity (although I cannot think of a charity that would want them, since most charities are dedicated the helping people, not slandering and urging violence against them).


LINK: http://www.prisonplanet.com/articles/october2005/231005fascistann.htm


Rogue

Ruff/HLB.to,HLSRF......I do own a small position in this coal player. I think it can be a big winner long-term. I'm trying to time an entry for a larger position on the charts.

This is probably a good stock for some of our excellent fundamental analysts to take a look at and give their opinion! Could be the next ASPN or CHAR or FPPC ...in capital gain potential going forward???

http://stockcharts.com/def/servlet/SC.web?c=HLB.TO,uu[h,a]waolyyay[pb50!b200!f][vc60][iut!Uc20!Lh14,....

http://stockcharts.com/def/servlet/SC.web?c=HLB.TO,uu[h,a]daolyyay[pb50!b200!f][vc60][iut!Uc20!Lh14,....

TECHNICALLY
It looks like it wants to go lower on the weekly chart. There has been consistent selling pressure on the Chaitkin Money Flow.

Rogue

Negotiators on Torture Ban Feeling Heat By LIZ SIDOTI, Associated Press Writer
30 minutes ago



WASHINGTON - Congressional negotiators are feeling heat from the White House and constituents as they consider whether to back a Senate-approved ban on torturing detainees in U.S. custody or weaken it as the White House prefers.

ADVERTISEMENT

Led by Vice President Dick Cheney, the Bush administration is floating a proposal that would allow the president to exempt covert agents outside the Defense Department from the prohibition.

Meanwhile, some newspapers are calling for lawmakers to support Sen. John McCain (news, bio, voting record)'s provision that would ban the use of "cruel, inhuman or degrading treatment or punishment" against anyone in U.S. government custody, regardless of where they are held.

"There's a lot of public pressure to retain the language intact. At the same time, there's pressure from the vice president's office to modify it," said Tom Malinowski, the Washington advocacy director for Human Rights Watch, which supports McCain's provision.

Cheney and CIA Director Porter Goss met last week with McCain, R-Ariz., and suggested excluding from the torture ban overseas clandestine counterterrorism operations by agencies other than the Pentagon "if the president determines that such operations are vital to the protection of the United States or its citizens from terrorist attack."

On Tuesday, White House press secretary Scott McClellan said, "The president's made our position very clear: We do not condone torture, nor would he ever authorize the use of torture."

McCain, himself a former prisoner of war in Vietnam, said he rejected the administration's alternative language because "that would basically allow the CIA to engage in torture."

It's unclear just how much influence McCain has in the House-Senate negotiations to iron out differences between House and Senate versions of the $445 billion defense bill. McCain won't be directly involved in those negotiations.

Sen. Ted Stevens (news, bio, voting record), R-Alaska, and Rep. Bill Young, R-Fla., who chair Congress' defense spending subcommittees, will be among the leaders of those talks in coming weeks.

Young has said the United States has no obligation to terrorists, and he and other top House Republicans have signaled they will try to change the Senate-approved language.

Stevens, who voted against it in the Senate, has said the language is too broad in applying to agents who work undercover. He has said the administration shares that concern.

"I still believe we have to take into account the situation that clandestine people find themselves in," Stevens said Tuesday. But he said he had not seen the vice president's language, so he couldn't say whether he would support it.

Top Democratic bargainers — Sen. Daniel Inouye (news, bio, voting record) of Hawaii and Rep. John Murtha (news, bio, voting record) of Pennsylvania — support McCain's language, but their clout is limited because they are in the minority party.

Earlier this month, the Senate added the torture prohibition and the interrogation standards to its defense bill on a 90-9 vote, even though the Bush administration threatened a veto if the president's ability to conduct the war was restricted.

The House bill did not include McCain's provision, which also requires U.S. service members to follow the Army Field Manual when imprisoning and questioning suspects in the war on terrorism.

In the weeks since the Senate vote, newspapers from Alabama to Texas to California have called on their lawmakers to support McCain's language. Several took particular aim at hometown Republicans leading the negotiations.

"Sen. Stevens is wrong and should follow the lead of Sen. McCain, who speaks firsthand of the wrongs of torture," the Anchorage Daily News said Monday.

Said the St. Petersburg Times on Oct. 16: "Young and his fellow conferees have an obligation to rise above partisanship and uphold principles that should be beyond debate in a civilized society."

Rogue

Rumsfield/Gilead/Tamiflu hoax.....You've got to be kidding?? Are you some "nutjob" or something. That can't be true??

If it is I'm fastly becoming more cynical than ever......
WOW.... whan an "age of Lies and Deception" we live in.

Have you ever heard or seen the video of the black lady Congresswoman "grilling" Rumsfield about the 9/11 scam/ tragedy??? She hung him to the wall!



Rogue

Len....Regarding New Orleans, If you haven't read this article, I want you to read it and tell me that BIG GOVERNMENT,BIG BROTHER, OR MARTIAL LAW is the answer!

After reading this article you'd have to be a "certified nutjob" to place ANY trust in this government and it's agencies.......EVEN THE MILATARY!! Good luck!

I still may have to "take you to the mat" on the 911 disaster!

You need to be educated on that one(911)....once you realize the truth on that maybe you'll start seeing that your world "reality" may be the biggest ILLUSION of all.


Katrina and Socialist Central Planning

by Llewellyn H. Rockwell, Jr.
[Posted on Monday, October 10, 2005]

Watching the Capitol Hill hearings on what went wrong after Hurricane Katrina provided a glimpse of what it must have been like in the Politburo in the 1950s. The Soviet bureaucrats would gather with the party officials and factory managers to figure out why grain production was down or why shop shelves were empty or why the bread lines were ever longer and the quality ever worse.

They gathered under the conviction that they had a workable system that was being rendered unworkable because of the incompetence of certain key players in the chain of command. No one was permitted to say that the command system itself was the problem; this would too contrary to the prevailing political ethos. Instead, they had to place blame on someone, as if all problems could be reduced to issues of obedience. It was always a scramble. Whoever was finally said to be at fault faced certain ruin.

To be sure, there was plenty of blame to go around. With rats in a maze, there is a sense in which they are all responsible for not having found the exit. If those rats could also organize into a hierarchy of control and hold trials, it would surely produce quite a show with many victims. But at the end of the day, the rats would be no closer to getting out of the maze. And so it was in the US Congress: the hearings produced a great show with no results that will make a difference for our future.

The Soviet system had to fully unravel before it became permissible to state what it used to be a crime even to think: you can't manage an economy. You can make every demand, issue a million commands, exhaust every financial resource in the state's account, elevate some people and demote others, dress up in a military costume and make grand pronouncements from a glorified pedestal, cut off fingers, toes, and heads, but in the end, you can't make the economy perform in a way that serves the people unless you let market forces work.

Not just the Soviets had to learn this. Authoritarian regimes from the beginning of time have attempted to defy the laws of economics, step on the interests of the merchant class, control and redirect the wishes of consumers and entrepreneurs, bend and kick prices and wages this way and that, and inhibit trade in every way. But they cannot finally overpower the driving desire on the part of people to control their own fate and not be subject to the slavery that is collectivism of all colors, whether red, green, or brown.

Someday, the US managers of crises will have to realize this same point. But for now, they are like Soviet bureaucrats scrambling to make an unworkable system function, and creating a scene that is as farcical as it is tragic.

Consider first how the much-glorified Department of Homeland Security responded to the Katrina crisis. There is a mysterious missing day between the time the hurricane hit and the levees broke and flooded New Orleans. During this strange Monday, August 29 — a day in which there was a window of opportunity to prevent the meltdown of civilization — why didn't federal officials respond or even pretend to respond?

The head of the Department of Homeland Security, Michael Chertoff, said that he read in the Tuesday morning newspaper that, according to the headline, "New Orleans Dodged the Bullet." So, to his mind, there was nothing to do. This was his testimony. This is not exactly an awe-inspiring admission, but it speaks to a truth that few are willing to admit: government officials live normal lives. They do not partake of the mind of God. They get their news just like you and me. And they have far less information than the body of knowledge generated by the signaling process of the market economy and the private sector.

We might even say that they are in effect sub-normal in intelligence, because government officials stand outside of society, cut off from normal channels of information that the rest of us take for granted. They are isolated from markets and the regular pressures of life. They are not owners of what they control, and have no real stake in the value of their product. They are surrounded by some of the most peculiar people in the world, namely lifetime bureaucrats, power-mad politicians, and lobbyists on the make. This is their world and this is what they know.

Now, they enjoy the illusion of being better informed than the rest of us, so it would never occur to a high official to surf Google News to find out what is really going on. Thus was it apparently beyond the capacity of FEMA to find out that the National Weather Service had issued a flood warning soon after the hurricane hit. The National Weather Service in turn was only reporting what many private local media outlets were saying.

Certainly the municipal government of New Orleans got the message. It issued a warning to residents, and then all the officials packed up their stuff and headed to Baton Rouge. I suppose that this was the plan that the bureaucrats came up with after having received a $500,000 federal grant in 1997 to design a comprehensive plan for evacuation. Half a million dollars later, they agreed what the plan should be. Two words: let's go!

Now, we can learn from observing this. It is always the case that the government's first interest in a crisis is the protection of itself. The public interest is way down the list. Government employees have no ancient code that requires them to go down with the ship. The seafaring captain might feel disgrace if he lost his crew and passengers but returned safely to shore, but the government bureaucrat would see this as nothing but rational self-interest at work. From their point of view, public service is not a suicide pact.

If this is so, are we wise to expect government service at times of crisis? Well, here is where it gets complicated. They always promise that they will take care of us. On the day the Hurricane hit, for example, President Bush made the following announcement: "For those of you who are concerned about whether or not we're prepared to help, don't be. We are. We're in place. We've got equipment in place, supplies in place. And once the — once we're able to assess the damage, we'll be able to move in and help those good folks in the affected areas."

Well, given the calamity that followed, this statement by Bush might as well have been a Soviet propaganda poster about the glorious future of socialism.

If the only response by government were to turn and run, they could be accused of hypocrisy, but it would be better than the alternative of bad government that stayed to ruin the work that markets and private individuals do.

As the Hurricane approached, for example, Mr. Bush, along with nearly every office holder in the entire region, immediately announced that there would be no tolerance of so-called price gouging. What is and what is not gouging remain undefined by law, but there are still criminal penalties attached to doing it. If you raise your prices to the point where you attract a complaint, there is a good chance that you will be thrashed as a gouger.

And yet, we have to ask ourselves what the purpose of a price is. It is a signaling device that allows market players, including both producers and consumers, to adjust their economic behavior in light of supply and demand. If supply remains the same and demand rises, the price too will have to rise so the market can clear properly. Otherwise there will be shortages and surpluses that will prove to be a benefit to no one. William Anderson has called gouging rules a form of back-door price control, and he is right. They create victims, encourage economic dislocations, and foster black markets.

One might think that a Republican administration would understand this, but reflect on the fact that Iraq still has very strict price controls on gasoline, controls that were instituted by the US after Saddam was overthrown. Don't think for a minute that it is beyond the capacity of the Bush administration to do what the Nixon administration did, which was to believe that the laws of markets can be overridden by regulatory force.

Anti-gouging laws, to the extent they are obeyed, will create shortages. But in telling the sad tale of Katrina, I would like to begin not with a case of shortage, but with a strange case of surplus.

One week after the hurricane, FEMA ordered the Army Corps of Engineers to buy 211 million pounds of ice from IAP Worldwide Services of Florida. Trucking companies were notified of a grand opportunity since the government was paying the bills for delivery, and the dispatchers sent out the word. There is no space to explore the workings of IAP Worldwide, but I will observe that the company, which exists solely to get paid by your tax dollars as a federal contractor, has a new CEO who most recently held the position of vice president of national security programs for the notorious Kellogg Brown and Root. His name is David Swindle.

But back to the story of the ensuing chaos. One trucker picked up ice in Greenville, Pennsylvania, and was told to drive it to Carthage, Missouri. When he arrived in Carthage, he was told by a FEMA official to go to Montgomery, Alabama. After a day and a half sitting in Montgomery, he was told to go to Camp Shelby, Mississippi, after which he was sent to Selma, Alabama, after which he was sent to Emporia, Virginia, where he stayed for a week burning fuel, until he was sent to North Carolina, and finally to Fremont, Nebraska, where he dropped the ice in a government storage unit. That's 4,000 miles over two weeks.

This was hardly the only case.

The news media chronicled the stories of these truckers. A truck full of ice was sent from Dubuque, Iowa, to Meridian, Mississippi, then to Barksdale Base in Louisiana, then to Columbia, South Carolina, and finally to Cumberland, Maryland, where he waited for six days before being sent to Bettendorf, Iowa, where the ice was unloaded. Another truck was sent from Wisconsin to Missouri to Selma to Memphis, before finally dropping off the ice in a storage unit.

Lew's collected speeches: $25
Do you know how many drivers were enlisted in this incredible charade? 4,000. No one knows for sure how much ice ever got through or how much good it did, if any.

In one of the first incidents reported of what was to be two weeks of catastrophe, a group of volunteer fire fighters from Houston came to New Orleans wanting to help. They were told to wait. They waited 48 hours and were ordered to go back. A group of doctors from Maryland tried to get in but FEMA sent them on to the Red Cross, which said it could do nothing without the approval of federal health officials.

After the New Orleans mayor made a call for firefighters to come help, hundreds of volunteers were sent to Atlanta, where they were put in a conference room at the Sheraton hotel and subjected to seminars on sexual harassment and other bureaucratic matters. They were then told that their job would be to distribute flyers with a message on it: call 1-800-621-FEMA. Many or even most of these well-trained people caught on to the racket and left town. Those who stuck it out and headed for Louisiana were aghast that their first assignment was not to fight fires, which had been raging for a week, but to escort President Bush on his TV-laden tour of the area.

You can see all the photos on WhiteHouse.gov.

In fact, FEMA refused offers of help of all sorts, mainly because of issues of control. FEMA declined helped from Amtrak in evacuating people from New Orleans. The Chicago municipal government was trying to send volunteers from the fire department, police department, and hospitals. FEMA said no. The same happened to New Mexico, whose governor volunteered equipment and personnel.

FEMA prevented Wal-Mart from delivering three tank trucks of water, and the Coast Guard from delivering 1,000 gallons of diesel fuel. It even cut the communications lines for Jefferson Parish. The local sheriff ending up posting armed guards to protect the restored lines from FEMA — an interesting model that many communities around the country would do well to imitate in the future.

A chief medical officer for a large ambulance company says he was unable to find helicopters to pick up dying patients at the Superdome. He walked outside and discovered that two helicopters, donated by an oil services company, had been ordered to wait in the parking lot. Morticians attempted to donate their help. But FEMA said absolutely not, on grounds that they were not officially certified by FEMA to perform such services, so the bodies of the dead piled higher.

As for the National Guard, for days it would not allow reporters into the superdome where tens of thousands were trapped. People were hungry and thirsty, but the National Guard would not allow the Red Cross to deliver any food.

Here is the astounding statement from the spokesperson of the Red Cross: "The Homeland Security Department has requested and continues to request that the American Red Cross not come back into New Orleans… Right now access is controlled by the National Guard and local authorities…. We cannot get into New Orleans against their orders."

The Salvation Army attempted to rescue two of its own officers trapped in a building and on dialysis. They rented three boats for a rescue. But they were not allowed through, though to be fair the Salvation Army did not specifically name the government as at fault, but it did point out that all private efforts were running into similar kinds of obstacles, so the message was clear.

Meanwhile, the USS Bataan, a floating hospital for 600 patients, that had ridden out the storm, was still sitting empty by the third day, not permitted to do its job.

An astounding case of ineptness comes to us from the case of three Duke University students who drove to New Orleans to help but were turned away by the National Guard. They had seen the news and knew that they could help, and wondered why they should be pushed around by bureaucrats. Being college sophomores, they took a risk. They forged press credentials, with fake IDs and shirts and the works. They went back and adopted a haughty tone. The National Guard waved them through.

Then the students drove to the Convention Center. There they found thousands of sick, hungry, thirsty, and dying people in desperate need. They found a man who had welts all over his body. He was in a tree covered with fire ants as the waters rose, and there he stayed there being bitten repeatedly for up to 24 hours.

The boys picked him up along with three others and drove them to a Baton Rouge hospital. They made another trip there and back with more people before they began to become frightened of what the government might do to them. On one return trip, they observed 150 empty buses driving the other way — and they have a video to prove it.

One can only express astonishment at how the government treated the tens of thousands of people that it had herded like cattle into large public spaces. For reasons that are still unclear, the government couldn't get its act together on transporting them out even as the people themselves were forbidden to leave. Once the central planners decided to move all these people from the Superdome to the Astrodome, no means of transport arrived, even as aerial photos showed miles and miles of public buses available.

Indeed, the first bus to reach Houston was not driven or approved by the government. It was commandeered by 20-year-old named Jabbar Gibson, who drove it from the floods and picked up as many people as he could and drove all the way to Houston, a 13-hours drive! He beat the government's system by a day. Meanwhile, the tens of thousands of people who had been shoved into the Superdome on Sunday, before the floods came, were still suffering in that massive calamity by Friday and Saturday.

Perhaps the most astounding case of incompetence has received the least attention. It relates to a 500-boat flotilla stretching over 5 miles that left for New Orleans from Acadiana Mall in Lafayette. It involved 1,000 people who had hoped to rescue hospital patients and take them to safety. It consisted of private boaters, fishermen, hunters, and others who had spent their entire lives navigating the waterways of Louisiana.

Once this caravan arrived, they were turned away by the Department of Wildlife and Fisheries, now being run by FEMA. All five hundred boats were ordered out.

After pleading, some people were told that they could take the boats to a rescue operation launch site. They reported that at this site, there were 200 agents of the government standing around doing absolutely nothing even as people were dying in hospitals and thousands were desperate to get out. After three hours, even these few boats were told to go away.

Now, President Bush has been criticized for being out to lunch on all of this. Indeed, some staff members put together a DVD of the evening news coverage for him to watch on Air Force One, which was the only way they could get him to understand the depth of the crisis. The purpose of the action was not so much to help people, of course, but rather to stop the meltdown of the president's reputation.

In fact, by the time he actually arrived in Louisiana, food and medicine deliveries, such as they were, had to be halted on order of the White House, to make room for the presidential caravan.

Then there was the matter of the government's proposed cash gifts to the victims of Katrina. Most FEMA employees knew nothing about it when their phones and offices were mauled by people demanding their cash. FEMA's website registration for victims required Internet Explorer 6.0 and could not work with any other browser. Of course this is somewhat academic, since most of the victims had no computer access at all. But those who called the number were often told to go online to register. Most of the time, people couldn't get through on the phone or online.

In one particularly interesting detail, Katrina triggered the first use of the Department of Homeland Security's great accomplishment since it was created after 9-11: the National Response Plan, a 426-page central plan for dealing with a crisis on the level of the post-Katrina floods. Here is how the government describes it:

"The National Response Plan establishes a comprehensive all-hazards approach to enhance the ability of the United States to manage domestic incidents. The plan incorporates best practices and procedures from incident management disciplines — homeland security, emergency management, law enforcement, firefighting, public works, public health, responder and recovery worker health and safety, emergency medical services, and the private sector — and integrates them into a unified structure. It forms the bases of how the federal government coordinates with state, local, and tribal governments and the private sector during incidents."

