A Real Worst-Case Scenario for BP: 20M Barrels, $560B Damages [View article]
I fully agree. Volatile hydrocarbons will evaporate, the small percentage of heavy tars will turn into blobs of asphalt and be combed off the beaches or decompose slowly, and three years from now no one will know the difference. Oil has been leaking steadily, naturally, and continuously out of fissures in the seabed for millenia.
Sad as this episode is, we need to accept that if we wish to burn 20 million barrels per day of cheap oil, the law of unintended consequences will rear its ugly head from time to time.
A Real Worst-Case Scenario for BP: 20M Barrels, $560B Damages [View article]
Placed in "Federal Receivership" by executive edict, or by Imperial decree, or by Sultan's Firman? Are you suggesting that our empror can just arbitrarily decide that their liabilities exceed their assets?Don't we have laws, courts, and impartial due process?
A Real Worst-Case Scenario for BP: 20M Barrels, $560B Damages [View article]
When Hugo Chavez nationalized the telephone company a couple of years ago, he paid the shareholders a reasonable price and honored the bonds.
When Obama too over GM to hand it over to the UAW in return for their votes, the shareholders lost everything, and even the bond-holders got nothing via a " pre-packaged legal due process" which gave everything to one group of unsecured creditors (the UAW) and nothing to another group of unsecured creditors (the bond holders).
The USA got to be the greatest economy on the planet in large part because it is (or was) a nation of laws, separation of powers, and an independent judiciary. I hope the recent events of GM and now BP are exceptions, and that such issues continue to be handled by legal due process, nor executive edict.
Wall Street Breakfast: Must-Know News [View article]
So the taxpayers have to bail out Citi, so that Citi can finance the purchase of unaffordable, useless, shiny objects from Zale's.
What a brave new world. People are "entitled" to taxpayer subsidies for buying houses they could not afford, "entitled" to HELOC-financed vacations paid for by the taxpayers, and even "entitled" to posess little shiny junk, all at the expense of prudent savers and productive taxpayers.
2010: Time to Arrest the Oil Extortionists? [View article]
If we follow the logic of this silly article, we would need to file anti-trust and gouging charges against many, if not most, of our corporations.
The author, and some commenters, are upset that the price we pay for oil greatly exceeds the cost of pulling it out of the ground at the world's cheapest wells. By this logic, how about the price we pay for cereal? Grains cost about $5 for a bushel (about 50 lbs). Most kids need to eat cereal, and their parents are forced to pay $4 for a box that contains 10 cents worth of grain. After adding some sugar, etc, the cost of the contents of a box of cereal is 20-25 cents, yet the poor consumer has to pay 15x-25x that cost. Should we haul the managements of the cereal companies off to jail?
How about clothes? People need underwear and socks, and our retailers sell them for 10x-20x what they pay the Chinese for them, so why don't we haul our retail executives off before the courts or the congress too?
How about tomato soup, or pasta, or soap, or toothpaste? Do you think the cost of ingredients in the package are commensurate with the price charged to the consumer? Should we sue their producers' executives too?
There are many other examples of necessities for which the consumers' final price greatly exceeds the basic cost of the goods or the raw material. This is natural, as there are many other components of cost, and if business cannot profit, it will not make the effort to develop a product and bring it to the consumer. However, the author's deficient logic implies that all these goods have to be subjected to price controls by the state. This is what centrally-planned (aka communist) economies have attempted, and the result was that production of all these necessities dropped, and so did their entire standard of living.
2010: Time to Arrest the Oil Extortionists? [View article]
Oil is too cheap. We waste too much of it unnecessarily, destroying our health by breathing pollution as a result. It is a finite resource, and its price will continue to trend inexorably upwards. We need to accept facts and plan accordingly, rather than bury our heads in the sand and blame cartels and manipulators.
We need to stimulate the economy by investing in jobs for energy efficiency, not by wasting money on pork. We can stimulate the auto industry by subsidizing smaller, fuel efficient cars and can create jobs building high-speed rail that reduces pollution, reduces highway and airport congestion, and reduces oil consumption. Ditto for nuclear and renewable energy.
If high oil prices are the only way to motivate us to implement such necessary changes to our economic model, then they are a blessing, even though those with limited vision are unable to see it as such.
The notion that if only the evil cartel were to pump out an extra 5m bbd then price will drop and all will be well forever is silly. This simply creates a greater crisis for our children and prevents us from implementing policies that create useful jobs that truly benefit our economy.
Preview from Europe: All Fools' Day [View article]
As usual a great, succinct and witty summary. You state that suspending mark-to-market would allow bankers to "...... run their firms with little or no capital and leverage them to the hilt creating the biggest credit bubble the world has ever known ....".
I was under the impression that this has already come to pass.
The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 5 [View article]
Cliff, I am confused by the prices you quoted as entry points for FTE and TEF, as they are inconsistent with the prices of their ADR's. I've owned both for many years due to their excellent dividends.
I added recently more FTE @22 (for the ADR). You recommend buying it @14/12, which I agree would be a great price, but the 52-week range is 21-36 and I'd be very surprised if it gets down to 14.
