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Archive for the ‘Finance’ Category

While Obama fantasizes about windmills and little cars that go buzzzzzzzzzz

Follow-up to The Devil Went Down to Georgia

steamfont-windmills

Sweden and Finland just approved the Nord Stream pipeline, a $15 billion project that will pump Russia’s natural gas to Germany via the Black Sea, bypassing Ukraine entirely. 80% of Russia’s natural gas is currently pumped through Ukraine, and a series of price disputes over the years has led to Russia cutting the gas off till its demands were met. Twice.

Between Swedish environmental regulations and some fussing by officials over details of the construction permit, the deal took 23 months to go through. Russia and Germany are expected to sign off on it, with construction set to begin next year. Two parallel pipelines will be constructed, with one scheduled to open in 2011 and the second a year later.  The pipes will be 758 miles long, running from the St. Petersburg area to northern Germany, with the capacity to deliver 55 billion cubic meters of gas a year.

This deal follows on the heels of a $3.5 billion deal with China..

Gazprom Chief Executive Alexei Miller told reporters the deal could open the way to Russia, the world’s biggest natural gas producer, supplying 70 billion cubic meters per year to China from Siberia and the Russian Far East, including Sakhalin.

This could make China the biggest buyer of Russia’s natural gas, overtaking Germany, which imported around 37 bcm last year.

Which followed on the heels of another deal

BAKU — Russia and Azerbaijan have agreed to two major natural-gas deals during a visit to Baku by Russian President Dmitry Medvedev, RFE/RL’s Azerbaijani Service reports.

One agreement, signed by Russian gas giant Gazprom’s Aleksei Miller and State Oil Company of the Republic of Azerbaijan (SOCAR) President Rovnag Abdullayev, defines the basic terms of gas deliveries from Azerbaijan to Russia under a memorandum signed on March 29.

Which, yes, you guessed it, followed on the heels of another deal..

Russian President Dmitry Medvedev and his visiting Turkmen counterpart Gurbanguly Berdymukhamedov discussed on March 25 in Moscow energy cooperation between their two countries, including the Caspian pipeline. Medvedev said that Moscow and Ashgabat will soon sign new agreements on natural gas production and transportation, RIA Novosti reported. “We studied in detail cooperation in the fuel and energy sector, including progress in the implementation of very important accords, such as the intergovernmental agreement on the Caspian pipeline, and other projects,” Medvedev said after talks in Moscow with Berdymukhammedov.

While Russia has been working to ensure its future prosperity by following Reaganomics, to wit, developing its abundant energy resources, cutting taxes, annnnd reducing government spending, our country will soon be swirling the drain thanks to a few things like..

All of which will massively increase our energy costs. The dollar will plummet at about the time energy rates skyrocket and the US government will collapse under the weight of its own debt, taking the American people down with it.

For a little fun, the next time a liberal brags to you about his electric car, ask him what will happen when the world’s supply of lithium runs out.

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On September 3 2008, Sarah Palin stood on a stage in Minneapolis and delivered one of the single greatest speeches in American history. Okay, perhaps it was not in the stratosphere of “give me liberty or give me death” but The Palin Speech was an electric experience that conservatives will never forget.

manAside from Palin’s charm, ease, and wit, she packed the speech with education that Americans needed to be aware of. She taught a clinic on rooting out corruption and returning more wealth to the taxpayers. She proved that a lady in pearls could be as sharp as a woman in a pantsuit. She also explained a big reason why America should be thankful that Alaska is on our side:

When that deal was struck, we began a nearly $40 billion natural gas pipeline to help lead America to energy independence. That pipeline, when the last section is laid and its valves are opened, will lead America one step farther away from dependence on dangerous foreign powers that do not have our interest at heart. The stakes for our nation could not be higher…with Russia wanting to control a vital pipeline in the Caucusus, and to divide and intimidate our European allies by using energy as a weapon. We cannot leave ourselves at the mercy of foreign suppliers.

At the time these words were spoken, Democrats scoffed. They promised us cars that ran on water and houses powered by nothing but air, which would eliminate the need for oil and get rid of the Russia problem. Trust us, they pleaded. In time the rush for oil will be old news.