What happened to the National Response Plan after the floods? It remained what it always was: a colorful PDF download, a thick book on the management shelves, an item in the Government Printing Office catalog, bird-cage liner, and many other things. One thing it was not was a national response plan that did all those glorious things listed above. As with all these plans from time immemorial, it was a dead letter.

As for the National Guard, it did what the military does best: it started harassing the residents. Working with the police, it began to enforce an order for everyone to evacuate. As the New York Times summarized the order: "no civilians in New Orleans will be allowed to carry pistols, shotguns, or other firearms of any kind."

The National Guard allowed themselves to be videotaped going from house to house, and mansion to mansion, knocking down doors, searching for weapons, handcuffing owners and humiliating them. They called them the "holdouts," a phrase out of Baghdad.

One storm trooper — that's a pretty good name for them — was asked whether he would shoot residents if they resisted. Yes, he said. He added, "It's surreal. You never expect to do this in your own country."

The police also broke into the offices of a heroic little company in New Orleans that did not flee. Its name is DirectNIC, an Internet Service Provider, and it was staffed by friends of the Mises Institute. Through careful preparations, good generators, lots of fuel, and vast amounts of courage, this company kept providing internet service throughout. For several days after the flooding, it was the only source of information coming out of New Orleans. They had a camera on the streets below, and ventured out to take pictures of the scenes. They were first to report the looting, the explosions, the fires, and to chronicle the craziness. They became so good at acquiring fuel that they military actually came to them for diesel.

Millions were logging into their feed, and for four of the most critical days the Mises Institute actually provided the group with an external server in order to make their broadcasts possible. They were showing what the mainstream media would not show and could not show. But late one night, there was a pounding at the door. The National Guard had seen lights in the window and demanded to know what was going on in this room. Though these young people had already been interviewed on MSNBC, Fox, and were the talk of the blogosphere, the troops knew nothing about them. Astounded and confused at what they saw, the troops allowed their pictures to be taken and went on their way.

I've provided a look at some of the terrible failures by the government — not only failing to do what it claims it will do, but actively working to prevent others from helping out. The cost to human life and prosperity is incalculable. But, one might say, at least the government is generous now in preparing to spend perhaps $250 billion to clean up and reconstruct what was destroyed.

But who will get this money and where will it go? Cynics could not be more correct: the first companies to receive the money were our old friend Kellogg Brown and Root, a current client of President Bush's former campaign manager and former head of FEMA. KBR is a subsidiary of Halliburton, the company formerly headed by Dick Cheney. Another winner is Bechtel, whose former head is now in charge of Bush's Overseas Private Investment Corporation. The top rebuilding priority: repairing government military bases in Louisiana and Mississippi.

If you work for one of these companies, you will do very well by this aid. As for the victims, everyone knows that what rebuilding they do will come from their own savings. You can expect no assistance from this monstrosity that taxes and controls you relentlessly on the pretext that it will protect you and care for you when no one else will.

Fortunately for people who lived in flooded areas, they did not face the crisis alone. The private commercial sector, along with thousands of religious charities, was there to help. Indeed, John Tierney of the New York Times was one of the few mainstream journalists to note that Wal-Mart improved its image after Katrina. Its stores in the disaster-stricken areas still carried generators in areas. Wal-Mart trucks rode into to areas immediately following the hurricane and gave away chain saws, boots, sheets, and clothes for shelters, plus water and ice. It alone had prepared for emergency with its own emergency operations center.

Chris Westley further noted that Wal-Mart gave $20 million in cash donations, 1,500 truckloads of free merchandise, food for 100,000 meals, and the promise of a job for every one of its displaced workers. After comparing FEMA's failures with Wal-Mart's successes, he concluded that the government emergency management ought to be abolished.

Tierney, meanwhile, drew the wrong conclusion. He says that the Wal-Mart CEO "is the kind of leader we need to oversee the tens or hundreds of billions that Washington will be spending on the Gulf Coast. Scott could insist on low everyday prices while still leaving the area as well prepared for the next disaster as Wal-Mart was for Katrina."

In fact, if Lee Scott were given a government job, it would only be a matter of time before he became just another Michael Brown, the disgraced former FEMA head. This isn't a matter of character. It is a matter of the maze in which you find yourself — the one made by the market so that it has large exit signs, or the one that is government's, that is, the one with no exits at all.

As Walter Block, Mark Thornton, and many others have shown, it was not the storm as such that did the damage, but the failure of the government levees. Combined with the levees-only river management strategy of the Army Corps of Engineers, the floods were a disaster waiting to happen. Just imagine if the town were private like your home or car. Insurance companies would have taken a huge role in risk assessment, not only charging more for higher risk but insisting on management strategies that reduce risk and rewarding those who adopt those strategies with better premiums. This works on the same principles as you home owners' insurance, which combines rules and incentives to reduce the likelihood of losses.

Government insurance, however, makes us less cautious and more willing to take risks. It prices coverage from losses far too low and creates an environment where disasters like flooding are waiting to happen. With programs like subsidized flood insurance, government is like a bad mother who pays her children to run with scissors.

Government ownership is even worse because there are no signaling systems in operation at all. It was also government that created a false sense of security for people in New Orleans, who were led to believe that the levees would hold and pumps would work. And when the floods finally did come, they were told the government would be there to manage the crisis.

But the government cannot manage crisis, as the response to Katrina demonstrated. The local government fled. The state government was dithering. And the federal government actively worked to prevent good things from happening. The thousands and millions of acts of private heroism that took place after Katrina occurred despite the government and not because of it.

And yet what lessons does the political culture want us to take from this? It is the same lessons we are instructed to learn after NASA spends and spends and still can't seem to make a reliable space shuttle. We are told that NASA needs more money. The public schools absorb many times more — thousands times more — in resources than private schools, and still can't perform well. So we are told that they need more money.

The federal government spends trillions over years to "protect" the country and can't fend off a handful of malcontents with an agenda. And so we are told that the government needs to start several new wars and erect a massive new bureaucracy and put sections of the country under martial law at the slightest sign of trouble.

So too, Congress can allocate a trillion dollars to fix every levee, fully preventing the last catastrophe, but not the next one. The real problem is the same in all these cases, not insufficient resources but public ownership and management.

Public ownership has encouraged people to adopt a negligent attitude toward even such obvious risks. Private developers and owners, in contrast, demand to know every possible scenario as a way to protect their property. But public owners have no real stake in the outcome and lack the economic capacity to calibrate resource allocation to risk assessment. In other words, the government manages irresponsibly and incompetently.

Actually, it was Mr. Bush who said one of the most sensible things, on September 2, 2005: "If you want to help, if you're listening to this broadcast, contribute cash to the Salvation Army and the Red Cross…. They're on the front lines providing help to the people who need help."

But it was two weeks later when his other instincts kicked in and he delivered a very different message, one that is deeply alarming. He said: "It is now clear that a challenge on this scale requires greater federal authority and a broader role for the armed forces — the institution of our government most capable of massive logistical operations on a moment's notice."

Interesting that his beloved military was not there at a moment's notice. It now cites its own failures as the great excuse to expand its powers. So the government will spend the next several years preparing for another Katrina that will never come, just as it spent the last several years preparing for another 9-11 that will never come. The next crisis will be something completely unexpected, and once again the government will fail. But we will be left with a government with some very bad habits, among which are declarations of martial law, mandatory evacuations, gun and price controls, and other totalitarian ways.

And given that that this is a Republican administration with its own internal culture, and its attachment to military means, we get what can only be described as the continuation of the fascist track: the militarization of the country under its own armed forces.

So far as I know, this passing remark by Mr. Bush has provoked no commentary in the national press. Commentators in the organized conservative movement have displayed an appalling deference to administration's priorities, with National Review consistently arguing for more spending and militarization, Rush Limbaugh calling for price gougers to be strung up, and even some free-market friends calling for billions to rebuild New Orleans as a way of showing terrorists that we won't let the weather get in the way of progress. On the last point, I kid you not.

Conservatives have been especially bad on tolerating egregious uses of the military. We need to reflect on what it means to have the military take over in the event of crisis. What kind of ideology promotes such things, and looks the other way when it happens? I think I know, and it serves as a reminder that not all threats to freedom come from the Left.

A clue comes from the neo-Nazi novel called the Turner Diaries, sometimes cited as the motivating force for the bombing of the Oklahoma federal building, which ends in what the author regards as a political utopia. After a world war that exterminates all non-whites, a military regime takes over the United States and centrally plans the economy under permanent martial law. All food and water are distributed on military trucks, all production takes place on a planned basis, and the merchant class is required to obey or be shot.

The author describes this race-based national socialism as if it is a system with an inherent appeal to the reader, and perhaps there are people economically ignorant enough and full of enough loathing for humanity and freedom to regard it as attractive. I do know that in our own times there are people waiting in the wings who long for power and who are drawn to the ideal of a militarized society and a centrally managed economy. Some call themselves conservatives, and they are as much a threat to civilization as those who call themselves liberals.

But let me end with several notes of optimism. The first is implied in all that I said above. The government cannot actually do what it promises, and there is a way in which we can only be thankful for that. It cannot succeed in managing a central plan. Its plans will always fail. The government tries to use its failures as an excuse for more power, but with every failure comes a substantial degree of public humiliation for the public sector, and that humiliation can provide a basis for the undoing of government authority.

Some people say that a loss of government authority will mean the breakdown of civilization. Actually it will create the preconditions for the reestablishment of civilization, and in a state of freedom that can happen very quickly. The aftermath of Katrina illustrated in a million individual acts of charity and enterprise that people can manage their affairs, even amidst the chaos.

The calamity following Katrina was an egregious display, one that gave the federal government a black eye. The Democrats will continue to use this to harm the Republicans, which is fine by me, but it is not just Mr. Bush that is suffering, but the whole apparatus of central planning by decree from above. A government that cannot manage a crisis should not be trusted to manage anything at all. Thanks to Katrina and its dreadful aftermath, I think it's fair to say that the age of not trusting government has returned with a vengeance.

It took decades for the rot to give way underneath the Soviet apparatus of central planning. But eventually the implausibility of the entire project was no longer possible to deny. It gave way under an intellectual reaction against the whole of socialism. We are seeing something like that take place today, as government fails in Iraq and New Orleans and in every place around the country and the world where it causes problems and creates no solutions.

The age of confident central planning is behind us. Right now, the state is just trying to keep its head above water. If freedom is to have a future, the time will come when it will sink to an ignoble end, and we will wonder how we ever believed in this myth called government crisis management.

The advocates of freedom and the partisans of private enterprise will be there with the intellectual equivalent of flotillas, barges, buses, helicopters, and the whole apparatus necessary to rescue liberty from every attempt to kill it. And when our City on a Hill comes to be, it will be privately built to withstand any flood.

Llewellyn H. Rockwell, Jr., is president of the Mises Institute and editor of Lewrockwell.com. Rockwell@mises.org. This speech was given at the Supporters Summit, October 7, 2005, Auburn, Alabama. Comment on this piece on the blog.


One does not make predictions about the market - the market can go up or down at any time. It is only the probability (of each move) that varies
#board-3736

Rogue

Martial Law - Coming
To A Neighborhood
Near You? - Pt. 1
By Craig Roberts
NewsWithViews.com
10-18-5

Arthur Wellesley, the Duke of Wellington, famous for defeating Napoleon's Grande Armee at Waterloo, once said "I've spent my entire life trying to discover what the fellow on the other side of the hill was up to."

And so it is with intelligence gathering and analysis. As a former intel analyst, I've spent many years on various missions beginning in the mid-1980s and going beyond Desert Storm taking pieces of the "global threat puzzle" and trying to fit the pieces together to discover what the "other fellow" was up to, and what he would do next.

In the past two decades I have witnessed a series of events that are extremely disturbing. Events, that if put together as pieces of a puzzle, seem to form a picture that is most disturbing-and even terrifying. Taken alone, they mean little. But taken in whole, the mosaic forms more than just a pattern-one that is planned, mission-oriented, and taking place almost as if there were a list of events that must occur to accomplish the final mission.

The "final mission" is two-fold: destruction of nation-states, and establishment of a New Age global-socialist New World Order.

For those who think this is "conspiracy theory," or simply fear-factor-fiction, let me ask this: Do you think the US Constitution is intact, and is this the same country as it was fifty years ago? If not, why not? And what and who caused the change?

Let's all play intelligence analyst. We'll do this by examining the reports, putting the pieces on the wall and seeing what kind of picture it forms. Here are the clues:

At the end of World War I, a new idea was born that national governments could not be trusted to govern their indigenous populations in an effective manner, and help maintain international peace. Instead, due to the carnage of World War I-the Great War-national governments should become subservient to a global entity. This entity was formed and became the League of Nations. However, the world and most countries were not ready for such a "super-government" and refused to get on board. The globalists were furious, but did not give up.

In 1945, when World War II ended, a private "club" called the Council on Foreign Relations, which is not part of any government agency, but instead is the American faction of the Royal Society of International Affairs in London, was instrumental in creating a new globalist organization called the United Nations. This body's mission was to slowly reduce the authority of national governments and replace them with a world council of representatives, none of which were elected, and none of which were patriotic nationalists. Their mission was to establish a world government in which other nations were simply nation states in their "New World Order."

In 1950 two wars broke out in Asia: the Korean war and the French Indochina war. During these "conflicts" the French, who attempted to retain their pre-war colony, were defeated by Ho Chi Minh's Vietminh guerrillas (by using US supplied equipment and weapons provided from the surplus stock on Okinawa left over from World War II). Meanwhile the United Nations forces intervened in an invasion of South Korea by North Korea-who was quickly reinforced by the Communist Chinese army. The French eventually lost their colony after the debacle at Dien Bien Phu in 1954. The South Koreans retained their country, but the war never ended. A truce was called in 1953, and Korea has become the longest war in American history.

The bottom line here is that the world-and the American people-were mentally conditioned that a single country (like France) could no longer win a war by itself, and the combined efforts of the UN forces in Korea barely was able to stand up against Communist aggression. (In point of fact, all UN forces' plans had to be cleared by a general at UN headquarters, who just happened to be a Russian, and all plans were relayed to the Chinese well in advance of an operation.)

But the American people-who had just won a two-ocean war against two powerful enemies-had to be convinced that we could not longer fight a war alone or stand alone. The stage was set for Vietnam.

The US forces, along with the South Vietnamese Army, and Australian allies, were forced to fight a war that they were not allowed to win. Lyndon B. Johnson and his "whiz kids" in the White House micromanaged the war to the point that generals in the field could not pursue an operation to its maximum effect, and even had to give up terrain that we took with American blood, plus stay within the confines of South Vietnam and not attack or pursue the enemy into his safe havens in Cambodia, Laos and North Vietnam. The end result was that the North signed the Paris Peace Accords simply to give President Richard Nixon (and Henry Kissinger) a means of extracting our forces from South Vietnam with "peace with honor." Two years later the North invaded the South and the rest is history. The lesson to the American people, via our media, is that we should not use our military forces abroad in any affair that might turn into a "quagmire" or "another Vietnam." The media, controlled by members of the Council on Foreign Relations and other global socialists (including their Asian and European counterparts), successfully conditioned the American psyche that we "do not want any more Vietnam style entanglements."

After Vietnam our armed forces underwent what was called a "Reduction in Force" or RIF. At the same time the "draft" was put on the back burner and a "volunteer army" was created. All of this at the height of the Cold War when Russia and China were building their forces. By the early 1980s the threat envisioned by the Pentagon was an attack on Western Europe by the Soviet Union through Germany. Known as the Fulda Gap scenario, where it was envisioned the Russians would push through with high speed armor assaults, it was theorized-and prepared for-that we would be forced to fight a fighting withdrawal through Europe while politicians decided if we would employ nuclear weapons. No one ever came up with a public answer to this threat, and in the end it never happened-yet.

There is an old military axiom that says that the military gains its best support when there is a barbarian at the gate. In other words, most people don't worry about supporting or funding the military unless they fear a threat that would affect them. By the mid 1980s a new threat was growing ever more frightening: Terrorism.

It actually gained U.S. attention during the Munich Olympics when the Black September terrorist gang of Palestinians kidnapped and killed members of the Israeli Olympic team. This was followed by many other "Arab Terrorist" attacks that often included American victims: skyjackings, an attack on a cruise ship, bombings, and kidnappings and assassinations. This new threat has been growing for over four decades and has become the current "barbarian at the gate." Don't get me wrong: it's real, it's there, and it's coming. But we have to ask how much of it was originally created or financed by our own intelligence services. We know that Osama bin Laden had CIA support in Afghanistan when the Russians occupied the country, and that Abu Nidal was a US intelligence asset. Who knows how many others?

Since the alleged "fall of the Soviet Union", the US and other western powers have undergone a political reduction in our armed forces. Beginning during the George H.W. Bush administration-up until Desert Storm when we were caught in a very vulnerable position militarily-our military has systematically been reduced in force structure, equipment destroyed or stored without proper maintenance, and numbers of personnel and equipment reduced to the point of being basically combat ineffective if committed to a major war.

In the 1990s, during the Clinton regime, when bases were being closed and Army divisions being cut, and tanks, planes and ships were being put in mothballs, a Pentagon general gave a speech to the CASQ officers command and staff class at Fort Leavenworth, Kansas. He said, paraphrasing, "with the build down of our armed forces, should we become committed to a two-ocean war, or be deployed to more than two foreign campaigns, and should a national emergency occur inside the continental United States, we will be forced to call upon foreign assets to patrol our streets."

The thought of this at the time was terrifying. But during the Los Angeles riots Henry Kissinger stated that even though at that time US citizens would not stand for foreign troops on US soil, that some day we would welcome them with open arms.



Martial Law - Coming
To A Neighborhood
Near You? - Pt. 2
By Craig Roberts
NewsWithViews.com
10-18-5

During the Clinton administration, the military was basically reduced-I would use the word "destroyed"-by not only reduction in forces and personnel and equipment and bases, but by chasing off the best officers and NCOs this country had in uniform at the time. I know of many of my cohorts who loved their country and military careers, but became so disenchanted with the Clintons' anti-military doctrines and abhorrence of the military that they either hung up their boots and became civilians, or took early retirement. It was during this time that political correctness was shoved down the throats of fighting units: females were put into harm's way in front line or near units; homosexuals were "accepted" by the "don't ask, don't tell" doctrine; and combined male/female combat support units and ships and aircraft came into being. The Clintons'mission was to destroy the military, or at least reduce it to a shadow of what was required to defend this country. (It was also a mission of the Clinton administration to reduce the firepower of the average American citizen with new, draconian "gun control" laws-after all, any invading force in the future would not want to face a few million armed American "guerrillas").

It was during this time that Islamic terrorist organizations grew and flourished, and Clinton did little, if anything, about it. It was almost as if he-or his globalist puppet masters-wanted such a movement to grow and become even stronger.

Then it was George W. Bush's turn.

Harry Truman once said that "there's not a nickel's worth of difference between Republicans and Democrats" at the Washington level. I would like to put it another way: If the Democrats in Washington voted to burn the city down, the Republicans would vote to phase it in over a two week period.

