Tuesday, October 31, 2006

Happy Halloween!

For your viewing pleasure, "It's the Great Pumpkin, Charlie Brown".

Enjoy!

Speculators buy drought-hit crops

The Guardian recently ran an article on the agricultural commodities, highlighting that sector's performance against the strong multi-year runs enjoyed by the industrial metals, energy, and precious metals groups.

Prices for wheat and corn crops are being affected not only by drought, but biofuel production and increased demand from Asia as well. A new group of speculators is also starting to pour into the commodities market; hedge funds are becoming more active in this arena and retail investors are gaining exposure to commodities through funds, ETFs, and other exchange-traded instruments.

For more information on the new commodity ETFs and instruments such as exchange-traded notes (ETNs), please enter the terms in either the Technorati or Google blog search features for this site.

Monday, October 30, 2006

Oil sands: questions over rising costs

I wanted to talk about energy from oil sands today, in response to a couple of recent articles on the subject. Mainly what I and an increasing number of people want to know is, will oil sands prove a sensible solution for our energy needs?

First, a little background on oil sands. Here's a brief summary taken from an earlier post on Alberta's oil sands boom:

The oil sands, or tar sands (depending on your point of view), have always been something of a difficult resource base to exploit. Extracting the heavy oil from thick mats of clay and sand is an energy intensive and land disrupting process. The tar sands deposits are actually mined open pit style or extracted by steam injection, a method which requires large amounts of water and energy.

Add the spectre of sizeable greenhouse gas emissions and it's easy to see that this activity will draw protests on multiple fronts. But even without outside protest, the companies involved in producing energy from the tar sands are encountering difficulties with higher than expected costs. These companies were probably not working from a base of overly-sunny expectations; everyone has known for quite some time that the tar sands projects were economical only during times of high crude oil prices.

What drove people to develop this resource was its sheer size and the prospect of extracting hydrocarbons in a politically stable, mining friendly environment. Alberta's tar sands are estimated to contain 175 billion barrels of oil (proven reserves) and this is where Western development has been concentrated.

A recent Financial Times article, "Optimists hope oil sands deliver", revisted the theme of project complications for Canadian oil sands producers. Petro-Canada's Mackay River project was cited as a prime example of a field hit by soaring development costs. The piece also sounded a skeptical note on oil sands production; it was noted that two tons of oilsands yield just 1.25 barrels of bitumen and a single barrel of crude. In light of the high environmental impact the oil sands projects carry, this is no small point.

Shrewd observers have also pointed out that vast amounts of energy and water are needed to develop the resource. CNNMoney.com makes exactly this point in, "Curing oil sands fever".

Experts say most of the natural gas Canada currently exports to the United States will be eaten up by the oil sands projects. To fuel further expansion, they say, Canada will have to import natural gas from Alaska. Some have even suggested going nuclear, although that idea has gained little traction so far.

Another constraint is water. Both extracting methods use huge amounts, up to two barrels for every barrel of oil produced.

Even with production running at one million barrels a year, concerns are already being raised over the drawdown from the major rivers that flow through the region.

The heavy use of natural gas in oil sands production may, at some point, be supplanted by near-site nuclear power or some form of renewable energy, but such plans remain speculative for now. What would be interesting, and not a bit ironic, is the possibility of the oil sands producers coming to the forefront in adopting these technologies in an effort to mitigate their high reliance on hydrocarbon energy.

Depletion of water resources is another matter entirely, and one that will have to be addressed through smarter planning and increased use of conservation measures (such as water recycling).

Still, many investors are serious when they say the oil sands could become a bonanza in terms of real energy supply, as well as returns. Jim Rogers, T. Boone Pickens, and Newmont Mining's Pierre Lassonde and Seymour Schulich are some of the astute investors who have invested in the oil sands companies and proclaimed their potential. Will they turn out to be right over the longer term or will rising costs and project difficulties eat away at their investment returns?

One last point. In the most recent issue of Barron's, Andrew Bary notes that output from the oil sands could rise, from the current figure of 1 million barrels a day, to 4 million barrels a day by 2020. He also points out that energy companies will spend an estimated $100 billion dollars to further develop the Alberta oil sands region over the next decade.

Here's a question for knowledgeable readers. What could be done with that $100 billion dollars if applied to the development or improvement of existing renewable/sustainable energy technologies?

Now I'm not speaking of pie-in-the-sky developments or the currently unfeasible notion of a "hydrogen economy"; I'm asking about real technologies and proven advances that could be brought to market through a similar sized investment.

Given the new ways in which scientists and entrepreneurs can share information and collaborate on projects, and the public's current awareness of issues related to energy reliance and global warming, I have say I'm optimistic regarding future advances in this field. By adopting and improving new and existing renewable energy technologies, we just might be able to lessen our reliance on dwindling hydrocarbon supplies.

Saturday, October 28, 2006

Jukebox

This might be too much style packed into one session, but here goes:

Stone Roses - "She Bangs the Drums".

Happy Mondays - "Step On".

Suede - "The Drowners".

Primal Scream - "Higher Than the Sun".

Keep rockin'.

Friday, October 27, 2006

Star "macro" funds lagged S&P 500

From the Bloomberg.com article, "Soros, Bacon, Jones Hedge Funds Lag Behind S&P 500":

Investors in hedge funds overseen by George Soros, Louis Bacon and Paul Jones would have made more money this year by buying shares of a stock-index mutual fund.