This promise didn’t even get to the other big concern over Russia controlling oil. Right now the only thing keeping the American dollar afloat is its tie to trading oil. Forget about putting gas in the car or paying high light bills in the winter. When Russia succeeds in taking oil away from us, paying a utility bill will be the least of our concerns. Conservatives are still waiting for the genius plan that Democrats surely have to make dollars valuable in a post-oil world.

More than one year later, Sarah Palin’s warning still sounds as relevant as ever. No magic cars yet, no windmills dotting the landscape, nothing we were promised from the left has appeared, and as the price of a gallon of gas hovers around uncomfortable levels, the fear of foreign suppliers has only grown.

Whatever came of Russia creeping into the Caucusus? The example they made of Georgia was enough to convince others in the region to cooperate with Russian demands for oil production. Now their control in that area is a major problem.

As Palin’s predictions began to come true, no one on the left saw a need to admit that domestic oil might be a good idea after all. Instead, the American people were offered a Cash for Clunkers welfare program designed to save families a few gallons of gas at a time in exchange for an expensive brand new car.

Having successfully gained control of major sources of oil, Russia is now canestepping up demands for all of Europe to tithe for their energy. January of 2009, the president of Ukraine refused to settle a debt for oil deliveries because he felt that Russia was charging too much. Russia retaliated by witholding oil from several other countries nearby and Ukraine was eventually pressured into paying.

As the end of another fiscal year comes around, Ukraine is back with the same problem. Russia is demanding $12 billion for oil supplies and the Ukrainian government says they don’t have that kind of money. Russia has responded, again, by ordering the European Union to come up with the funds or lose energy for millions of citizens in eastern Europe.

Meanwhile, America will have those windmills set up in Nantucket any day now.

This is the part where some might wonder why Russia would withold oil if it means they can’t make any money. That’s why they just negotiated a similar deal with China, who certainly has enough cash to pay the bill and has no qualms about making Faustian agreement.

Moreover, as The Messenger recently reported, our supposed ally of India has taken their own cue to get in bed with Russia. Oh, and there is also a whole other problem with Russia doing a favor for Iran by stalling sanctions over nuclear technology.

And while we are at it, let’s mention Russia signing energy deals with countries like Equador and becoming BFF with Hugo Chavez.

So, to sum up this situation: Sarah Palin predicted exactly what would happen, half the world is either afraid of Russia or sucking up to stay in favor, and America is still debating what color to paint the windmills.

If this is the best that the American people can do, we didn’t deserve to hear The Palin Speech at all.

Enjoy the feeling of pride that owning a Prius will save the world.

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Reserve Bank of India, the central bank of the Indian government, sold off $6.7 billion in US dollar reserves to buy 200 tons of gold on November 3. The move came as a surprise to investors and shot up the price of gold to $1086 per ounce.

breadIndia’s Finance Minister Pranab Mukherjee said the move was a strategic decision to build more wealth inside of India and move away from Western influence, because, as he put it, “Europe collapsed and North America collapsed.”

Americans need to worry about this for three reasons:

1) central banks tend to be more conservative since they unofficially signal the mood of their government. But if other countries see that major central banks are now openly dumping dollars, they’ve no reason to hold off themselves. 

2) India’s central bank has a heavy hand in regulating the currency exchange. The rupee has been tied to the dollar for several years, but lately there has been growing pressure from the Indian people to change that. Since much IT and customer service work is outsourced to India, a strong rupee would destroy profit margins for American companies.

3) Russia has been courting India as a possible ally for some time. If India truly believes the West has collapsed, they will gravitate to Russia and China where the future is percieved to lay.

With more investment firms like CIT continuing to fail, it’s getting harder for the US government to convince investors that America isn’t in the midst of a slow-motion collapse. Unless our economy makes a miraculous recovery, and soon, India’s warning will become a self-fulfilling prophesy as more central banks join the exodus.

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A bank that recieved more than $2 billion in bailout assistance last year is officially filing bankruptcy to absolve itself of more than $10 billion worth of debt. Government officials, who proffered the bailout funds a year ago on the insistence that the bank could not be allowed to fail, are now apparently okay with it failing and have conceded the American taxpayers will not recoup the lost money.

mugBloomberg reported on the plight of one CIT Group Inc. that filed in bankruptcy court last week. The firm owes money to approximately one bazillion creditors and attempted to pull off a debt exchange in bankruptcy court, but the creditors, led by Bank of America, are favoring the traditional process.