We are now seeing how true that is. Considering that the main function of our government is to provide for the common defense, then we have a capital full of traitors. At this very moment we are undergoing a massive invasion along our southwestern border on a daily basis. There are similar incursions on the northern border, and along our coasts and seaports, but the most obvious is the borders of Texas, New Mexico, Arizona and California. Reports of Islamic terrorists-al Qaeda-are coming in all the time, not to mention the hundreds of thousands of illegal Mexicans, Salvadorans, South Americans, and Chinese. Yes, I said Chinese. More on this in a minute.

While this invasion is occurring, no matter how much we scream and shout and complain, Washington-and especially the White House-remains strangely silent. Americans have even had to form border watch organizations like the Minutemen to help the beleaguered Border Patrol slow down the massive flow of illegals and terrorists.

To close the border could be done. It might take the American military to do it-which is actually supposed to be its primary job (secure the borders and provide for the national defense), but what is left of our military has been deployed overseas to the point that there's no one left at home to watch the chickens. Our "reduced" armed forces are now tied up in Afghanistan, Iraq, South Korea, Kosovo, and places in South America and the Philippines. The active units have made so many deployments that they are losing good personnel because of the wear-down factor. We are now relying on not only the Reserves but also the National Guard to fight overseas wars!

When Hurricane Katrina hit New Orleans, the media showed the country that the local governing officials for the mayor to the governor and all their horses and men could not handle the problems at hand. It was up to not only FEMA, and all of our charitable and emergency management organizations and what national guardsmen that could be spared, but the only combat division left in the U.S.-the 82nd Airborne-which had to be deployed to secure one city. Just ONE city. If the emergency was more widespread, who were we going to call to help us? What if the 82nd had already been "punched out" for another tour in Iraq?

Now, let's add a few more factors:

China controls the Panama Canal, and has established the world's largest ocean shipping fleet (COSCO) and ocean transshipment center (Hutchinson-Whampoa at Freeport, Bahamas) just a few miles from Florida. They have made huge inroads into our technological structure. During the Clinton Regime they obtained our nuclear secrets, missile guidance systems, and even have had special operations forces trained by our Special Forces. They are now building a huge invasion fleet-allegedly for a future invasion of Taiwan-and are bolstering the South Koreans with military equipment and supplies. There are Chinese weapons and "advisors" in Mexico, and our border residents, including law enforcement, have reported "Asian males in uniform on, and crossing, the border" in California and Arizona. Also, Sealift containers full of Chinese arms have been intercepted in Long Beach, California and other places. The excuse we were given in the media was that they were smuggled goods earmarked for street gangs.

Meanwhile, over the past twenty years we have trained Russians and other former "Warsaw Pact" troops at Fort Polk, Louisiana in a project called Operation Cooperative Nugget. Most of the training concerned searching buildings in a combat town that looks just like downtown America. Most of this training was "house-to-house search and seizure" for arms and/or "insurgents." These units then took this training home to construct more combat towns (MOUT sites--for Military Operations in Urban Terrain), then train their own forces at home.

Other training concerned how to operate our equipment and weapons. As an intel type, this tells me that if I were to want to send my troops someplace, it would be easy to load them quickly if they didn't have to load equipment. If we can use pre-positioned trucks, tanks and aircraft, then we only need to worry about getting the troops to the zone of action. This is why we have a Diego Garcia in the Indian Ocean with pre-positioned equipment and supplies. Is this why China has Freeport?

So, here is what we have so far:

* We have been conditioned to accept we can't win a war by ourselves anymore

* Our military has been reduced in force and strength

* Many of our installations and bases have been closed

* Our forces have been stretched thin and deployed overseas

* Internally, there are morale and morals issues that have not existed in the past

* We have used up our Reserves and National Guard and continue to do so

* Our borders remain open, almost as if by design

* We have no control over the illegal immigrants, including terrorists, who come into this country

* The firepower of the American people has been reduced to "sporting arms" in most areas

* National Emergencies are occurring more frequently, and the federal Emergency Management program is not effective

We now have a Homeland Defense organization that has ever-reaching powers over the citizenry and a blank check to, if not shackled by law, become our version of the Geheime Staatspolizei-the Gestapo or Secret State Police.

And now we have another barbarian at our gate: Avian Influenza-Bird Flu.

The media, and the White House, has already broached the subject of a possible "pandemic" that is as large, if not larger, than the 1918 outbreak that killed millions.

In the aftermath of Hurricane Katrina, and in the preparation for Hurricane Rita, we were introduced to the first use of martial law in this country since the 1932 when US Army troops broke up the Veterans Bonus March camp in Washington who were protesting the federal government's reneging on veterans bonus payments to the WWI vets.

There are times when using military assets are necessary in a disaster or other emergency: carrying and distributing food, fuel and water, traffic control, emergency transportation, evacuations, searches and rescues, and so on. But they are not to be used as a control agent to force some despot's will upon the people. We know this, and our military knows this. I think that it is because our young soldiers, sailors, Marines and airmen can not be trusted by the global-socialists of the New World Order gang to impose their will on us, that they will be more than happy to use "foreign assets" to police our streets-and us.

Plans are now made for quarantining cities and towns, blocking major highways, shutting down airports, and relocating segments of the population-by force if necessary. Also, plans are in place to forcibly inoculate the population. This is a frightening thought in itself when we consider the track record of the federal government when it comes to such wonderful programs such as Agent Orange, Gulf War Syndrome, experiments on GIs and sailors with gasses, poisons, and biological weapons, plus marching soldiers through nuclear test sites after bombs were exploded to see what would happen. This is also a government that now has a law that says it can experiment on the civilian population with chemicals and biological weapons without our knowledge or consent.

To sum this all up: our military is reduced in strength and are now overseas; our reserves are used up; our borders are open; terrorists are inside our country and may even have access to nuclear weapons; our federal government is totally infiltrated with global-socialists; and now we are facing a global pandemic that might require "foreign assets" and martial law!

I'm sure China and Russia are ready to come to our aid.

Some Americans will, as Kissinger predicted, welcome them with open arms.

What the globalists fear now is that too many will "welcome" them with a demonstration of our Second Amendment-if the Bird Flu doesn't get us first.



Rogue

H5N1 Coming -
So, What Do We Do?
By Oscar P. Lagman, Jr.
10-18-5

Local newspapers, international news magazines, and the internet have been replete with articles about the probable outbreak of an avian flu pandemic. All paint a grim picture of between 7.4 million and 150 million deaths within a period of five and a half months. It is not a blown-up figure they project, as they cite the pandemic of 1918 which claimed 100 million lives in that span of time.

Some scientists say it is not a matter of if, but when the disease will sweep all over the world. For this reason, the World Health Organization has sent out warnings to all nations and advised them to develop preparedness plans. Travel ban, quarantine, closure of public places, cancellation of mass gatherings, and declaration of state of emergency are among the measures the Philippine government is ready to adopt when migratory birds bring the virus to our land.

That is preparedness at the national level. But are the gated communities where most of the readers of this newspaper reside prepared to cope with the grim situation? I asked a friend, a public health practitioner, who is now posted at the Kobe office of WHO, if the organization has pro-forma plans which communities can adopt to deal with the daunting situation. It has none.

Public health officials have created the chilling scenario of hospitals and other health facilities being overwhelmed by the number of patients seeking treatment and other health services; health professionals being reduced in number because they, after being exposed to the virus, are themselves down with the sickness; anti-viral agents and antibiotics being exhausted; basic services like power, water, transportation, and communication severely strained by absenteeism; drugstores, grocery stores, restaurants, and public markets closed and padlocked to prevent looting by a desperate population.

Most people would have to fend for themselves. If a member of the family got infected, he will have to be taken care of and treated by the others at home. Should families now stock up on anti-viral agents and medicines, and foodstuff like rice, canned goods, drinking water, and even face masks and rubber gloves? Who would determine when and what dosage of medicine should be given the sick person, or who would administer intravenous antibiotics since health practitioners may be fully occupied at health centers or are themselves incapacitated by the flu?

The household help, who ordinarily take the brunt of the burden of helping in the care of the sick at home, like fetching drinking water, washing stained linen, and cleaning the dirtied floor, may not be of much help as they might also be down with the flu. The stay-out family driver may not report for work as he may also be afflicted or has to take care of a sick member of his own family. Given their normal living conditions of congested community and poor sanitary conditions, they would be more vulnerable in the event of an epidemic. If a maid gets afflicted, she would have to be isolated so as not to infect others who, in most instances, sleep in the same cramped quarters. Where will she be placed? If she had infected other household help, who would take care of them? You, their amos?

If the subdivision draws water by pumping it out of its own deep wells, what happens when electric power is reduced or completely cut off due to the absence of operators at power stations? The outsourced security force might also be reduced markedly in size by the epidemic. Like the family driver, security guards would be more vulnerable to the flu due to their living conditions. Garbage collection will completely cease as collectors, in all probability, would be incapacitated.

If we go by the mortality rates, it is inevitable that there would be deaths among the afflicted cared for at home. With traditional funeral services not available due to the unavailability of a funeral crew, what does the family do?

As public health organizations or institutions have no suggestions as to how communities can deal with the frightening situation, it is time for community leaders to come up with their own preparedness plan. They should exchange ideas with leaders of other communities.

Some ideas are the conversion of the subdivision clubhouse into the nerve center of contingency activities, formation of security details with the young male residents of the village under the supervision of former military officers (in our subdivision, there must be 10 generals, among them heroes of EDSA 1), acquisition of an incinerator for burning garbage, and conversion of a school in the subdivision into a temporary infirmary to be supervised by physicians and other health professionals residing in the village, with able domestic helpers taking turns going on duty.

Other contingency measures would be the pooling of generators of homeowners to power water pumps, the formation of a provision committee composed of the ladies of the community who will procure the basic needs, supervise their storage, and manage the distribution or even create a temporary commissary for more efficient use of cooking fuel, their daughters helping out, and the formation of a brigade of young boys who will gather firewood.

These may all seem laughable at this point. A year before Hurricane Katrina hit New Orleans, a scenario of deluge, destruction, and death was drawn and presented to city officials and community leaders. In typical American braggadocio, they shrugged it off and said, "We will know what to do if and when it does happen." No hurricane in the long history of the city has ever wreaked damage that was anywhere near the scenario. When Katrina unleashed its fury on the city, creating a situation that was strikingly similar to the picture painted a year before, the people were caught not knowing what to do. Many policemen, overwhelmed by the disorder and destruction, turned in their badges and went home. Some even joined in the looting out of desperation.

When the avian flu sweeps over the land, its impact would be much more tremendous than that of the tsunami that hit parts of Indonesia, Thailand, and Sri Lanka, than that of Katrina that blew away the age-old city of New Orleans, than that of the earthquake that destroyed parts of Pakistan. Unlike the victims of the tsunami, hurricane, and the earthquake, we won't get help from any country as the desolation will be global.

We have to prepare and now!

Copyright 2005 BusinessWorld Publishing Corporation

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Rogue

Latest from Coxe...

Nesbitt Burns Institutional Client Conference Call for October 21, 2005

Don Coxe
Chicago

The Pain of October



Charts: The TSX Energy Index

http://stockcharts.com/def/servlet/SC.web?c=$spten,uu[w,a]daclyyay[pc50!c100][vc60][iUb14!La12,26,9]....


Thank you for tuning in to the call, which comes to you from Chicago. The chart that we faxed out was the TSX Toronto Energy Index and the tag line was “The Pain of October”. Well, there’s so many aspects to this story that’s still unfolding but this has been a few days of high drama for those who are long the oil stocks and well, stocks generally actually except for Google, which is floating in a world of its own, a world that it’s helping to reshape at the expense of a lot of established firms.

Any week in which you have a block of twenty four and a half million shares of ExxonMobil going at ninety-five cents below the previous trade, is quite remarkable. We did a gigantic block of Chevron yesterday, so what we’ve got is some big holders of the big energy stocks are capitulating and that of course means that the smaller fry, of the kind that we tend to talk about most are getting belted around pretty badly.

Interestingly enough, although the metals prices have held up much better than the price of oil and indeed of natural gas this week, that the metal stocks have also been banged around. The sheer extent of these sell-offs is pretty impressive, even for those of us who thought that, you know, we were going to get some kind of correction some time in September, October would tend to be it.

I mean, what seems to have happened is that after September 30th, that a group of major investors decided that was it, the commodity story is over. Just about all these stocks had their best price for October on the first trading day of the month. If you look at…I mean, stocks as diverse as BHP Billiton, Phelps Dodge, Inco, all the oil stocks, what you’ve got is a pattern that the selling began as soon as October began and it’s just intensified.

There’s been some bounces here and there, but we’re talking about big moves and it’s not confined to these North American stocks, BP just gapped down at the beginning of October, it never traded anywhere near as high as it closed September out and it had three days of gap down trades going all the way from 72 ½ in three days trading down to 67.

So, this was a worldwide phenomenon of investors deciding that the game was up. What we saw was that the correlation with crude oil was pretty direct. We’ve broken $60 on crude oil amidst evidence of rising inventories. You’ve seen all of the talk out there and that OPEC’s going to expand production and so what’s different this time? We’ve had these sell-offs before, nothing on this kind of scale.

Well the first point we should note, if you compare the price of crude oil to the oil index in this country, which is called the XOI, that’s the one that’s the American Stock Exchange index, what you see is that the index, that is the stocks, have done considerably better than oil over the past year.

And so, what we’ve had then is a situation where there were more believers coming into it. And in retrospect, the peak for the stocks came with the front-page story in the Wall Street Journal about the new rock star of oil analysts, Goldman Sachs’s oil analyst. The one who had come out earlier this year talking of $105 oil. And the story, which was a relatively enthusiastic story for the ordinarily cautious journal, was that this individual was now absolutely having to keep deep cover because investors were just swarming around him as the new rock star of the oil business.

So, that seems to have been it and one is always cautious about finding new stars on the horizon. It’s so often that it means that it was a splotch on the telescope. Because this is a business that takes a while to learn about. It takes some experience, most of which in recent years has been bad.

And so, I guess what we had underestimated was the sheer scale of enthusiasm that these kinds of stories, $100 oil and $80 oil, what they had drawn in. With that huge move, if you look at that S&P TSX chart that we sent out, which I thought would be of particular interest to the Americans and Europeans on the call, you see what a gigantic move came in the third quarter.

So, that was the quarter where we had the henny-pennies talking about a new energy crisis because of Katrina and all sorts of doom and gloom talk that, you know, we were going to have scarcity forever of oil and so forth. What happened was the media of course, then focused on the people who had the most extreme forecasts. Then, when those forecasts didn’t work out, what we have there is what we see what fair weather friends indeed these new investors were that crowded into these stocks in the third quarter, thinking that oil was going to $80 or $100.

Now, in retrospect, I wish we had been even stronger in our caution, back in August, when we said we thought this was a near-term peak and what we did not do was recommend that anybody sell any of these stocks. We said we’d still be overweight the oils because we still see the value there compared to the rest of the market. And that wasn’t trying to be an “on the other hand” type of person, it was that we have been, in our recommended asset mix, at near our absolute low level for the last six months. Which means we were cautious on the US stock market.

The question was, though, about what you should own. And we were of the view then and are of the view now that the greatest risk in these stocks is not being in them.

Having said that, when you look at the screen and it’s as red as a vampire’s fantasy, what you realize is just how painful it can be on a near-term basis when people who didn’t really know what it was they were buying, they were buying what moved, that they got badly hurt and just bailed out.

So, in our current Basic Points we refer to President Reagan’s summing up of what amounts to Democratic Party economics as “If it moves, tax it. If it keeps moving regulate it. If it stops moving, subsidize it.” Well, what I realize is there’s an investor equivalent of that, which is, “If it moves, buy it.” And there’s some value in doing that in pure momentum investing and it certainly worked during the third quarter. And if the momentum investors all cleverly reached the conclusion at the same time, which was just after September 30th that the momentum was gone, then more power to them for having timed a short-term trade so well.

For the rest of us, and I reiterate that my strategy has been and will continue to be that I give five-year forecasts not one year and certainly not one month forecasts, the reason for owning these stocks have been set out at such length in Basic Points and on these calls that I won’t go back to them.

But at a time when these forecasts don’t seem to be working out, it’s very important to go back to the principals of why you’re there and then what you should do in the midst of such carnage.

So, what has also happened, is if you look at the chart for Refco stock, and it’s a very short term chart indeed because the company’s only been publicly traded for a couple of months, what you see was the breakdown in commodity prices starting along with Refco coming apart. And so, to me there’s probably still some Refco effect in what’s going on here. It’s because Refco…complicated company. It’s got the three parts of the business, frankly, I only knew there was one part of the business, which was the commodity futures trading and commodity trading part of the business, where they were the biggest players and a well-established name.

But it turns out that they had two other parts of the business, one of which was a regulated securities dealer where they would be trading stocks and I would imagine the kind of stocks they traded would be commodity-related. And then the third part of the business, which was unregulated, where they were trading various kinds of derivative and specialty products.

There’s more and more stories coming out about these other two parts of the business other than the commodity futures trading business. Now, I never really worried about the futures trading part of the business, because I’ve got a CFTC license and I’m pretty much aware and Harris Bank is the biggest factor in financing what’s called the base, so that business is so closely regulated that it was hard for me to see that it could come apart. But when you look at these other parts of the business and you read that Jimmy Rogers funds are tied up in these other parts of the business and he can’t get money out for his investors, you start to realize then that the Refco story has broader implications.

But, what we know is that they’re just about all commodity-related. I don’t think people would get involved with Refco for derivatives products that weren’t tied to commodities. I mean, if you were going to do pure financial futures, you’d be doing it with people like Bear Stearns and Goldman Sachs.

So, it may be that we won’t know for a while yet, where commodities bottom out in terms of real value. But what it does indicate is investment decisions made at a time when you have a front page story which is Refco, and since the price of gasoline remains on the front page, that you can take your eye off the ball which is why you own these companies.

So I’ll just reiterate. The companies, no matter which way you price oil, are coining money like they’ve never made before. And you could argue that for some of the companies, this pullback in the price is really good on a mark-to-market basis because they had sold forward so much. They didn’t sell forward a lot at $65 oil, they sold forward a lot at 35, 40, 45, 50, $55 oil. So therefore a pullback in the price of oil and natural gas is good news on a financial basis for the companies.

But, coming back to it, as to our method of valuation of stocks, was and is that earnings are the second feature that you use. The first feature that you use is the value of reserves of oil and gas, unhedged, in the ground in politically secure parts of the world. And that is our view that you should - to the extent that it’s appropriate for your particular investment goals - you should ally yourself with the energy industry itself, which is, you’re investing in reserves.

And then in the case of the integrated companies of course, the refineries which are worth a lot more than people thought they would be. We’re talking about the E&P companies or we’re talking about the mining companies, it’s the value of reserves, economic reserves and preferable producing reserves backed by long-life reserves.

Well, if you look at those criteria, what you see is that everything that’s happened in the last twelve months tends to mean that those reserves are worth more. And although they’re worth less if you have been spending your time reading forecasts of $100 oil that’s coming up soon. In which case, if you were factoring that into your valuation for what’s in the ground, then your attitude is “I want to get out of these stocks fast”.

In which case, having bought Suncor, which of the stocks traded on the New York Stock Exchange, has the longest life reserves. If you had bought Suncor back at it’s peak, based on reserves then what’s happened to you since then is you would say “Well, the reserves aren’t worth as much anyway. I was paying $61 for it and that was when oil was trading at $70, which it did for about three hours and now oil, having broken 60, Suncor has broken 50, so they’re closely allied.”