You recommend buying TEF @ 14/12, but its 52 week range is 47-93 (for the ADR). I have been looking to expand my holding in it, but frankly I think it is expensive. I would not buy more unless it dropped below $40.
Regarding BP, another issue that I have owned for years and added to recently, I am less confident than you about their dividend, and would not be too surprised if it were reduced if oil continues to slump for a while. I believe the stock price slump suggests that others have similar expectations.
Four Oil Giants to Keep an Eye on - Barron's [View article]
I've held XOM for three decades (both as Exxon and as Mobil), and have added to my holdings many times over the years. It is solid and low-risk. It is also pricey, reflecting a flight to safety, so I believe its upside potential is modest from current levels. I also hold other oils, and have added to BP, RDSB, TOT, STO and REP in recent dips. I've held PBR for years, and its done very well, but think its a bit pricey at present.
A Real Worst-Case Scenario for BP: 20M Barrels, $560B Damages [View article]
Sad as this episode is, we need to accept that if we wish to burn 20 million barrels per day of cheap oil, the law of unintended consequences will rear its ugly head from time to time.
A Real Worst-Case Scenario for BP: 20M Barrels, $560B Damages [View article]
A Real Worst-Case Scenario for BP: 20M Barrels, $560B Damages [View article]
When Obama too over GM to hand it over to the UAW in return for their votes, the shareholders lost everything, and even the bond-holders got nothing via a " pre-packaged legal due process" which gave everything to one group of unsecured creditors (the UAW) and nothing to another group of unsecured creditors (the bond holders).
The USA got to be the greatest economy on the planet in large part because it is (or was) a nation of laws, separation of powers, and an independent judiciary. I hope the recent events of GM and now BP are exceptions, and that such issues continue to be handled by legal due process, nor executive edict.
Wall Street Breakfast: Must-Know News [View article]
What a brave new world. People are "entitled" to taxpayer subsidies for buying houses they could not afford, "entitled" to HELOC-financed vacations paid for by the taxpayers, and even "entitled" to posess little shiny junk, all at the expense of prudent savers and productive taxpayers.
2010: Time to Arrest the Oil Extortionists? [View article]
The author, and some commenters, are upset that the price we pay for oil greatly exceeds the cost of pulling it out of the ground at the world's cheapest wells. By this logic, how about the price we pay for cereal? Grains cost about $5 for a bushel (about 50 lbs). Most kids need to eat cereal, and their parents are forced to pay $4 for a box that contains 10 cents worth of grain. After adding some sugar, etc, the cost of the contents of a box of cereal is 20-25 cents, yet the poor consumer has to pay 15x-25x that cost. Should we haul the managements of the cereal companies off to jail?
How about clothes? People need underwear and socks, and our retailers sell them for 10x-20x what they pay the Chinese for them, so why don't we haul our retail executives off before the courts or the congress too?
How about tomato soup, or pasta, or soap, or toothpaste? Do you think the cost of ingredients in the package are commensurate with the price charged to the consumer? Should we sue their producers' executives too?
There are many other examples of necessities for which the consumers' final price greatly exceeds the basic cost of the goods or the raw material. This is natural, as there are many other components of cost, and if business cannot profit, it will not make the effort to develop a product and bring it to the consumer. However, the author's deficient logic implies that all these goods have to be subjected to price controls by the state. This is what centrally-planned (aka communist) economies have attempted, and the result was that production of all these necessities dropped, and so did their entire standard of living.
2010: Time to Arrest the Oil Extortionists? [View article]
We need to stimulate the economy by investing in jobs for energy efficiency, not by wasting money on pork. We can stimulate the auto industry by subsidizing smaller, fuel efficient cars and can create jobs building high-speed rail that reduces pollution, reduces highway and airport congestion, and reduces oil consumption. Ditto for nuclear and renewable energy.
If high oil prices are the only way to motivate us to implement such necessary changes to our economic model, then they are a blessing, even though those with limited vision are unable to see it as such.
The notion that if only the evil cartel were to pump out an extra 5m bbd then price will drop and all will be well forever is silly. This simply creates a greater crisis for our children and prevents us from implementing policies that create useful jobs that truly benefit our economy.
Preview from Europe: All Fools' Day [View article]
I was under the impression that this has already come to pass.
The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 5 [View article]
I added recently more FTE @22 (for the ADR). You recommend buying it @14/12, which I agree would be a great price, but the 52-week range is 21-36 and I'd be very surprised if it gets down to 14.
You recommend buying TEF @ 14/12, but its 52 week range is 47-93 (for the ADR). I have been looking to expand my holding in it, but frankly I think it is expensive. I would not buy more unless it dropped below $40.
Regarding BP, another issue that I have owned for years and added to recently, I am less confident than you about their dividend, and would not be too surprised if it were reduced if oil continues to slump for a while. I believe the stock price slump suggests that others have similar expectations.
Four Oil Giants to Keep an Eye on - Barron's [View article]