Here is why this story matters: first, it exposes the stupidity of the bailout, but more importantly, it’s one more dent in Bank of America’s pocket. The more of these smaller banks that continue to fold, the more BOA sees another debtor go “poof.”

BOA cannot afford to absorb many more of them. And if BOA goes bankrupt, get ready for the end of the world.

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The House Always Wins

Anyone who can’t grasp the concept of cause and effect is either criminally stupid or willfully obtuse. I report, you decide.

This week Senate Banking Chairman Chris Dodd proposed a bill to immediately freeze credit card interest rates. This is in response to a shower of complaints from debt-saddled constituents currently being taken to the cleaners. What a nice man. Those poor people are being taken advantage of, and by golly, he’s going to ride to the rescue in his white limousine.

Here’s the thing. Congress passed a bill in May, H.RES.456 , aka the “Credit Card Accountability Responsibility and Disclosure Act of 2009”. (I adore Newspeak, it has such a grand ring to it as it rolls off the tongue.) This well-intentioned piece of legislation does wonderful things like:

  • Mandating a written notice of fee and rate increases 45 days before they are to take effect.
  • Declares that the obligor (you, poor devil) may cancel the account without constituting default.
  • Prohibits retroactive increases and universal default.

All this Hope and Change is set to kick in…..next February. Can you guess what the credit card companies are rushing to do before then?

After reality landed on his constituents (and everyone else) with a resounding thump, Dodd scrambled to come up with his grand rescue plan to save us all from the monster Congress created. The bill is unlikely to pass, not that it matters much. If it does, the banks will simply come up with other ways to limit their risk, like tightening credit requirements and canceling accounts.

The House always wins.

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Regulators Prepare for the Next ‘Big One’ Ω

LONDON — Global economic policy makers are just beginning to grapple with a key issue rising out of last year’s bankruptcy of Lehman Brothers Holdings: how to react if — or when — the next big global bank spins out of control.

While the furor over bankers’ bonuses has captured most of the headlines, policy makers are in the process of assigning each of the world’s 25 most complex international banks to a multinational crisis-management team to draw up contingency plans if they run into trouble.

Here’s the Wall Street Journal piece on a North American currency referenced at the 8:10 mark. Here’s the FT piece on a one world government referenced immediately following. See Henry Kissinger’s call for a new world order here.  A minute and a half later watch him call Obama the best person to sell the new world order to the American people.

Any banks that don’t follow the program will be crushed, or cowed into submission. Remember Ken Lewis? Once you take their money, they own you.

The Wall Street Journal reported Saturday that Bank of America’s attempt to repay federal bailout funds and escape the government’s grasp has been snagged by a disagreement over how much additional capital the bank must raise to satisfy regulators, according to people familiar with the situation. Bank of America slid 5.1%, the biggest decliner on the Dow.

Don’t mess with the big boys, they’re the only thing standing between you and the pitchforks….

“‘My administration,’ the president added, ‘is the only thing between you and the pitchforks.'”

The implication was unmistakable. Do as I say or you’ll be handed over to the mob. It is a mob, by the way, that Barack Obama himself, with the help of his allies in the media and the Congress, have done their best to whip up and inflame. Executives at AIG, which has been the focus of some controversy because of bonuses, have gotten actual death threats, buttressed by protests ginned up by labor unions.

The American people are being played for fools by Obama and the people who put him in power. Bankers reluctant to go along with the plans of the Federal Reserve and Co. to bankrupt and enslave the American people are made the targets of a blinded citizenry. Irony surrenders.

Stay tuned for the next installment, tomorrow at 9 am.

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We will be putting together a package of material – a package of legislation – that will substantially diminish that problem.  First of all, and this is again something that goes back to Secretary Paulson in April of 08 – we will be providing a mechanism for putting nonbank financial instutions out of everybody’s misery. There will be death panels enacted by this Congress, but they will be for nonbank financial institutions that will not be considered too big to die.

Notice the look of amusement on Sec. Geithner’s face.

Is this as funny to you as it is to them?

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