But nobody should ever have been buying Suncor based on a squeeze tied in to a hurricane. I mean, when you’re talking anywhere near sixty years of reserves, what you have to have is some concept of the longer-term relationship between supply and demand for oil and how this company’s assets are worth more than the typical E&P company which has a reserve life index of twelve to fourteen years.

So, those kinds of analysis, which those of you faithful on the calls have been hearing for three years, naturally get blown away when you have people who bought in to these oil stocks because they thought oil was headed to 80 or 100 and as soon as it starts to fall, they panic.

Well, I do not believe that oil at $100 is likely to occur except on a spike basis, because it’s just too costly for the global economy and there’s enough other problems for the global economy. So, I think the more rational approach is to assume something like $50 oil and that it will rise in price over the long term well ahead of inflation.

Which means if you’ve got a long-term inflation assumption of, let’s say 3 ½%, then what you’re assuming for oil is it’s probably going to do at least 2% better than inflation over the longer term and that’s before you get into the question of Hubbert’s Peak, the question of alternative fuels and all those other things. Because, although there are all sorts of things that get in the way of this, if you go back to 1955 and follow it through, then oil does trade ahead of inflation. But it has long lags in that. I mean, after all, it fell in price from 1979 through 2001. Rallies in there, but it did fall.

I think what we’re talking about then is that the reason you want to own these, and particularly the oil sands stocks, is because they represent a long-term annuity, one that’s going to outlive you. And that kind of asset and investment is so rare that it should have a premium attached to it.

Now, frankly, as we’ve told you, we don’t think you’re going to be able to own it for as long as you live, because we think that these assets are so unique that Big Oil is going to have to buy them out to deal with its reserve life index problems and that once this question of the SEC’s ruling of how you value the reserves is settled, that Big Oil is going to want to buy these companies. And if that happens, Big Oil can afford to do it because Big Oil is so rich and Big Oil was saved from selling too much forward by the introduction of Rule 133 of the FASB, which made hedging contracts classified as derivatives which had to be marked to market.

So this is a case in which two changes in accounting rules have enormous impact on the valuation of these companies. The first one, which is Rule 133, which actively discouraged energy companies from doing vast forward sales – and therefore it means they’re in better financial shape now that oil and gas prices have done better than Wall Street said they would.

And the second rule, which is, how you use what’s in the ground, into your reserve life index. And so, ordinarily it’s pretty easy having oil and gas stocks. It’s what their production is going to be and what you think is the price for the commodities. Then with some allowance for the reserve life index, although that tends to be for the few that want to read the reports, fairly far down in the report.

Well here, it’s odd, that despite all the drama and the Page One stories about oil and gas, then in a funny kind of way those two rather obscure accounting principals, actually are more important than if oil is trading at 60 or 50, in terms of what these companies are worth.

So, for those of us who like to take a longer-term view and like to look at Page 16 to get a sense of something that is not subject to current fads, fancies and follies, then what we’ve got here is the beginning of a new buying opportunity, I think, for investors. But the old Wall Street admonition “Do not try to catch a falling knife” is always a useful one to have in mind. Because we don’t know how many holders there are out there, who were buying because they believed that there was a new rock star who was right about $100 oil. We’ll never know that.

And so, we also don’t know how many people have reached a conclusion that we’ve already got enough impact from $60 oil to produce a global recession which will mean that all commodity prices will fall. And that is in contrast to what we’ve been talking about up ‘til now, is for somebody who’s got a one year view of the markets is a very, actually, respectable viewpoint, which is that the risk out there isn’t inflation. The risk out there is deflation. And the risk will come when, what will drive us to the precipice will in fact have been, the run up in commodity prices. That plus Federal Reserve tightening and tightening by other central banks. There’s even talk now that the European central bank will do some tightening.

So, the viewpoint that we are coming to the end of the economic recovery, in the US, which will mean that the whole global economy next year will be in a slowdown mode, that is a justification for staying away from these stocks. So you may say “Well, then you’re making an economic forecast, since you’re so bullish on them, that says that there will be no recession.” Well, not my job to forecast recessions. That’s done by the economics people. We’ve been in good hands.

But remember that what I do is, I talk about how much equity exposure you should have and then what I see as true value within the equity group, without trying to predict every quarter that the ones I emphasize will be the ones that outperform the market. In other words, I feel far more comfortable talking about assets that I believe are going to grow in value over the next 2, 3, 5, 10, 15, 20 years, than I do about predicting what’s going to be the hot group for the next few weeks.

And so I leave that up to people who are good at that sort of thing. You know, you can’t be all things to all people. And there are people who are very good at that. I do not scorn them. I admire their ability to do that. I used to be a strategist for Gordon Capital, up in Toronto, during the ‘80’s when they were the high-flying firm and I was surrounded by people who were very good at that.

So, I don’t disdain those skills, just saying that what we try do in these calls and in Basic Points is talk through, to people who like the concept of value in investing, about different ways of looking at value. Not that we’re denying Graham and Dodd, but we’re saying that by using the Triple Waterfall thesis we can identify what groups are going to perform better over the next 10 or 15 or 20 years and then by plugging in these long-term historical features, the rise of China and India, we know that the commodity group will, over any reasonable length of time, outperform the rest of the advanced industrial world indices because the new wealth of China and India comes by creating formidable competition for the groups that make up most of the weight of the industrial world indices.

So, this isn’t rocket science. This is just saying simply that you want to be on the right side of history, when you’re pretty confident about the way that history’s going to perform.

So, the pain of October? Yup, we did caution you in August about this but, no, we weren’t predicting something as spectacular as this. And in retrospect, what I should have noticed was what happened to BP in those first three trading days of October. Because BP is next only to ExxonMobil as the global institutional investor’s favorite company. And the fact that BP gapped down three days is an indication that there was some major sentiment change out there. And overlay that with Refco and what we’ve got is a bit of a bloodbath.

But, the earnings season will be coming up. And although this time, the analysts will be saying “Well it’s all over, because they earned all this money when oil was $65, gonna be pretty hard to make that statement because it’s still 59 and nobody can be so sure that just because they’ve taken $100 off the table as a forecast that that automatically means that Wall Street’s forecasts up until six months ago, which was that oil prices were going to plunge, that those have suddenly been validated. There’s enough unknowable in this that taking a longer-term view is much safer than taking a shorter-term view.

So, that’s it. I think that October isn’t over yet and we haven’t yet finished the bailout of Refco, which means there’s also some surprises, both good and bad to come. Are there any questions?



A. Gray: Good morning, Don. Knowing that you take a long range view, rather than the short one, which is hopefully the right way to look at things, looking at the economy from the long-range standpoint, surely you accept the idea that if it’s a question of inflation or deflation the central banks will always go toward inflation. So, with that in mind, isn’t it more comfortable to feel that we’re not going to go into deflation and that we should be thinking in terms of longer-term inflation?

Don Coxe: Well Arthur, what we now see is that because of the emergence of China and India as price setters for each week a wider range of manufactured goods, and what we see is because of supply chain and free trade in most industrial goods and manufactured goods, that we have now a global wage arbitrage developing. What we see is that for most of the kinds of things that go into the CPI, where there is a global content in them, it’s going to be very difficult to get sustained price increases.

However, there’s lots of other components of the CPI which include property taxes and which include bus fares and include what the things you buy that are perishables in the stores…there’s all sorts of other things in the CPI, where prices are set locally or prices are set by governments which are going to be inflationary.

And to me, the CPI is no longer as homogenous an index as it was when it was the OECD that amongst them defined world trade. So, the combination of technology which allows an Indian radiologist to do X-ray interpretation in Chicago with the fact that something over half of everything that Wal-Mart sells in the United States is made in China and that for somebody going into a Wal-Mart store this morning, the order to replace that will be at a Chinese factory before midnight North American time. That is a different kind of process.

And when you look at the fact that the Fed has failed to grow its balance sheet, that is the monetary base, anywhere near like the monetary aggregates have grown, which suggests that the growth of the monetary aggregates in the United States is to a considerable degree the effect of repatriation of Eurodollars, which a lot are undoubtedly the Homeland Investment Act. It makes it harder to look at the relationships that Milton Friedman was able to use for M-2 and M-1 and then forecasting inflation. Because domestic monetary aggregates back then were huge relative to Eurodollars, and there was no particular reason to bring Eurodollars back into the US and repatriate them.

So we’ve got these special factors which make it harder, I think.

And the final factor we have is simply that we still have central bankers who can remember what the ‘70’s were like. Probably the real threat will come when they retire and are replaced by people who don’t have that kind of deep searing in their memory of not only runaway inflation, but political instability caused by what happened at those times.

I think we still have a generation who fear inflation more than deflation and are amazed when they see evidences of deflation. So, Arthur, long answer, but of course what you asked is a very fundamental question and deserves a long answer, which is, I still see that to the extent that there is pricing power, it’s in stuff that can’t be produced fast and you can’t expand production. Which is commodities. And that the deflationary forces are in stuff that you can produce fast and where you can expand the production and they count for more in the CPI than the former.

Thank you. Any other questions?


Santiago: Don, I’d like to get your comments on the market action you’ve seen in the metals, vis-à-vis what’s gone on in energy. And also, perhaps hear your comments, I don’t know if you’ve had the chance to look at the supply and demand of oil and gas given hurricane Katrina and how these things have worked out, importing of gasoline into the US, just get your feeling on that.

Don Coxe: Okay, first of all, I think that what we’ve got is that the current figures for US holdings of crude oil and of refined products which we had the sharp increase, that the people who are using that as a reason for selling oil futures and selling oil stocks are making the same kind of mistake as the people that bought oil stocks when oil was briefly trading at $70 on the theory that it was going to 100 because of a squeeze.

In each case you’ve got to allow for the effect of the Strategic Petroleum Reserve and the International Energy Agency allotments, which include refined products. What we see is the first test of a system, which only got put in place in the late 80’s and didn’t get in to full shape until the late 90’s when people didn’t think it was important.

So you’re absolutely right to ask that question because what we have is a situation where we’re now up to all but 5% of US refining capacity is active. So therefore we will have a surplus then of refined products because the orders to replace what they thought was a shortage were made weeks ago, right after Katrina.

So I don’t think we’re going to know the supply and demand and what the inventory numbers really are probably until late November. Because this is just too extraordinary a set of events. First Katrina itself, then the Strategic Petroleum Reserve of the United States and then the intervention of help from abroad.

And as to the metals, what we’ve had is big swings in the copper move. We’re all the way down to a buck seventy-three now, which means we’re down nine and a half cents from the high which is only a few days ago. So clearly there was some kind of short squeeze in copper. But a dollar seventy-three copper is so far above what was forecast that what you know is the company that’s a pure play like Phelps Dodge, that their earnings are going to be absolutely fabulous.

Now on the other hand, what we have in the other metals is erratic price behavior. And this is tied into all the problems of figuring out what is happening in China. And it’s almost laughable at times for me, I’m sort of Action Central for the China bad news story. Because of a number of you that are out there on the call and read Basic Points who know my interest in the subject, you are wonderful at sending me every bad news story that you encounter, for which I thank you.

Although I try to monitor a lot of sources, when it comes to the China bad news story, you have sources I don’t have. And some of them are really, quite frankly, surreal, in the horror they depict of what’s coming in China and that all the current statistics are lies and how this relates to metal prices is what you do know is the big swings that occur in China in their inventory accumulations and so you still have a frontier economy in a sense where at times there’s huge hoarding at other times there’s liquidation.

This is not an economy being run on Japanese just-in-time inventory principles by one gigantic, disembodied genius sitting in a tower in Beijing. The results is that there are huge swings in what happens to the Chinese import totals. We’ve even seen that in oil and yet what happens is somehow their economic growth comes out around the 9% level.

What we have said before and I’ll reiterate, that we believe that the big change in China is not just it’s ability to produce things cheaper and better than other countries in the world and grow it’s world share of GDP, it’s the new middle class who come out of that process and therefore that ultimately the biggest component of Chinese growth is internal. Which is exactly what happened in Japan. That’s exactly what happened in South Korea. That’s exactly what happened in Taiwan, only in the case of China, you’ve got three extra zeroes to put on.

So, what this means is the kind of swings we’ve seen in the metal prices are tied, in the case of speculation, there are still lots of speculators who trade these metal futures on the basis of US economic forecasts and just about everybody is scaling back those.

What we’re much more interested in is China and India and as long as the economic growth over there in each of these countries is above 6%, then we will see no near-term term challenges, let alone any long-term challenges to our thesis. That the best value lies with the mining companies that are trading at single-digit P/E ratios with decades of reserves in the ground in secure areas of the world.

As far as I’m concerned, they are still the most obvious value out there to someone whose time horizon is longer than a few weeks.


Ray D.: I wanted to follow up on your last comment that. So, if you have a group of people who are convinced that US growth is slowing dramatically, you still think that because of the internal growth that’s going on in China and in India that you could see GDP numbers north of that 5% number, because of the internal growth and the exports, guess, to other places?

Don Coxe: Yeah, and let me explain that I’ve been so influenced by a book which is tragically out of print, but for those of you out there who want to know, I’ve mentioned it before but I’ll reiterate, which is Jane Jacobs “Cities and the Wealth of Nations”. And because she is not an economist, this book has never received the kind of treatment in academic centers or indeed among the elites that it deserves.

It’s a brilliant analysis of how new economies become great economies and how they switch from being export-driven to being import-substitution-driven and then being driven by growth in their internal economy. And that explains why it is that for the last fifteen years Japan’s GDP component that comes from exports is a small fraction of what Canada’s is.

So, I believe that that process is already at work in China – and there’s lots of anecdotal and now documentary evidence on this – and therefore, I’m not one of those who believes that if the US economy goes to zero growth for a while that China’s GDP will collapse.

There will definitely be a contraction in it, but remember you’ve got to use the second derivative. If the amount of oil and copper that China is buying in the twelve month period now is X, and we know what strains that’s put on world supplies in them, then if China’s growth rate slows from 9% to 5% and what we know also is that the consumption of metals and oils in China is about three times the GDP number, because of the way they’re levered to these things, that means that instead of consumption growing at 27% let’s say, blended in the metals and oh, two thirds of that for oil, it will still grow at double digit rates.

And, doggone, we have the precedents with those other countries, that this is what happened. That as they developed their own middle class and this process is there, so therefore, it would be truly amazing to me if what you had was an economic collapse in China just because the US went into recession. What you have is the collapse in bankruptcy of a large number of manufacturing enterprises in China, because they have so much excess capacity. And that would contribute to global deflation. But that does not take away the China story and does not mean $35 oil. Or $1 copper.

Ray D.: Right. One other issue that I’ve been thinking about is…in the past when we’ve had price spikes in commodities or, you know, especially oil I’m thinking of, we’ve never really seen the long-dated futures market pick up as much as we have this time it seems like. And are there any metals or other commodities where you think that the ability to go out and hedge five years is going to cause you to see maybe some surprising growth in capacity on the upside either…natural gas is the one I’m worried about. It seems like everybody’s drilling who can scrape together some money, I mean, basically, do you think there’s any supply risk out there for any commodities out there right now?

Don Coxe: No, because first of all, what we don’t have in the metals, we have nowhere near the depth further out the strip that we have in oil and gas. Part of that is just because these industries got into such bad shape for so long that nobody was interested. So what you don’t have, there’s no situation where somebody could say “I could lock in one dollar and fifteen cent copper for 2012, the entire output and I’m going to open a 500 million pound copper mine and I’ve got it locked in”.

Whereas you can, as you know, open a field in the North Sea which won’t come onstream until 2011 and sell all of it forward, because that’s virtually what Petro-Canada did with the Buzzard Field, wherenthey sold half of the production forward at a munificent $26 a barrel.

So, I think that, no, the metals…while they’re again…I’m glad you asked me that because there is an OTC market in all of these and that’s precisely the area where people like Refco on the one hand and Marc Rich on the other, play. And that’s totally unregulated and I don’t have any statistics on it, but it’s not enough that you could go to a banker and say “I’ve got enough to open a new mine”. And if you did do something like that and Refco was your counterparty in that, at this point you’d be…a little worried.

Ray D.: Right. All right, thanks a lot, Don.

Don Coxe: Thanks for tuning in, we’ll talk to you next week.


--

Don Coxe Profile from the BMO websites:


Donald G. M. Coxe is Chairman and Chief Strategist of Harris Investment Management, and Chairman of Jones Heward Investments. Mr. Coxe has 27 years experience in institutional investing, including a decade as CEO of a Canadian investment counseling firm and six years on Wall Street as a 'sell-side' portfolio strategist advising institutional investors. In addition, Mr. Coxe has experience with pension fund planning, including liability analysis, and tactical asset allocation. His educational background includes an undergraduate degree from the University of Toronto and a law degree from Osgoode Hall Law School. Don joined Harris in September, 1993.

Don Coxe Weekly Conference Call – Current
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Basic Points – Archive

Basic Points is a monthly publication of opinions, estimates and projections prepared by Don Coxe of Harris Investment Management, Inc. (HIM) and BMO Harris Investment Management Inc.:


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Rogue

stockpeeker...Are those dolphins or tuna???


Rogue

STILL CHEAP AFTER ALL THESE YEARS
http://www.financialsense.com/Market/wrapup.htm

The time to buy a stock is when the short-term owners have finished their selling, and the time to sell a stock is often when short-term owners have finished their buying.
~ John Templeton

Energy prices and energy stocks rose rapidly in the wake of Katrina and Rita. Short-term speculators and the momentum crowd moved into the market, pushing up prices at an accelerating pace. This was the “hot money” crowd looking to make a fast buck. It was money that was looking for $75-$85 oil. After rising to $69.98 on September 1, oil prices retreated and have fallen steadily since that time. Disappointed, the speculative money has now been exiting the market looking for the next trade. Predictably, the result has been a fall in prices. Many on Wall Street claim energy stocks are overvalued. Some analysts believe the bull market in commodities is over, while others believe the energy market has made a top. I disagree. Yes, demand has softened; yes, prices have retreated, and yes, the economy is slowing down.

However, demand globally is still growing and the demand/supply balance remains decidedly fragile. There is very little slack left in the energy markets. There is very little room for weather, geopolitical uncertainties or any other form of supply shock. Demand has fallen, but that is normal this time of the year. We are in the “soft shoulder” months of the year when we transition from warm to colder temperatures. The summer driving has ended, the family vacations are over, the motor home is parked in the garage and the country is experiencing milder temperatures. The result is less demand for energy. This is temporary. Colder temperatures are directly in front of us and most weather experts from the National Weather Service to the Farmers Almanac are calling for colder than normal temperatures this winter.

While demand for energy is expected to gradually pick up with the arrival of cold weather, supply will be insufficient. Hurricane recovery is still underway, but it may take several months before a complete recovery. As of mid-month three refineries are still shut down from Hurricane Katrina and four from Rita, representing 1.9 million barrels per day of refinery capacity that still remains offline. According to Minerals Management Services, (MMS) 67% of Gulf of Mexico crude production and 60% of natural gas production remains offline. As of October 6th, there are 20 natural gas processing plants in Texas, Louisiana, and Mississippi, which are not up and running. By December, if everything goes well, shut-in capacity is projected to average 33.1% for oil (10.4% of total U.S. production) and 20.6% for natural gas (4.2% of total natural gas production).[1]

Meanwhile, global oil demand is expected to slow, but still remain strong over the next two years. Worldwide oil demand is expected to grow on average 1.8% per year during 2005-2006, down from 3.2% in 2004.





In contrast to growing demand, non-OPEC production is expected to remain weak with the loss of production in the Gulf of Mexico, production declines in the North Sea, and a slowdown in Russian oil production. Spare production capacity is at a three-decade low. The only one left with spare capacity is Saudi Arabia. While OPEC production is flat out, OECD oil inventories have not increased significantly due to increasing demand. The net result is at a time when demand is growing faster than supply, there is no spare capacity left in the system to handle a loss of production in the Gulf of Mexico, bad winter weather or geopolitical risks in Iran, Iraq, Nigeria, or Venezuela. We may be heading into "The Perfect Energy Storm.” Demand is growing, supply is falling, and inventories remain tight. There is no margin for error. To avoid a crisis, everything must go well.

This brings me back to the energy markets. The pullback in energy may be the lull before the storm. I don’t believe the energy market has topped out or that energy stocks are overvalued. Nor do I believe that inflation is contained. Look at any economic report—the ISM price component, the CPI, PPI, or the trade deficit price index—and you'll see inflation is on the rise. Stagflation has arrived and will be with us a long, long time. The world is awash with liquidity. According to Grant’s Interest Rate Observer “…global liquidity (defined as the U.S. monetary base plus central bank holdings of foreign exchange, mainly dollars) grew by 20% in both 2003 and 2004. It was the fastest two years of growth since 1975.”[2] We are living in an inflationary age and it is getting harder to hide it.

Clear The Mechanism

As to how one should invest given the environment we now find ourselves in, I would recommend investors to "clear the mechanism" (the markets' daily noise) and focus on long-term trends. Along this line of thinking, I to draw your attention to my article, “The Next Big Thing,” written at the beginning of this new bull market. The quote is from Marc Faber’s Gloom, Boom, & Doom Report. What Marc wrote then still has relevance for today. “… an investor could have done very well over the last 30 years with just a handful of investment decisions. In 1970, a long-term investor should have bought gold, silver, and oil (Commodities); in 1980, he should have sold his gold and oil and bought Japanese stocks; then in 1989, he should have switched out of Japanese stocks into the S&P 500 or, ideally, into the Nasdaq, which he should have sold at the beginning of 2000.” What Faber was referring to here was catching a trend and riding that trend until it has completed. In other words, buy and invest in long-trending markets. That is where we are today. Another long-trending market has emerged in commodities as shown in the charts of gold, silver, copper, oil, natural gas, and the CRB. We have come full circle and are back in a gold, silver and oil bull market.



If an investor has been out of energy, or sold prematurely, you have been given another chance. The recent sell off is nothing more than “hot money” exiting the market. The energy and gold sell off is grossly overdone and in my opinion, should shortly reverse itself with the same upward momentum. For a technical perspective on the energy markets, please review last week's WrapUp by Frank Barbara.

As to the energy markets being overvalued, nothing could be further from the truth. As shown in the industry composite tables below, the fundamentals have never been better.

PETROLEUM INTEGRATED COMPOSITE

2001 2002 2003 2004 2005 2006 (est)
$723,646 $800,525 $979,256 $1,251,989 $1,498,970 $1,511,500 Sales

16.1% 11.9% 14.4% 15.1% 16.5% 16.5% Operating Margin
7.0% 4.6% 6.1% 7.2% 7.7% 7.4% Net Profit Margin
13.9% 9.0% 13.3% 17.9% 19.0% 15.5% Return on Capital
16.7% 11.1% 15.1% 20.2% 22.5% 17.0% Return on Equity
Source: Valueline



PETROLEUM PRODUCING COMPOSITE

2001 2002 2003 2004 2005 2006 (est)
$18,808 $13,039 $18,152 $23,010 $25,900 $24,470 Sales

50.5% 61.7% 71.8% 71.4% 70.0% 67.0% Operating Margin
17.1% 15.9% 24.6% 26.0% 26.7% 25.0% Net Profit Margin
11.0% 7.2% 11.8% 13.4% 12.5% 12.5% Return on Capital
17.1% 10.0% 16.7% 18.1% 17.5% 17.5% Return on Equity
Source: Valueline

Integrated oil companies are benefiting from the strongest market conditions in decades: high oil and natural gas prices, strong domestic and global demand that is proving to be inelastic, favorable energy legislation, refinery bottlenecks, skyrocketing Chinese and Indian demand, ongoing geopolitical troubles in Iran, Iraq, Nigeria, and Venezuela. On top of that there isn’t any clear sign that demand is about to drop off a cliff, which would take the pressure off prices. Every oil demand projection I’ve looked at from the EIA to the IEA still shows demand growth globally despite higher prices. On the supply side, there have been no major discoveries or announcements of major oil or natural gas fields that will come on line and relieve supply stresses. Moreover, from the North Sea to Alaska and to Mexico, oil production is in decline.

Are energy investments still a buy in this investment climate?

Based on fundamentals, energy investments are still cheap. The next set of tables shows five-year earnings trends with projections for this year. Sales and earnings are still in an uptrend, while stock prices lag performance. The problem with the industry is that it still gets no respect on Wall Street. Stock prices are up over the last three years, but they haven’t kept up with explosive earnings. Price/Earnings multiples are close to the bottom of their P/E bands. The reason is simple: profits are rising faster than stock prices.

INTEGRATED PETROLEUM

Company
5-Year Earnings History (Millions)
Performance

2000 2001 2002 2003 2004 2005** 3-Yr
Earnings Change

ExxonMobil $17,720 $15,320 $11,460 $21,510 $25,330 $30,850 169% 61%
Chevron Corp 7,727 3,288 1,132 7,230 13,328 13,405 1084% 72.04%*
ConocoPhillips 1,862 1,661 -295 4,735 8,129 11,415 N/A 149.49%*
Occidental Petroleum 1,570 1,154 989 1,527 2,568 3,645 269% 153%
Marathon Oil 411 157 516 1,321 1,261 2,285 343% 176%
PETROLEUM PRODUCING

Company
5-Year Earnings History (Millions)
Performance

2000 2001 2002 2003 2004 2005 3-Yr Earnings Change
3-Yr
Stock Gain

Apache Corp $713 $723 $554 $1,122 $1,669 $2,285 313% 114.67%*
Devon Energy 730 103 104 1,747 2,186 2,550 2352% 155.33%*
Burlington Resources 675 561 454 1,201 1,527 2,100 363% 217.84%*
Anadarko Petroleum 807 -181 831 1,292 1,606 1,840 121% 84%
EOG Resources 397 399 87 430 625 960 1004% 61.15%*
NOTES: *Adjusted for stock splits **Estimated earnings polled by Thomas First Call

When earnings rise faster than the price of the stock, the P/E multiple declines. As an example, ExxonMobil trades at 11.9 trailing earnings and 10.5 times estimated earnings. Looking at ExxonMobil’s historical P/E bands, the average P/E has been 18.5 with a high P/E reached on 1/28/00 of 38.4 and a low reached on 5/20/05 of 12.3. After this week’s sell off, Exxon is currently trading at below its five-year average and at the bottom of its P/E earnings confidence interval as shown in the two charts below. The same is true with Chevron and many other integrated and producing oil companies listed in the tables above.

ExxonMobil Performance Chart


Chevron-Texaco Performance Chart

Source: Ford Equity Research

The whole energy sector remains grossly undervalued and is selling at the bottom of its historical price-earnings band. Once again this has been due entirely to earnings rising faster than stock prices. Most energy stocks hit their high P/E bands at the end of the '90s bull market. Exxon sold at 36 times earnings in January of 2000. Likewise Chevron traded at 27 times earnings in March of 2000. When the bull market hit its peak in the first quarter of 2000, energy stocks—like the rest of the market—hit their highest level. From the time the bear market began earnings, stock prices and P/E multiples contracted. Energy earnings bottomed in 2002 and have been on an upswing ever since. However, while earnings climbed, stock prices lagged far behind. As a result P/E multiples continued to decline. Unlike other sectors of the market, P/E multiples never expanded and continue to decline even as of today. This is hardly the sign of a frothy market. Contrast the energy sectors' value metrics with the leading market indexes. By comparison, the energy sector still looks cheap. It is also one of the few industries that have strong pricing power.

VALUE METRICS

COMPANY P/E Div % P/Book P/Sales P/CF
ExxonMobil 12.3 2.0 3.5 1.3 8.4
Chevron Corp 9.9 3.1 2.5 0.8 8.0
ConocoPhillips 8.2 2.0 1.9 0.6 5.9
Occidental Petroleum 9.3 2.0 2.3 2.3 6.2
Marathon Oil 11.5 2.2 2.2 0.4 5.2
Apache 10.2 0.6 2.3 3.3 5.5
Devon Energy 12.4 0.5 2.1 3.0 6.0
Burlington Resources 14.5 0.6 3.6 4.3 7.3
Anadarko Petroleum 11.1 0.8 2.2 3.5 6.8
EOG Resources 19.7 0.2 4.8 5.7 9.0
AVERAGE 11.9 1.4 2.7 2.5 6.8
Dow Industrials 18.7 2.5 3.0 1.1 9.8
S&P 500 18.4 2.1 2.7 1.4 10.1
NASDAQ 43.5 1.6 2.6 1.9 13.5
Source: Bloomberg

I have heard the argument that the economy is weakening and demand is slowing. Therefore the time to get out of energy is now. However, today’s global demand and supply imbalances are not going to go away. The damage to the US energy infrastructure will not be repaired completely until next spring. Meanwhile, non-OPEC production continues to decline and Saudi Arabia has little spare capacity left. Where will all this new oil and natural gas come from? Show me the beef! There aren’t any major supply sources for oil and natural gas that can quickly come on-line, including alternative sources of energy. New discoveries, production and refinery capacity takes years to find, build and bring on line. The only mitigating source we have is the marketplace, which ushers in conservation through the means of higher prices. As friend Ken Gerbino illustrates in his supply/demand spreadsheet, supply deficits continue to grow each year as demand outstrips supply. With no major oil discoveries on the horizon, that means oil and natural gas prices are heading higher long-term. In summary this is a long-trending market and the energy sector remains grossly undervalued by present or historical standards.

This brings me to another relevant topic the inevitable peaking of world oil production. The majority of oil geologists generally agree that the era of cheap, plentiful oil is approaching an end. As oilfields have lifetimes they typically begin to peak within a decade or more after discovery. You can take this concept an apply what usually occurs in one oilfield to the majority of oilfields around the globe. Peak oil doesn’t mean that you’re running out of oil. Peak oil applies to production output. It means you no longer can increase production and eventually production begins to decline. According to the US Energy Department world oil demand is forecasted to grow by 50 percent by 2025. While demand is expected to grow supply will not grow as fast as demand and at some point will eventually decline. Some members of OPEC are already warning that oil supply will not be adequate to satisfy global energy demand in 10-15 years. Peak oil is not a question of if but when. Energy experts only disagree as to its timing.

Projections of the Peaking of World Oil Production

Projected Date Source of Projection Background & Reference
2006-2007 Bakhitari, A.M.S. Oil Executive (Iran)
2007-2009 Simmons, M.R. Investment Banker (U.S.)
After 2007 Skrebowski, C. Petroleum journal editor (U.K.)
Before 2009 Deffeyes, K.S. Oil company geologist (ret., U.S.)
Before 2010 Goodstein, D. Vice Provost, Cal Tech (U.S.)
Around 2010 Campbell, C. J. Oil geologist (ret., Ireland)
After 2010 World Energy Council World Non-Government Org.
2012 Pang Xiongqi Petroleum Executive (China)
2010-2020 Laherrere, J. Oil geologist (ret., France)
2016 EIA nominal case DOE analysis/information (U.S.)
After 2020 CERA Energy consultants (U.S.)
2025 or later Shell Major oil company (U.K.)
Source: Hirsch, Robert L. "The Inevitable Peaking of World Oil Production,"
The Atlantic Council of the United States, Bulletin, October 2005, Vol XV1, No. 3

While the experts disagree as to the timing of Peal Oil, they all agree it’s on the horizon. The current discussion is on mitigation. What should be done now to mitigate the peaking of world oil production? Studies indicate that effective mitigation will cost hundreds of billions of dollars and will take decades to implement. The experts have simulated various scenarios based on a crash program implementation worldwide. Start dates [4]include:

When peaking occurs

Ten years before peaking occurs; and

Twenty years before peaking

The problem of waiting too long is that we may not know when we reach peak oil to well after the fact. Since mitigation of this problem or crisis—depending on how soon it arrives—takes time and money, we should be starting to activate “Plan B” today. Possible alternatives include the following:

Fuel efficient transportation (Mass transit, trains, hybrids, diesel)

Heavy oil (Shale)/ oil sands

Coal liquefaction

Enhanced oil recovery

Gas-to-liquids

Alternatives nuclear, wind, solar conversion[5]

One suggestion would be to convert our present system of generating electricity over to nuclear, wind, solar, and clean coal freeing up much needed oil for our transportation system and natural gas for agriculture. Whatever method of energy that is used to mitigate peak oil, there is going to be enormous costs and long lead times to put them in place. The longer we fiddle and dither the worst the eventual crisis when it finally [6]arrives. In the words of Dr. Robert L. Hirsh “If mitigation is too little, too late, world supply/demand balance will have to be achieved through massive demand destruction( shortages), which would translate to extreme economic hardship.“

As Hirsh points out there are plenty of warning signs out there to take notice and action. Stable oil producers in North America, the United Kingdom and Norway have already reached their peak. Out of the world’s top 45 producers of oil, 33 have already reached peak oil production. Hirsh believes—as does Simmons—that we will have less than a year’s warning before peaking occur. As I wrote last week, we have no ”Plan B” and we need to start working on one real soon before it is too late.

In this regard another long-trending market is going to be alternative energy in coal, nuclear power, to wind and solar. More countries are building nuclear power plants at a time we are running uranium supply deficits. Uranium production is only supplying 60% of our uranium needs. The balance is being supplied form above ground stockpiles. New mines will need to be brought into production as new power plants are built. IN summary everywhere you look within the energy sector whether it is oil and gas, nuclear, wind or solar there are amble opportunities for long-term investors. The best part is that very few get it, which explains the lower prices. When it comes to investing, energy is the "Rodney Dangerfield" of investing... it gets no respect. To some, including this author, that spells opportunity.

Today's Market

Market Recap

Index
Close
Day Change
Day % Change
YTD % Change

DJIA
10281.10
-133.03
-1.28
-4.6

DJ TRAN
3624.07
-7.44
-0.20
-4.58

DJ UTIL
380.98
-12.19
-3.10
13.74

NASDAQ
2068.11
-23.13
-1.11
-4.93

NYSE
7234.09
-128.98
-1.75
-0.22

AMEX
1576.79
-39.24
-2.43
9.93

S&P 100
545.13
-8.93
-1.61
-5.24

S&P 500
1177.80
-17.96
-1.50
-2.82

RUS 2000
627.54
-10.74
-1.68
-3.69

10 YR BOND
4.46
0.00
0.00
5.69


Jim Puplava

[1] FXStreet.com, Short Term Energy Outlook, Thursday, October 20th,2005 by EIA/DOE.gov
[2] Grant’s Interest Rate Observer, Vol. 23, No.19, October 7, 2005, p. 1
[3] Gerbino, Kenneth J., AA TitaN Oil Peak Spreadsheet, September 16, 2005.
[4] The Atlantic Council of the United States, “The inevitable Peaking of World Oil Production”, by Robert L. Hirsh, October 2005, Vol. XVI, No. 3
[5] Ibid, & Simmons & Co-International
[6] Ibid, p.7

© 2005 Jim Puplava
October 20, 2005


Rogue

Len....I asked you to comment on this before, but still no answer? Here goes again!.....

You're probably aware of the book written by Albert Pike "Morals and Dogma"? Do you know who that man was? Why do you think he's got "THAT" on the cover of his book?
Here...take a look!!

http://toodumbtobepresident.com/NewWorldOrder.html

Come on Len, take a "stab" at it!

Who was that man and why is that "Order From Chaos" stuff on the cover of his most famous work???

By the way....Pike was an absolute genuis who wrote and spoke fluently 16 different languages. Understand a bit about Pike and all and maybe the New World Order agenda will became more believable to you.

Rogue

Researcher....XLE Oil Index. I'm watching that one too to buy more for an investment than as a trade. With all the panic liquidation going on.... who knows, maybe it could see $40.

The situation is shaping up exactly as saavy old pro Richard Russell had speculated. He thought we would have the "head and shoulders" breakdown in crude oil that would provide an excellent buying oppurtunity.

It's here....I kind of expect the Oil/Gas equities to bottom out first before the Crude Oil futures. Crude could possibly get as low as $48 I believe ,but wouldn't stay there for long as I think prices would recover shortly to $60 or more.


Rogue

Jim Roger's.....I'd really like to hear what he's got to say about the fiasco with Refco.

I'm sure it would be interesting to hear!! I've spoken with Roger's many times personally over the years. Me and him seem to think alot alike....I rarely have the occasion to disagree with him.

I think the Oil equities "bottom" before the oil futures. Watch for that.

I think oil may se a liquidation spike to as low as $48. That would be a great buy oppurtunity IMHO. We'd be back to $60 in short order relatively speaking I'd think if that happened.

I think there is a huge shakeout going on in oil. ...but the oppurtunities are great for true "investors".

Rogue

XOM....Exonn Mobil, a big dog "Dow 30" stock trading at a forward p/e of 7-10 for 2006 depending on which estimate you use. If you like 'em on sale....take a look.

I don't think we'll see oil UNDER $50 anytime soon. The futures market dosn't see it anytime at all going forward to 2011.

Seems like if you can't buy XOM.....what big Dow 30 stock could you possibly buy?

Rogue

Oil/Gas.......The bloodbath of liquidation and selling seems to presenting some possible great long-term oppurtunities for "investors".
Traders/manipulators are in control for now....but the investment case seems to be more compelling with every day of bloodshed.

What's the old saying??....buy when there's bloood in the streets?

Rogue

Homebuilders...I agree with your analysis here. I believe the LONG LONG LONG real estate game is now offiially DEAD!

If they do get any rally you can sell them short again around their necklines with limited "known" risk parameters.


Rogue

Len....there you go, twisting my words again trying to make me look foolish.

Since you're such an expert on all matters!...

You're probably aware of the book written by Albert Pike "Morals and Dogma"? Do you know who that man was? Why do you think he's got "THAT" on the cover of his book?
Here...take a look!!

http://toodumbtobepresident.com/NewWorldOrder.html


You're usually pretty critical Len....why are you not being that way with this Bird-Flu?? You just like to disagree with a genuis like me??? LOL!

Rogue

Will you trust the vaccine that may be forced upon you by "milatary force" from ole Skull and Bones frontman W Bush II for the bird-flu scare???

Check out this site! There's a fine line between trust and foolishness.

http://www.tetrahedron.org/

Rogue

Oil/Gas....I think we are getting pretty close to the bottom in the energy equities. FWIW....Cramer thinks tommorow marks the bottom.

I think all should be looking to add/buy good names in Oil/Gas here. I believe the equities are "discounting" a probabilty of the Oil futures hitting lows(mid to low $50's barrel)here in the near future.

When the equities bottom soon and then "most likely" show "relative strength" against the crude oil cash/ futures.....the institutions will pile back in and we'll see some real nice gains!!!! A nice oversold liquidation bottom WILL BE IN PLACE!

I think we should be making Oil/Gas shopping lists and buying!

Rogue

Dr. Len Horowitz Debunks Avian Flu Hysteria Campaign

Leonard G. Horowitz | October 11, 2005

Abstract http://www.infowars.com/articles/science/bird_flu_horowitz_debunks_hysteria.htm
Background
Political Reality Versus Mass-Mediated Myths
Avian Flu for Profit
Lethal?
Transmissibile?
Treatability?
Why Asia?
The "Big One"

Abstract
If avian flu becomes more than a threatened pandemic, it will have done so by political and economic design. This thesis is supported by current massive media misrepresentations, profiteering on risky and valueless vaccines, gross neglect of data evidencing earlier similar man-made plagues including SARS, West Nile Virus, AIDS and more; continuance of genetic studies breeding more mutant flu viruses likely to outbreak, inside trading scandals involving pandemic savvy White House and drug industry officials, curious immunity of these pharmaceutical entities over the past century to law enforcement and mainstream media scrutiny, and published official depopulation objectives. With the revelations and assertions advanced herein, the public is forewarned against this physician assisted mass murder best termed "iatrogenocide."* This genocidal imposition is expected to serve mainly economic and political depopulation objectives.

Background
In April, 2003, a social experiment called SARS, said to have arrived from Asia, heavily struck Toronto. I was there throughout most of this Asian flu-foreshadowing fright. This bizarre new pneumonia-like illness was named Severe Acute Respiratory Syndrome. It was said to be the latest threat in an ongoing series of attacks on humanity by mysteriously mutating "supergerms."

A careful study of the scientific and medical-sociological correlates and antecedents of this "outbreak" revealed something amiss far more insidious than SARS. I critically considered Toronto's media reaction as any Harvard-trained public health expert in media persuasion behavioral science might. The scourge had all the earmarks of a novel social experiment conducted by white-collar bioterrorist.

It seemed clear to me that this unprecedented population manipulation effectively indoctrinated the mass mind in support of a grossly ineffective, albeit legislated, public health response in advance of the arrival of "the Big One." Throughout the "SARS Scam,"(1) repeated references were made to biological agents that might facilitate decimation of approximately a third to half of the world's population. Having extensively reviewed political population control literature and contemporary objectives of leading global industrialists, I noted these predictions were in close keeping with current official population reduction objectives.(2)

Canada's response to SARS in 2003 was, for the first time in history, directed by the United Nations and World Health Organization (WHO). Having reviewed the intimate financial and administrative ties between these organizations, the Rockefeller family, Carnegie Foundation, and the world's leading drug makers, "the fox," in essence, reigned over Canada's "chickens."

The truth about plagues includes the fact that "no grand pandemic ever evolved divorced from major socio-political upheaval." SARS advanced a political agenda more than a public health emergency. If public health officials earnestly intended to prevent these new emerging diseases, or successfully treat them at their roots, I repeated, they would study their obvious origins from the merged military-medical-biotechnology arena. A basic course in medical sociology simply justifies this utilitarian counsel.
"Experts" had been predicting the arrival of a super-plague for decades.

What was HIGHLY SUSPICIOUS about the mysterious and terrifying arrival of SARS, however, was its timing. It synchronously arrived with the global war on terrorism, and the Anglo-American war with Iraq. It seemed a convenient distraction from the fact that the earlier Bush administration had shipped Saddam Hussein most of his deadly biological weapons arsenal including anthrax and West Nile Virus. SARS was pathognomonic (i.e., symptomatic and characteristic) of what I had predicted and explained in the book, Death in the Air: Globalism, Terrorism and Toxic Warfare (Tetrahedron Publishing Group, 2001; http://www.healthyworlddistributing.com/), a prophetically-titled text that predated the 9-11 attacks on America by several months, and provided a contextual analysis of certain globalists' links to recent "outbreaks."

In essence, I provided insight into the broad application of a new form of institutionalized "bioterrorism" consistent with state sponsored biological warfare. Saddam Hussein was said to have exposed populations in his and adjacent lands with biological and chemical weapons of mass destruction.

SARS and the current avian flu fright is sanctioned by military-medical-pharmaceutical-petrochemical industrialists likewise operating above the law in many documented instances. Having testified before the U.S. Congress, I personally experienced how premiere pharmaceutical industrialists direct our political-economic representatives in government. Emerging diseases complement the political "War on Terrorism," and our bioterror-influenced culture. This agenda serves two primary objectives: profitability and population-reduction.

Political Reality Versus Mass-Mediated Myths
The ever increasing madness around us is eerily consistent with globalist think tank recommendations for the current "conflicts short of war." Beginning in the late 1960s, "economic substitutes for standard militarization" were sought and found by leading global industrialists. New biological threats, the "war on terrorism," and increasing numbers of "natural disasters" including space-based threats and superstorms were considered economically and politically expedient compared with the first and second world wars. These "conflicts short of war" were decidedly more manageable and economically viable. For this reason, especially their profitability, they were leading options among Anglo-American policy makers.

Nelson Rockefeller's protégé, Henry Kissinger, for instance, as National Security Advisor (NSA) under Richard Nixon, oversaw foreign policy while considering Third World population reduction "necessities" for the U.S., Britain, Germany, and other allies. This Bush nominee to direct the 9-11 conspiracy investigation, a reputed war criminal, then selected the option to have the Central Intelligence Agency (CIA) develop biological weapons, according to the U.S. Congressional Record of 1975. Among these new man-made biological weapons were germs far deadlier than the avian flu.

For example, by 1968, when Kissinger requested and received updated intelligence on useful "synthetic biological agents" for germ warfare and population control, mutant recombinant flu viruses had just been engineered by Special Virus Cancer Program researchers O'Conner, Stewart, Kinard, Rauscher and others.(3) During this program, influenza and parainfluenza viruses were recombined with quick acting leukemia viruses (acute lymphocytic leukemia) to deliver weapons that potentially spread cancer, like the flu, by sneezing. These researchers also amassed avian cancer (sarcoma) viruses and inoculated them into humans and monkeys to determine their carcinogenicity. In related efforts, Raucher et al. used radiation to enhance avian virus's cancer-causing potential. These incredible scientific realities have been officially censored and generally neglected by the media's mainstream.

Similarly, the Institute of Science in Society (IoSS) in London raised the genetic engineering question in the origin of SARS. "Could genetic engineering have contributed inadvertently to creating the SARS virus?" they asked. "This point was not even considered by the expert coronavirologists called in to help handle the crisis, now being feted and woed by pharmaceutical companies eager to develop vaccines." Those living in glass houses should not throw stones. The above emphasis is added to show IoSS they had "not even considered" intentional SARS deployment in their scientific, allegedly unbiased, purview.(4)

Conflicts short of war, like the "War on AIDS," "War on Drugs," "War on Terrorism," "War on Cancer," and now "War on the Avian Flu" require sophisticated propaganda programs employing fear campaigns for social acceptance and popular support of legislated policies. These psychological operations (officially termed PSYOPS) for "command and control warfare" (technically called C2W), experts advise, best support the emerging "Revolution in Military Affairs" (RMA). The RMA's capabilities include "a form of human slavery" in which the world's captive populations would not know they are enslaved.(2)

The RMA undoubtedly incorporates the use of debilitating biologicals and chemical agents most generously on behalf of drug and vaccine makers. A classic example is the toxic carcinogenic organophosphate pesticides deployed against human populations, said to target "mosquitoes," in the "War Against the West Nile Virus." Such "non-lethal warfare" agents, as these are militarily termed, are indeed deadly, but mortality results slowly from toxic exposures allowing more profits to be made by allied pharmaceutical and medical industrialists. Victims of the "non-lethal" exposures die slowly from chronic debilitating diseases. Expensive hospitals and long-term care facilities are virtual concentration camps. The ailments generated for "iatrogenocide" include the plethora of autoimmune diseases and newer cancers virtually non-existent 50 years ago. This fact, alone, strongly suggests a genocidal socio-economic and political agenda.

Avian Flu for Profit
In response to SARS, senior fellow at the Hudson Institute in Washington, Michael Fumento, published an economic thesis in Toronto related to the one I advance here. The "Super-bug or Super Scare," he wrote was published in Canada's National Post. Canadians were warned to "quarantine themselves," wear masks, and in some cases stay home. The Ontario Health Minister declared a "health emergency," as the media dubbed the "mysterious killer" a "super-pneumonia." Recoiling from the hype, Fumento asked and answered a few "real questions . . . How lethal, how transmissible, and how treatable is this strain?" The answers, he concluded, "leave no grounds for excitement, much less panic." The same may be said for this new curse of avian flu.(1)

Lethal?
At this writing, the avian flu is said to have killed "about 65 people" in Southeast Asia during the past two years! Little to no data is available on these individuals who most commonly had immune-compromising medical conditions. Further, all deaths were in Asian countries with questionable health services.

Conversely, other forms of flu kill more than 40,000 North Americans annually, generally the immune-compromised elderly.

Transmissibile?
According to USA Today (October 9, 2005), "European health officials are working to contain the [avian flu] virus, which so far has not infected anyone in the region." Although, allegedly "more than 140 million birds have died or been destroyed, . . . and financial losses to the poultry sector have topped $10 billion." This propaganda actually admits, "the current virus, known as H5N1, has not yet mutated to the point at which it can easily spread from person to person." In fact, it is likely to have never spread from person to person other than during laboratory handling!(5)

Treatability?
"The U.S. Senate has already approved a $3.9 billion package to buy vaccines and antiviral medications, and the Administration is also preparing a request for an additional $6 billion to $10 billion," according to a current BusinessWeek report.( 6)

"Beam me up Scottie, there is no intelligent life on this planet." This largely explains why the public puts up with this deadly deception. Even USA Today bemons, "there is no human vaccine yet." So how come the U.S.

Senate is rushing to spend all these billions for an avian flu vaccine?

I suppose we should overlook the fact that the current frightening strain of H5N1 avian flu virus has never readily jumped from human to human, and not commonly from birds to humans either. Thus, an effective vaccine can only be prepared by mutating this virus, thus creating what the world fears most. Let me explain. . . .

To make the human vaccine specific for the H5N1 mutant virus, you must start with the human virus which does not yet exist, except in perhaps military-biomedical-pharmaceutical laboratories. In fact, this is precisely what is being prepared based on news reports. To produce the human pathogen, the avian virus must be cultured for lengthy periods of time in human cell cultures, then injected into monkey and ultimately humans to see if these experimental subjects get the same feared flu. Thus, the flu virus the world currently fears most is either: 1) now being prepared in labs paid by industrialists with massive wealth-building incentives to "accidentally" release the virus; or 2) has already been prepared in such labs to take advantage of this current fright and future sales following the virus's release.

Remember, to be effective against a virus, a vaccine is said to require specificity. If authorities were to now have the main H5N1 avian flu strain feared to spread at some future date there's no assurance by the time they developed the vaccine the strain would remain sufficiently the same for the vaccine to be effective anyway due to expected viral mutations. Viral mutations over time is a function of the agent's newness. New man-made viruses, laboratory creations, like the ones currently being prepared for vaccine trials, are less stable not having evolved over the millennia. Thus, the entire vaccine effort is largely, if not entirely, a sham with ulterior motives.

Remember too, that a vaccine's reliability requires years, or at least months, of testing in the targeted population. Vaccine injury data must, or should, be meticulously collected over this period to assure the vaccine is not killing and maiming more persons than it is helping or saving. Can you seriously believe this assurance will be provided by government or pharmaceutical industry officials in this pandemic's wake? FEMA's failed Katrina response pails by comparison to this public health liability and vaccine-injury certainty.

I say "vaccine-injury certainty" because of the extensive list of newly developed vaccinations, highly touted when brought to market, that caused horrific results. This list includes the first swine flu vaccine, polio vaccines, smallpox vaccine, anthrax vaccine, hepatitis B vaccine, and most recently Lyme disease vaccine that crippled approximately 750,000 people within months of its release and prior to its recall by the FDA.

Most people fail to realize all vaccines carry a list of ingredients that typically increase human disease and death (i.e., morbidity and mortality). These include toxic elements and chemicals such as mercury, aluminum, formaldehyde and formalin (used to preserve corpses), MSG, foreign genetic material, and risky proteins from various species of bacteria, viruses, and animals that have been scientifically associated with triggering autoimmune disorders and certain cancers. A growing body of scientific evidence strongly suggests vaccines are largely responsible for increasing cases of autism and other learning disabilities, chronic fatigue, fibromyalgia, Lupus, MS, ALS, rheumatoid arthritis, asthma, hay fever, allergies, chronic draining ear infections, type 1 autoimmune diabetes, and many, many more pandemics. These chronic ailments are said to require long-term medical care for the patients' management causing toxic side effects resulting in America's leading killer--iatrogenic disease. That is, vaccines and other pharmaceutical industry inventions are literally killing or disabling millions with little effort on the part of government officials and their drug industry cohorts to arrest this scourge.

For all we know, governments are ordering an avian flu vaccine that will precisely deliver this pandemic to the world to affect population control. Absurd thesis? Read on.

BusinessWeek expects avian flu vaccine stockpiling by government officials will help the Sanofi-Pasteur company on behalf of Sanofi-Aventis and Chiron. "Tamiflu," it reported is an antiviral manufactured by Roche, . . . considered effective against avian flu. . . . The U.S. owns enough for 4.3 million people, with more on order." BusinessWeek failed to report: 1) Tamiflu's safety and effectiveness has not been determined in people with other chronic medical conditions--a significant percentage of the U.S. population-- and common side effects of this drug include nausea, vomiting, diarrhea, bronchitis, stomach pain, dizziness, headaches, and much, much more; 2) Roche (Hoffman-LaRoche) was found guilty of price fixing the world's supply of vitamins in 1999 as part of the global petrochemical/pharmaceutical cartel evolved from Nazi-Germany's I.G. Farben organization;(2)(6) and 3) Sanofi-Aventis's corporate colleagues include Merck, a company that received a lion's share of the Nazi war chest at the end of WWII, whose earnings plunged after the withdrawal last year of its deadly Vioxx arthritis drug. According to recent news reports, Merck is partnering with Sanofi-Aventis to produce the world's first sexually-transmitted-cancer vaccine to be given to prepubescent boys and girls.(7) Merck is infamous for having developed the first hepatitis B vaccines that triggered the international AIDS pandemic according to published scientific research and stunning documents reprinted in this author's national bestselling book.(3)(8)

In the weeks and months following the 9-11 attacks on America, I traced the widely publicized anthrax mailings "mystery" to U.S. Central Intelligence Agency (CIA) commissioned biological weapons contractors with ties to Britain's MI6, Porton Down, and this same Anglo-American pharmaceutical cartel.(9) The anthrax mailings fanned fears of bioterrorism throughout America and economically served primarily vaccine and drug makers with administrative and financial links to these avian flu profiteers.(10)

People willingly relinquish their civil rights and personal freedoms in the wake of such engineered frights. The passage of the infamous "Homeland Security Act" in America, and its counterpart in Canada, are classic examples of this societal direction, forced legislation, and egregious manipulation.

Why Asia?
How convenient that Asia is said to be the origin, as with SARS, of this latest plague when Chinese-Anglo-American relations are strained to say the least.

In the days preceding the emergence of the first SARS cases, America raced to the Pacific Rim to impact escalating aggressions on the Korean peninsula. Communist China--a "most favored" trading partner with America--is politically allied with several American enemies, including those said to possess weapons of mass destruction, including Iraq. Coincidental? Not likely when viewing the larger political picture involving the Ango-American oligarchy's RMA, its global enterprises, and instigated planet-wide "conflicts short of war."

Consider also the fact the media's mainstream has been heavily influenced, if not entirely controlled, by multi-national corporate sponsors protecting and advancing the interests of a relatively small number of global entities. Also recall that the focus of news providers, on any given day or hour, results from intelligence agency directives, according to reputable authorities including myriad retired news officials and intelligence officers. So ask and answer the following intelligent questions:

* Why have American military officials, beginning with Secretary of Defense William Cohen during the Clinton years, publicized America's greatest vulnerability lies in the realm of biological weapons wielded by terrorists? Is this not a form of treason against the United States to relay such sensitive intelligence to potential enemies through the mainstream press?

* Why does the mainstream media continue to foretell of the expected arrival of the "Big One"-an influenza virus that will produce a super-flu that will kill billions of people, like the "Spanish flu" did between 1918-19, while totally disregarding the individuals, organizations, and laboratories that have labored to produce these weapons of mass destruction? Even the devastating Spanish Flu virus has been, literally, unearthed for further study and, do you suppose, deployment?

* Why was the "Spanish flu" influenza virus called the "Spanish flu" when it originated, by historic accounts, in Tibet in 1917? It is said that Spanish newspapers were the only ones reporting on the great plague due to their neutrality over World War I politics. However, Spain was as dear to America then as Communist China is to the United States today. The "Spanish flu" was named such following two decades of disputes between America and Spain over colonization of the Caribbean Islands, Hawaii and the Philippines beginning with the Spanish American war that ended in the Philippines in 1902. In fact, the grand Spanish flu began in military camps. Does this history appear to be repeating?

*Doesn't it make sense that America is being manipulated, if not targeted, for the purpose of advancing globalistic agendas, central among them is population reduction?

The "Big One"
As mentioned above, during the 1960s and early 1970s, military biological weapons contractors with intimate ties to leading drug industrialists prepared mutants of influenza and para-influenza viruses recombined with acute lymphocytic leukemia viruses. In other words, they stockpiled a quick spreading cancer virus which may also be deployed.(3)
Alternatively, many infectious disease experts and government health officials oblivious to this scientific reality say this avian flu might be the 'Big One." Several days ago, the United Nations released a report that stated as many as 150 million people worldwide might die from this avian flu.

Emma Ross of the Associated Press reported on SARS as the World Health Organization (WHO) launched its "crisis plan to attack" the Severe Acute Respiratory Syndrome. WHO, as you may recall, is a U.N. sponsored organization that is rumored to have helped spread AIDS to Africa by way of contaminated hepatitis B and/or polio vaccinations. There is a reasonable amount of evidence to support this contention.(1)

More disconcerting, the U.N. is known to be heavily influenced by Rockefeller family members and their petrochemical-pharmaceutical interests. History shows Rockefeller fortunes built the U.N. building in New York City. During WWII, the Rockefeller family and their Standard Oil Company supported Hitler more than they did the allies according to court records. One federal judge ruled Rockefeller committed "treason" against the United States. Following WWII, according to attorney John Loftus-an official Nazi war crimes investigator-Nelson Rockefeller persuaded the U.N.'s South American voting block to favor Israel's creation only to assure secrecy regarding his support for the Nazis. Earlier that century, John D. Rockefeller joined Prescott Bush and the British Royal Family in sponsoring the eugenics initiatives that gave rise to Hitler's racial hygiene programs. During the same period the Rockefeller family virtually monopolized American medicine, American pharmaceutics, and the cancer and genetics industries.(2, 3)

Today, the Rockefeller family, its foundation, U.N. and WHO remain at the forefront of administering "population programs" designed to reduce world populations to more manageable levels. As per an advertisement in Foreign Affairs--a prestigious political periodical published by the David Rockefeller directed Council on Foreign Relations--the U.S. population is being targeted for a 50% reduction.(2)

"We've never faced anything on this scale with such a global reach," said Dr. David Heymann, of the WHO, not regarding the avian flu, but SARS.

"This is the first time that a global network of [Rockefeller-directed infectious disease 'surveillance' outposts and] laboratories are sharing information, samples, blood, pictures," added Dr. Klaus Stohr, a WHO virologist coordinating labs internationally. "Basically overnight, there are no secrets, there is no jealousy, there is no competition in the face of a global health emergency. This is a phenomenal network."(1) ____________________

* The term "iatrogenocide" is derived from the combination of words "iatrogenesis," meaning physician induced illness, and "genocide," defined as the mass killing and/or enslaving of people for economics, politics, and/or ideology.

Leonard G. Horowitz,
About the Author Leonard G. Horowitz, D.M.D., M.A., M.P.H., is an internationally known authority in the overlapping fields of public health, behavioral science, emerging diseases, and bioterrorism. He received his doctorate in medical dentistry from Tufts University School of Dental Medicine in 1977, was awarded a post-doctoral fellowship in behavioral science at University of Rochester, earned a Master of Public Health degree from Harvard University, and another Master of Arts degree in health education from Beacon College, all before joining the research faculty at Harvard. Dr. Horowitz is best known for his national bestselling book, Emerging Viruses: AIDS & Ebola - Nature, Accident or Intentional? (Tetrahedron Press, 1998; 1-888-508-4787) which recently resulted in the United States General Accounting Office investigating the man-made origin of AIDS theory. (See: http://www.healingcelebrations.com/gao.htm) Dr. Horowitz's work in the field of vaccination risk awareness has prompted at least three Third World nations to change their vaccination policies. His stunning testimony before the United States Congress' Government Reform Committee, literally brought the hearing to a halt. (See: healingcelebrations.com) Dr. Horowitz questioned government health officials regarding a Centers for Disease Control and Prevention (CDC) secreted report showing a definitive link between the mercury ingredient (i.e., Thimerosal), common to most vaccinations, and the skyrocketing rates of autism and behavioral disorders affecting our children and the future of our nation.
Incredibly, Dr. Horowitz alerted the FBI, in writing and in person, one week before the first anthrax mailing was announced in the press, that a "major anthrax fright" was in the process of unfolding that demanded the FBI's urgent attention. Needless to say they did not heed Dr. Horowitz's prophetic warning.
Moreover, three months before the September 11 attacks on the World Trade Center and Pentagon, Dr. Horowitz released his thirteenth book, prophetically titled Death in the Air: Globalism, Terrorism and Toxic Warfare. The book focuses on the West Nile Virus as an act of Bioterrorism, and considers what and who is really behind this and other recent outbreaks. Dr. Horowtiz argues that his disclosures expose the roots of global terrorism, along with the individuals and organizations at the heart of what he calls "the petrochemical-pharmaceutical cartel". He believes this "multi-national corporate beast" is in the process of committing global genocide, profiting from engineered frights, and at the same time, most efficiently culling targeted populations considered excessive.
As you may have heard, Senator Patrick Leahy (D-VT), Chairman of the Senate Judiciary Committee, called for an investigation into the links between recent West Nile Virus outbreaks and bioterrorism. Dr. Horowitz is among the leading pioneers of this theory.
Dr. Horowitz's most recent book is DNA: Pirates of the Sacred Spiral, a reference text on the electro-genetics of biology, disease therapy, and human spirituality. This work also details links between the anthrax mailings and human genome project heist, and leading intelligence agency, genetics industry, and pharmaceutical company officials.
For more information about Dr. Horowitz's books, videos, CDs and DVDs link to www.healthyworlddistributing.com and www.tetrahedron.org, or by calling 1-888-508-4787. His official website is www.drlenhorowitz.com.
This article was provided courtesy of Dr. Leonard G. Horowitz and Tetrahedron Publishing Group. It's copyright is relinquished for widespread distribution.
References:
1) Horowitz LG. SARS (Severe Acute Respiratory Syndrome): A Great Global Scam. Available at: http://www.healingcelebrations.com/SARS.htm
2) Horowitz LG. Death in the Air: Globalism, Terrorism and Toxic Warfare.
Sandpoint, ID: Tetrahedron Publishing Group, (Spring) 2001.
3) Horowitz LG. Emerging Viruses: AIDS & Ebola, Nature, Accident or Intentional? Sandpoint, ID: Tetrahedron Publishing Group, (Spring) 2001.
4) The Institute of Science in Society. SARS and Genetic Engineering? London, England. Article available at:
http://www.tetrahedron.org/articles/health_risks/sars_engineering.html
5) Knox N. Europe braces for avian flu. USA TODAY, October 9, 2005; Manning A.Government to stock up on avian flu shots. USA Today, Oct 8, 2005.
6) Wang P. Avian Flu: Inoculate Your Portfolio. BusinessWeek. Online edition. Available at:
http://www.businessweek.com/investor/content/oct2005/pi2005110_4988_pi015.htm
7) CNNMoney. Merck shares jump on cancer drug vaccine. October 6, 2005.
Available at: http://money.cnn.com/2005/10/06/news/fortune500/merck.reut/
8) For more scientific background on the link between the hepatitis B vaccine and the AIDS pandemic link to http://www.originofAIDS.com.
9) Horowitz LG. The CIA's Role in the Anthrax Mailings: Could Our Spies be Agents for Military-Industrial Sabotage, Terrorism, and Even Population Control? A Special Report. Article available at: http://www.tetrahedron.org/articles/anthrax/anthrax_espionage.html
10) Horowitz LG. DNA: Pirates of the Sacred Spiral. Sandpoint, ID: Tetrahedron Publishing Group, 2004.



Rogue

Oil/Gas investment legend Henry Grope TV interview on RobTV from the other day.....

The Groppe interview can be viewed for free on RobTV. look in the archives for this past Tuesday, and look for the broadcast starting at 12:30 pm. It lasts 57 minutes.
http://www.robtv.com/shows/past_archive.tv?day=tue


Rogue

Somebody Tried to Kill Hurricane Wilma ... BEFORE She was Born! -- UPDATED 4:50 AM October 19th

http://www.enterprisemission.com/weblog/weblog.htm


Hmmmm.......it looks more and more like there is "weather control" going on.

Ooooooohhhh.....the progress of "technology"!!

Rogue

Here's another one from HENRY GROPPE:

***Rogue comment.... For better or worse, funny thing is I'm pretty "aligned" with this guy's investment position.


Oil Forecasting Legend Discusses Peak Oil, Share Prices

By Michael J. DesLauriers
19 Oct 2005 at 05:13 PM EDT


TORONTO (ResourceInvestor.com) -- When Henry Groppe shares his opinion about the oil patch, investors would be well advised to pay attention. Groppe has 55 years experience in the business and his list of clients includes not only some of the biggest oil companies in the world, but governments as well. Groppe, Long and Litell are known to be among the most accurate forecasters of oil and natural gas prices in the world.

Groppe attributes his success to methodology, “Our approach is to do detailed analysis from the bottom up, to look very carefully at all the producing history and producing trends and recognize then these two controlling fundamentals of depletion and the rational progressive nature of exploration. That has always given us a good approach to accurate forecasting and enables us to forecast major changes in direction and that's what’s most important.”




In a recent interview Henry Groppe shared some of his views on the major issues surrounding these key commodities.

Prices/Peak Oil

Unlike some other well-followed thinkers on the subject, Groppe doesn’t see prices exploding to over $100 a barrel, nor is he quite so concerned about the reserves of OPEC members such as Saudi Arabia.

Groppe believes that, “we are at the point where production is peaking and the price required to restrain consumption to match this future available supply is in the 50-60 dollar range on an annual average basis…This or next year might very well be the all time peak year in world liquid petroleum production.”

His view is that, “it’s going to be essential to achieve reductions in consumption because we're forecasting no continual increase in total world oil supplies in the future.” Groppe estimates that, “a price range of $50-$60 a barrel is going to be required in order to in effect cause no growth in total world oil consumption. That we think will be the composite of continuing but slower growth in transportation fuel use of oil, because that consumption grows essentially with the vehicle population in the world. With higher prices there will be pressure toward more fuel efficient vehicles and we’ll see actual consumption decreases in fuel oil where all you’re after is a source of heat, and that’s the way the system will balance itself.”

Groppe finds himself sort of in the middle in terms of the prevailing views on the future, both optimistic and pessimistic. He stated that, “Matt Simmon's view is that we're just on the verge of seeing very significant depletion decline rates and total world oil production will then decline precipitously and were approaching the end of the world economy as we've known it. Major oil companies take the view that it will be relatively easy to continually expand oil production, specifically, they all agree that world oil production can be expanded 50% in the next 25 years and we disagree very strongly with both of those viewpoints. We think there will be a flattening of total oil supply and the high prices needed to constrain consumption to match that available supply.”

Saudi Arabia

Because outsiders can’t verify the reserve figures of OPEC countries, many analysts wonder whether the published figures can really be backed up. With Saudi Arabia’s largest fields going into decline, the question is: can the oil be replaced and production levels be maintained? Groppe has an answer:

“Saudi Arabia is the largest exporter in the world, I went to live and work in Saudi Arabia in 1948, I know it very well, I follow it very closely. They did a very careful study to develop a long-term business plan for the kingdom and concluded that, and put it in place in 1994. The study reported that roughly 8-9 million barrels a day of oil production is something that they could comfortably sustain for several decades and that’s the balance of the resource base and all the other resources needed to develop and maintain oil production as you’re having to replace and flush over fields with new smaller fields. They've been on that path since 1994, producing in this 8-9 million barrel a day range and we think they'll be able to comfortable sustain that for many years to come.”

“We have six major exporting countries in the world today: Saudi Arabia, Russia, Venezuela, Iraq, Iran and Nigeria. Together they account for over 40% of total world oil supply and security and stability concerns are growing continuously in everyone of those. Its impossible to predict when disruption might occur and in which country but I think that they're equal risk across the board and all of my comments about future oil prices are based on the assumption there are no disruptions, the probability is high that there will be.”

Canada/Oil Sands/Shale

Groppe sees Canada as the most favourable place to invest for energy and sees the country as being of strategic importance going forward. He noted that Canada provides, “something like 14% or so of our total gas supply and with our production having peaked some years ago and declining, that’s been very important to us. In fact over the last 12 or 14 years if Canada had not had the ability and willingness and infrastructure that allowed them to increase their gas exports to us about 500%, we'd have had a gas crisis for many years.”

Despite some concern amongst investors about the increase in CAPEX on a lot of oil sands projects due to rising input costs and technical and logistical considerations, Groppe is convinced that, “even with these increased prices we think the economics of oil sands production in this $50 - $60/barrel range are very favourable. There will be continuing work on the part of all the oil sands producers to use energy more efficiently.”

With high oil prices always come unconventional methods of meeting the world’s consumption needs. One play on that is shale and the share prices of related players have been doing very well. Groppe, however, is not a believer, at least not for the time being. According to him, “We have enormous resources of shale in the western part of the U.S. The difficulty with it is that it's a very dense rock with the oil held in that, it almost looks like a piece of a formation in a typical oil field where if you looked at it, you’d never dream that it could produce oil. It looks like a rock you’d pick up off the ground. To recover it you have to mine that rock, then you have to pulverize it and with heat, drive off the contained oil. In the process that volume of rock is expanded perhaps as much as two-fold, so you've got a huge disposal problem. A lot of work has been devoted to trying to develop in-situ methods but so far none of those have been very successful, so we doubt this is going to be very significant in the next 10-15 years.”

Conclusion

From an investment standpoint the answer still seems clear – energy stocks should continue to move higher despite corrections and volatility along the way. Groppe thinks investors need to hold their ground and not be phased by short-term price swings such as those we’ve experienced recently. His advises that, “if you believe in these fundamentals and the type of future pricing environment that I’ve described you need to ignore these short-term variations in equity prices with the fluctuations in oil and gas prices. I've given you my view on the average annual long-term prices, but since you have both of these very important industries [oil and gas] essentially operating at capacity and you've got all kinds of unpredictable events that occur all year long...there will be significant continuing volatility from this point forward and that just needs to be ignored as long as fundamentals remain intact.”

Groppe has 90% of all his equity investments in energy, and 65% of that is in Canadian energy stocks.

Rogue

"Guns and Butter"....FULL STEAM AHEAD!

Rice Won't Rule Out Force on Syria, Iran By LIZ SIDOTI, Associated Press Writer
38 minutes ago



WASHINGTON - Secretary of State Condoleezza Rice on Wednesday refused to rule out U.S. troops still serving in Iraq in 10 years or the possibility that the United States could use military force against neighboring Syria and Iran.



Rice deferred to the decisions of President Bush and military commanders as Republicans and Democrats on the Senate Foreign Relations Committee pressed her for more specifics on the U.S. strategy in Iraq.

Asked specifically whether the United States would have troops in Iraq in five or 10 years, Rice said: "I think that even to try and speculate on how many years from now there will be a certain number of American forces is not appropriate."

At the White House, spokesman Scott McClellan also would not rule out the possibility of a U.S. troop presence that far in the future.

"In terms of decisions about troop levels, we've always said that we will look to our commanders on the ground and they will be the ones who will make decisions based on circumstances on the ground," McClellan said.

Lawmakers also pressed Rice on strategy for dealing with Iran and Syria. U.S. officials have accused Syria of allowing foreign fighters to flow across its borders into Iraq and Iran of supporting the insurgency.

Rice said the United States was using diplomatic means to urge a change in the behavior of both countries — but she stopped short of ruling out military force. "I'm not going to get into what the president's options might be," Rice said. "I don't think the president ever takes any of his options off the table concerning anything to do with military force."

Testifying before the committee for the first time since February, Rice sought to reassure jittery lawmakers — who are hearing from their war-weary constituents — that the Bush administration had a plan for success: helping Iraqis clear out insurgents and build durable, national institutions.

She said the United States will follow a model that was successful in Afghanistan. Starting next month, she said, joint diplomatic-military groups — Provincial Reconstruction Teams — will work alongside Iraqis as they train police, set up courts, and help local governments establish essential services.

But even as Rice tried to crystalize the plan, Republicans and Democrats asked her pointed questions they say Americans need to know.

"I'm not looking for a date to get out of Iraq," Sen. Joseph Biden (news, bio, voting record) of Delaware, the top Democrat on the panel, said. "But at what point, assuming the strategy works, do you think we'll be able to see some sign of bringing some American forces home?"

Rice declined to answer directly, choosing to leave an estimate to military commanders. "I don't want to hazard what I think would be a guess, even if it were an assessment, of when that might be possible," Rice said.

Later, Sen. Paul Sarbanes (news, bio, voting record), D-Md., told Rice that her response to questions about U.S. troop withdrawal "leads me to draw the conclusion that you're leaving open the possibility that 10 years from now we will still have military forces in Iraq."

"Senator, I don't know how to speculate about what will happen 10 years from now, but I do believe that we are moving on a course on which Iraqi security forces are rather rapidly able to take care of their own security concerns," Rice responded.

Republican Sens. Chuck Hagel of Nebraska and Lincoln Chafee of Rhode Island were among several lawmakers who asked Rice whether the Bush administration was considering military action against Iran and Syria, and asked whether the president would circumvent congressional authorization if the White House chose that option.

"I will not say anything that constrains his authority as commander in chief," Rice said.

The lawmakers' queries followed Rice's earlier remark that: "Syria and, indeed, Iran must decide whether they wish to side with the cause of war or with the cause of peace."

As Rice spoke, a woman in the second row of spectators shouted "Stop the killing in Iraq." A police officer motioned her out of the room.

By State Department design, Rice testified before the committee just days after Iraq apparently approved its first constitution since a U.S.-led coalition ousted Iraqi dictator Saddam Hussein in 2003. Her appearance also coincided with the start of Saddam's trial in Baghdad for a massacre of 150 of his fellow Iraqis.

McClellan praised Saddam's trial as "a symbol that the rule of law is returning to Iraq."

Rice heralded the referendum on the charter as "a landmark" and said the US. strategy was moving from a stage of transition to a stage of preparing a permanent Iraqi government.

She described the administration's plan as "clear areas from insurgent control, to hold them securely, and to build durable, national Iraqi institutions."

"Our strategy is to clear, hold, and build," she said. "The enemy's strategy is to infect, terrorize, and pull down."

Alongside Iraqi allies, she said, the United States is working to dismantle the insurgent network and disrupt foreign support for them, maintain security in areas insurgents no longer hold, and build national institutions to "sustain security forces, bring rule of law, visibly deliver essential services, and offer the Iraqi people hope for a better economic future."

___

Rogue

10 winners for the next oil rally , 2005

Jubak's Journal
Oct 18,2005


Don't let falling oil prices fool you. The long-term trends for oil and gas are still in place. But the winners in the next run-up will be smarter and nimbler.

By Jim Jubak

The rally in oil and gas stocks is dead. Long live the rally in oil and gas stocks.

No doubt about it, the profit-taking in the sector that began as soon as the third quarter ended has taken a bite out of energy stocks. The Amex Oil Index ($XOI.X) fell more than 10% from Sept. 30 through Oct. 14. And with the price of oil in its own 11% correction, it's not certain that the damage to oil and gas stocks is over.

Oil stocks jumped 124% in the two years beginning on Sept. 30, 2003, and the longer-term trends that fueled that rally are still in place. The current sell-off is a pause, and I think investors can expect the long-term rally to resume as soon as some of the speculative excesses of this past run-up are worked off. And it should last possibly through the end of the decade..

The next stage of the rally, however, won't be like what's just concluded. To this point, oil and gas prices have risen so far and so fast that all oil and gas stocks have gone up. Even investors who plunked down their money on mediocre energy companies did well. In the next stage of the rally, however, stock picking will be more important, and the biggest gains will go to investors who pick the best oil and gas companies.

In this column, I'll explain why I think the energy rally will resume, describe how the next stage will be different and select the 10 energy stocks that should, in my opinion, perform best.

Demand outruns new production
My logic is pretty simple: Energy prices are likely to continue upward for the rest of the decade.

Oil production is projected to grow by an annual 2% a year through the end of the decade -- if you believe that oil companies will actually be able to complete planned production projects on schedule. I don’t buy it. New oil production is coming from deeper water, from less stable countries and from more complex geologies than was the case 10 years ago. This is resulting in serious delays in bringing planned production to market. Because of delays, oil production in 2007 will be 2 million barrels a day less than planned by oil companies, Bernstein Research has calculated. That kind of slippage suggests that oil production will grow by something close to 1% annually -- not 2%.



Forecasts for world oil-demand growth for next year range from 2% (from the International Energy Agency) to 2.3% (from the U.S. Department of Energy, which now projects that crude oil will stay above $63 a barrel in 2006.) The projected average annual demand growth to the end of the decade: 1.8%

If the pessimists are right about production growth, the world is looking at tighter oil supplies through the end of the decade. Even if the optimists are right, the margin between supply and demand will remain small enough to produce a steady stream of energy crises that keep pushing prices up.

But it's not just short supply and growing demand that will keep energy prices moving up. Much of the new supply will be more expensive to produce and more expensive to refine. Producing oil from oil sands, for example, breaks even somewhere near $30 a barrel.

And much of the oil from these new sources, as well as new production from sources such as Saudi Arabia, consists of heavy sour grades of crude (crudes with high sulfur content) that are expensive to refine -- if you can find refinery capacity for these grades at all. Sour crude contains more than 1% total sulfur content.

Marathon Oil (MRO, news, msgs), for example, recently reported that that the average spread between the price of sour crude and light sweet crude widened from $7.77 per barrel a year ago to $9.52 a barrel.

But refinery capacity isn't just a bottleneck for heavy grades. Because the global refinery industry is operating at full capacity, refiners can charge more to refine petroleum products. For Marathon, the Chicago crack spread -- the difference between the price of a barrel of crude at the refinery and the value of the products produced from that barrel and sold in the Midwest -- reached $17.29 a barrel in the third quarter of 2005, up 124.5% from $7.70 a year ago.

Time to get selective
So if the price trends are all still up, why should the next stage of the rally be less spectacular and more selective?

While the price of oil climbed 52% through the first nine months of 2005, the price may jump only 20% in 2006. Refinery crack spreads at the end of September were nine times the 20-year average. Refiners won't see run-ups like that in 2006, and there's a good chance that crack spreads will come down from current highs as U.S. refineries get back on line after the Gulf hurricanes. Meanwhile, costs for everything from steel pipe to drilling rigs are climbing. In some cases, costs for oil companies are climbing faster than the price of oil. That will moderate stock gains in the sector.

These trends will separate the great companies from the mediocre ones. Companies that don't control costs well will see margins fall. Refiners with capacity in the sour end of the oil-grade spectrum will see bigger margins than their peers. Oil producers with a history of adding reserves at low cost will outpace peers who struggle to find oil or overpay for reserves. And pick-and-shovel makers -- maybe, since this is oil, we should call them drill-and-pump makers -- could well outperform even the best producers.
Here are my 10 picks in three sectors for a more selective energy rally.

Refiners: When it's the spread that counts, it helps to be sour. Valero (VLO, news, msgs) is the sour-oil refiner that everyone recognizes. Despite that name recognition, the stock isn't all that expensive. After dropping from its 52-week high of $117.25 to $101.27 on Oct. 14, the stock is selling at a price-to-earnings ratio of 12.1. About 60% of the oil running through Marathon Oil's (MRO, news, msgs) refineries has been sour lately. The stock trades at a higher multiple, 12.6, than Valero does -- because Marathon is also a major oil-production company, and oil-production companies traditionally command higher price-to-earnings ratios than refiners.

Producers: Finding oil that pays will pay off. Exploration and discovery is hard work, and some companies are simply better at it than others. After exhaustively looking at the correlations between oil discovery and stock-price gains, Lehman Brothers concluded that no one factor explained the difference between good stock performance and mediocre returns, but three measures together seemed to capture most of the difference. A high return on capital employed (ROCE) means that an oil company is getting the biggest bang for each dollar it spends on exploration and production rather than simply spending for the sake of spending. High ROCE companies, Lehman found, include Chesapeake Energy (CHK, news, msgs), Occidental Petroleum (OXY, news, msgs) and XTO Energy (XTO, news, msgs). Companies that find reserves faster than they pump them also reap high stock market rewards when oil prices are climbing. Chesapeake Energy, XTO Energy and Quicksilver Resources (KWK, news, msgs) fall in this group. And, finally, companies with high efficiency ratios (low finding-and-development costs per dollar of oil produced) should draw investor attention: XTO Energy, Occidental Petroleum, Quicksilver Resources and Apache Corp. (APA, news, msgs)

Pick-and-shovel makers: Reap the benefit of scarce supply in drilling rigs. There's very little extra supply of drilling rigs; there's almost no extra supply of offshore rigs; and there's no extra supply of deep-sea rigs. Deep-sea rigs are booked solid into 2007. And there's no significant supply of offshore rigs set to come on line before 2007-2008. Day rates -- which is how oil-service companies price their services -- have climbed and will keep climbing as long as demand for oil and natural gas keeps climbing. Investors should be selective in this sector, too, and look for drillers that dominate (or concentrate in) booming sectors with no spare capacity and soaring day rates: Transocean (RIG, news, msgs) in the deep-sea drilling segment, Noble (NE, news, msgs) in the hard-environment (such as the North Sea) segment, and ENSCO International (ESV, news, msgs) because the company has a large number of rigs about to come off contract and available, therefore, to sign new contracts at much higher rates.

Do I know when the energy sector sell-off will end? No. It has relatively little to do with the price of oil and a lot to do with speculative positions put on -- and now being liquidated -- by traders, especially hedge funds. The shutdown of Refco Capital Markets, the non-regulated subsidiary of Refco (RFX, news, msgs), a major market maker for hedge funds and institutional investors, after allegations of massive financial fraud by Refco's CEO, has certainly increased that selling and made it harder to predict a bottom for the sector.

My advice would be to stay cautious on the sector in the near term -- maybe through the end of the year. Nibble at stocks you really want to own by taking partial positions that you can add to in the future.

The long-term rally in energy stocks has another leg. And I think the long-term rewards justify taking a modest short-term risk or two even if you can't call the absolute bottom in the sector.

Rogue

Is the high price of Oil propping up our US dollar and "twin deficits"??.......here's a somewhat interesting article.

Purchase power just changes place. Disappear there and appears in the Middle East or other countries that exports oil.

Oil cash stockpile fuels fears of 70s-style recession
A paper trail of petrodollars leading from the wallets of Western motorists to the bank accounts of oil sheiks is raising fears that the world is on the brink of a 1970s-style slump.


A quarter-century on from the first oil crisis, however, Middle Eastern countries are better-equipped to spend the avalanche of cash, international bankers said.
Sales of Bentleys and the footfall in Bond Street jewelers are popular indicators of Middle Eastern wealth, but more important signals have been triggered in the banking community by this year’s extraordinary surge in the price of crude oil.
Unable to spend the flood of cash, oil exporters have been running up huge deposits reminiscent of the hoard accumulated by countries in the Middle East in the 1970s.
The International Monetary Fund (IMF) predicts that Middle East-ern and Central Asian oil exporters will earn about $600 billion from crude sales this year. Of that, they will spend some $350 billion importing goods and services from the West, leaving a surplus of $250 billion – footloose money looking for a home.
In the short term, home is likely to be dollar deposits and U.S. treasury bills, according to Mohsin Khan, the IMF’s director for the Middle East and Central Asia. “The deposits are shooting up,” he said. “We have seen an increase of between $80 billion and $100 billion in the first quarter of this year.”
The scale of the surplus is making heads turn in the foreign exchange market, where anxiety is mounting about a growing financial imbalance between America’s debt-strapped consumers and cash-rich savers in emerging Asian economies. The current account surplus of the main oil-producing nations totaled $84 billion in 2003, compared with Asia’s surplus then of $289 billion. However, Morgan Stanley, the investment bank, predicts that next year OPEC, the oil producers’ cartel, will have as big a cash surplus as Asia, which the bank expects to be $450 billion. The IMF reckons that the oil exporters will displace the Asian tigers by the end of this year, their petrodollar deposits becoming the main prop to America’s deficit.
The new sightings of oil cash mountains echo the slump of the late 1970s and early 1980s, when petrodollar loans to developing countries fuelled a debt crisis. Kahn admits that the huge transfer of wealth from Western motorists to the Gulf and Siberia carries a risk.
“Once you start transferring income from people with a low propensity to save the U.S. to people with a high propensity to save the oil exporters, that is deflationary,” he said.
A stagnant and deepening pool of capital could push the world economy into recession and, in the short term, poses a big challenge to the U.S. Treasury, which will be under mounting pressure to defend the integrity of the U.S. currency from fickle petrodollar investors.
Morgan Stanley worries that oil exporters will be more “footloose” than Asian central bank investors and could precipitate a dollar selloff on signs of weakening support for the currency. If the world is to avoid a repeat of 1980, the petro-wealth must be recycled into consuming markets and Kahn believes that the Middle Eastern oil exporters are better equipped this time to spend the cash.
“Their ability to absorb the funds is considerably higher,” he said, pointing to huge oil and gas projects in Qatar and Saudi Arabia, or transport infrastructure such as the Riyadh to Jeddah railroad. “There has been a deterioration in infrastructure in oil-exporting countries. They have not done much spending for 30 years.”
The Gulf’s new financial markets are a conduit for investment and a spate of privatizations and public offerings in Saudi Arabia provides vehicles for investment. The value of rights issues on the Gulf’s stock markets have risen tenfold this year to more than $9 billion as Middle Eastern countries fund the rapid growth of their economies. There are more cash calls on the way, notably a $2 billion fundraising by Kuwait’s Mobile Tele- communications Company and a $500 million share offering by Etihad Etisalat/Mobily. The initial share offering of the latter company, which owns Saudi Arabia’s second mobile phone license, was oversubscribed 50 times when it floated in 2004 and provoked fights when subscription forms ran out.
The Gulf is awash with cash and the evidence is nowhere more plain than Dubai, an emirate bereft of oil that has taken up the challenge of becoming a financial and leisure playground for the region. Some 23 million square feet of shops is planned and Emirates, the state’s airline, has virtually underwritten the launch of the Airbus A380, ordering 45 of the supersized aircraft. Saudi Arabia spent about $18 billion on defense in 2003 and is anxious to replace its old Tornado aircraft.
Much of the Gulf’s spare cash originates in Saudi Arabia, which is enjoying the double bonus of record oil prices and ever-increasing demand for its crude. According to the Centre for Global Energy Studies (CGES), net revenues from Saudi Aramco’s oil sales will reach $139 billion this year, up from $91 billion in 2004. That will leave the Kingdom with a surplus of about $65 billion, according to the CGES.
Where will all the money go? Repayment of debt accumulated during lean years could absorb $20 billion or more, Leo Drollas, of the CGES, said.
Saudi Arabia is also under pressure to invest, citing a five-year plan of about $30 billion to $40 billion in oil, infrastructure and housing projects. Even so, the annual investment of $6 billion to $8 billion will do little to dent the huge cash haul. “In the short term, they will finance the American deficit,” Drollas admitted.
Kahn believes that the oil exporters will quickly recycle the wealth and he is encouraging them to do so, urging them to build schools, hospitals and roads: “Telling people to spend more is not the usual IMF line. When oil was $20, we said: ‘Don’t spend.’ When it was $40, we said: ‘Spend cautiously.’ Now it is $60, we are saying: ‘Spend it all and save the world.’”

By Carl Mortished
The Times of London

Rogue

Bobwins.....I'm 80% cash and still the drawdown I've had on my 20% invested had been disheartening. I own about 40 different names and at least 30 are oil and gas related. I have a few shorts but not enough dollarwise to compensate for my longs these past few weeks.

I'ts tough because on the day I was going to look to take some very large profits on about 8 oil issues and sell into strength( a wendesday about 3 weeks or so ago) my computer crashed out for the entire day. Those oil issues topped out that day and it would have been an "easy sell" for me into the strength. I like to sell into strength and not weakness like we've been seeing.

I still think that the only issues in general that have "real investment potential" in this market going forward are Oil/Gas and natural resource related. I'm trying to figure out how and if/when I may want to hedge my long positions with a 100% to 200% short position of my 20% invested position dollar wise.

I can envision the market in general doing poorly or stagnant and our oil/gas and natural resources(Gold/Palladium/copper etc) doing relatively well.

I really am trying to figure a "hedge" to play this. I'm sure the QQQ's and DIA, SPY and XLE may figure into the "equation".

And of course.....timing is everything.

Rogue

Housing Index...I guess 23 years of "hardened financial" battles and experience can pay off! Investing/trading is a learned art......you're never to old to keep learning!

Look at the date of this post, It was the "ultimate time" to go short housing/building stocks if I may say so..... with the least amount of "risk"!!



Posted by: roguedolphin
In reply to: FinancialAdvisor who wrote msg# 10224 Date:8/6/2005 2:07:30 AM
Post #of 12433

DING DING DING!!!!!! I'm ringing the bell here for the end of the building boom after all these years!!!

Fundamentally I believe all the "ducks are lined in a row" to put an end to the LONG LONG LONG building and housing boom.

Technically....look at those classic "bearish divergences" on the housing Index chart. New highs were "unconfirmed" by both RSI and stochastics.


Rogue

Legend Grope's latest OIL "updated" view...

from another poster today...

"Henry Groppe was just on ROBTV for the past hour.He said the world is now at peak production.His firm has 88% of its investments in Canadian oil with the tar sands being the most of the position.He said that Canada is the only country with growth in the oil business as all other countries are entering decline in production world wide. He also said that all other sources of opec oil are in question has the countries with that production are unstable.He said that Canada is the only country in the world with the biggest energy reserves sitting beside the biggest consumer US and with the friendly trade that is the largest in the world.He said you will never be able to find this type of situation any where in the world.Bottom line BUY OIL SAND COMPANIES and turn off the daily market noise.Good advice Henry."


Rogue

Oil Forecasting Legend Paints Dire Energy Picture

By David J. DesLauriers
06 Jun 2005 at 07:00 AM EDT


TORONTO (ResourceInvestor.com) -- While Matt Simmons’ work is recently more widely publicized, Henry Groppe has been accurately forecasting oil price trends for the last 55 years. His latest views agree with those of Mr. Simmons, and paint a dire picture of a “permanently changed situation”. Indeed, Groppe says, “We think were headed for an energy crisis.”

Background




Henry Groppe founded Groppe, Long & Littell in 1955. He has 55 years of experience in the oil, natural gas and petrochemical industries, including positions with Arabian American Oil Company, Dow Chemical, Monsanto and Texaco. He is a fellow of the American Institute of Chemical Engineers and has served as a charter member of the Texas Governor’s Energy Council and a director of the United States Energy Association (the U.S. member committee to the World Energy Council).

The company’s clients include some of the largest oil & gas, integrated, chemical, financial, oilfield services, and pipeline utilities in the world – not to mention several world governments.

Some more recent examples of their successful forecasting track record include:

Calling the top for oil in 1980 when everyone thought prices were going to $100 per barrel.
Calling a persistent gas bubble in 1986 when the consensus was that it would be over within 12 months.
Predicting long term gas prices rising to $4-$5 per MMBTU in the early 1990’s as the Department of Energy said prices would be steady to lower, in the $1 per MMBTU range.
Between 1998 and 2000, successfully forecasting both the drop in oil prices to the $10 per barrel range, and their subsequent quick ride back to $30 per barrel.
Groppe says his accurate forecasting record is “based on two fundamentals – and our view is that given enough time the fundamentals always prevail. That has enabled us to relatively accurately identify all of the major turning points in the last 30 or 40 years. Petroleum fundamentals are first - depletion. From the moment you drill your first well into a field and begin producing, you are physically depleting that finite source, and it is just a question of time until you’ve produced it all. The second is that exploration is a very rational process. Experienced people use the best technology, go after the biggest deposits first, the easiest to find, most profitable, and it always gives you the classic production history curve.”

Simmons

As seen recently in these pages, Matt Simmons in his new book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, predicts “prices surging to progressively higher plateaus.” He says, “The peak oil discovery year was 1965. 2005 is now being marked as peak sustainable production.”

Going forward, his predictions are gloomy “there’s a better chance we’ll be living on the moon [than find enough oil to sustain current and projected demand]. Oil will peak and it is not renewable.”

On the whole, seasoned veteran Groppe seems to agree with all of this.

Are the numbers real?

As an aside, well-regarded and prescient analyst Don Coxe recently cited for Basic Points readers a fascinating report by the Association for the Study of Peak Oil and Gas, which refers to 1985 when OPEC members were “competing with each other to be allotted bigger OPEC quotas.” Coxe writes “OPEC has always allotted quotas to members in proportion to their proven reserves. Kuwait’s geologists must have had a pretty good year, because their reserves climbed from 64 bn bbls to 92 bn. But the Kuwaitis were pikers compared to their brethren in the Emirates, who said that, upon reflection, they needed to boost their reserves from 31 bn to 92 bn. Not to be outdone, Iran announced its real reserves were 93 bn, up just a tad from a previous 47 bn. The 1985 champ, though, was the savvy Saddam, who was not content with double digits: his reserves went to 100 bn, up slightly from the previous 47 bn.” According to the Association for the Study of Peak Oil and Gas, those reserve figures remain today.

What does Groppe think now?

Groppe says that we are at "a major turning point for world oil and north American natural gas.” According to this veteran, “We've been down a long road of exploration and exploitation and found everything easy. We've reached the point where all the major initial discoveries have reached their peaks and are declining. The newer ones are too small to offset it, and North American natural gas production has clearly peaked and is irreversibly declining. We think were at that turning point for world oil. From now on we’re in a new era where the key question is what prices will be required to cause consumption to decline to match an irreversible decline in supply?"

A critical question, and here Groppe seems to feel a little bit better about the situation than Simmons. "We think it requires a minimum of $50 for WTI to balance the system, and it will take time to determine how much above that is going to be required. And for the US natural gas market we think it will require prices in the range of $6.50 to $8.50 during the next 10 years to balance our supply demand system."

At the same time, he reiterates that “for the first time in our history we are now at the point where the huge complex worldwide oil business is operating at total capacity, with every prospect of staying there from here on. Therefore any disruption in supply, or concern about disruption in supply, is going to create very very volatile surges in price on the upside.”

Indeed, Groppe says, “The difference this time, in our view, is that we are going to have sustained higher prices. In the previous energy crises the big run up in prices produced significant reductions in consumption and significant supply responses, particularly by non-OPEC producers. That is no longer possible, and we think the consumption response is going to be lesser this time because all of the easy things were done previously.”

“We think this is a real turning point because of so many years of exploiting what we’d already found, and the disappointing rate of new discoveries… in the last 35 years over $1.5 trillion was spent outside OPEC, and the three largest discoveries in that period were all under water. At peak each will only produce 1.5 million barrels per day, roughly equivalent to only one year’s depletion decline in base current world oil production.”

This is worrisome, as according to Groppe “New finding rates in the US peaked in the 30s and 40s, and on a worldwide basis, finding rates peaked in the 50s and 60s.” The math is quite simple and shows us how unsustainable the present environment really is. Right now “we’re using 2 to 3 times as much as were finding.”

Where can investors hide?

An interesting point for investors is that, Groppe says that as a result of the Iranian Revolution, “something like 30% of the value of the S & P in 1980 was the energy sector, and today its more like 6%-7%, and significantly last year the energy sector generated 23% of all of the earnings of the S & P 500.” “We expect it to rise to the 15%-20% range” in the future.

Going right along with this bullishness on the energy sector, and historical low point for the weighting of the energy group in the S & P, Groppe says, “I think the easy oil has been found, but in general, in our work, we conclude that oil and gas assets are still significantly undervalued based on the long term price outlook that we see.”

To get a little bit more specific, Groppe’s favourite group is the Canadian oil patch. “We would classify Canada as perhaps possessing the most attractive combination of circumstances for energy investment of any place in the world. It is only a quarter as intensely drilled and exploited as the United States” and “I suspect that in the next several years the oil sands reserves will be raised to be higher than Saudi Arabia’s.” In that same vein, Groppe predicts “within 10 years we have Canada as being the largest non-OPEC producer in the world outside of Russia.”

The man puts his money where his mouth is, and says that “90% of all of my equity investment assets are in energy, and 65% of that is Canadian.” He also says, “We think there is still a good long run ahead with the kinds of prices that we see”, which should be a positive, and somewhat comforting for investors in the area, considering Groppe’s enviable and unmatched oil forecasting record, both in longevity and accuracy.


Rogue