Managers of so-called macro hedge funds have lagged behind market benchmarks such as the Standard & Poor's 500 Index after being caught off guard by reversals in stock, bond and commodity prices. Macro funds, so named because they bet on broad economic trends, fare better when prices move up or down for a sustained period, which hasn't been the case in 2006 with investor opinions divided about the strength of the U.S. economy.

The "macro" style of hedge funds not only underperformed the S&P 500, they also failed to outpace the overall asset class.

Macro funds rose by an average 1.8 percent as of Oct. 24, compared with 5.6 percent for all hedge funds, according to data compiled by Hedge Fund Research Inc. of Chicago. The Vanguard 500 Index, the largest mutual fund to track the S&P 500 index, a broad measure of U.S. stocks, advanced 12 percent.

Last year, macro funds returned 6.8 percent, beating the Vanguard 500 by 2.2 percentage points.

The performance time frames are getting shorter for hedge fund managers; there have been many reports in recent years of investors zeroing in on monthly performance. So now, I guess when the managers and their funds are having an off year (as defined by their failure to beat benchmark X), they're more likely to see withdrawals of money.

I'm not that familiar with the funds run by Soros, Bacon and Jones, but I would guess their funds cater to a more experienced, higher echelon investor group. These are star managers who can probably demand stringent lockup terms on any outside capital they attract, and I'd guess that the investors would be oriented towards longer-term horizons.

Or am I wrong and is it the young hot-shots that everyone wants to give their money to? I don't know, I'll have to look into it. The newer group of hedge fund investors seem to be saying, "here, take my money and shoot the lights out. Just don't have a bad month!".

One axiom does come to mind: "new money is scared money".

Halliburton arm accused of ‘abuse’ in Iraq

Nnnnooooo....(said in exaggerated Jack Tripper-style stage groan).

A Halliburton subsidiary that has been awarded billions of dollars in federal contracts in Iraq has been accused by an independent watchdog of “abuse” of government regulations that protect US taxpayers.

Stuart Bowen, the special inspector-general for Iraq reconstruction, said in an interim audit released on Thursday that Halliburton subsidiary Kellogg, Brown and Root (KBR) had, in effect, routinely inappropriately hidden data about one of its contracts from public scrutiny by marking the information as “proprietary”.

The critical audit comes on the heels of a separate report released this week that found that overhead costs had consumed between 11 per cent and 55 per cent of the cost of a handful of reconstruction projects.

See the full article at FT.com

Thursday, October 26, 2006

Quote of the day

" People never lie so much as after a hunt, during a war or before an election." - Otto von Bismarck

Thanks to Penntrade mining news editor Tom Wobker for including this quote in his Northwest Mining Stock News update. If you survey the news today, you'll find at least one glaring example of the truth behind this statement.

Tuesday, October 24, 2006

Interesting quotes from Brian Eno

I happened to see these Brian Eno quotes from Brainyquote.com and found them interesting enough to include here. Here are two that jumped out at me:

I have lived in countries that were coming out of conflict: Ireland, South Africa, the Czech republic. People there are overflowing with energy.

Then, further down the page...

When I went back to England after a year away, the country seemed stuck, dozing in a fairy tale, stifled by the weight of tradition.

Interesting. The second Eno quote reminds me of Kipling's famous remark on the benefits of traveling outside one's home country. “And what knows he of England who only England knows.” I wonder if any Finance Trends readers have had such a learning experience?

Faber sees emerging markets outperforming U.S.

Also at Bloomberg.com, see the latest interview segment with Marc Faber, "Faber Sees Emerging Markets Outperforming U.S., Likes Argentina".

Always interesting to hear his thoughts, but personally I have to wonder how he can stomach some of the idiotic questions/debate points thrown his way by some of these sycophantic reporters and panel guests. It seems they are consistently interrupting the guest or throwing out idiotic statements in an effort to discredit logical and original thinking.

Witness the guest speaker's assertion that liquidity is not coming from the U.S. Federal Reserve, but from "petrodollars". Of course, Faber makes short work of him. So sad.

Corporate bond traders, salesmen lose out to automation

Bloomberg reports that due to newfound transparency in the corporate bond market, bond traders and salesmen are witnessing the demise of their profession.

With the advent of NASD's computer price reporting, their previously large incomes withered away. Now, many involved in the corporate bond market are losing their jobs.

One-fourth of all corporate-bond traders, analysts, brokers and salesmen have lost their jobs in the past two years, according to Michael Karp, head of New York-based executive search and consulting firm Options Group. David Hendler, an analyst who covers financial firms for CreditSights Inc., estimates as many as 500 people work in corporate bonds at the five biggest firms.

Since 2002, traders have been required to report trades of registered corporate bonds to a computerized NASD price reporting system known as Trace (an acronym for Trade Reporting and Compliance Engine). This has replaced the time honored dealer market in which customers would call up bond salesmen and survey them on price.

``Technology took a lot of the margin out of the business,'' said Richard duBusc, a Credit Suisse banker who started working on Wall Street 40 years ago when the NYSE closed on Wednesday afternoons to catch up on its paperwork. ``Is that good or bad? It's bad if you're losing your job. It's good if you're paying a tighter bid-ask spread.''

While the changes are considered good for the customers, the newer, regulated system has certainly taken its toll on those who once made their livings in the corporate debt market.

``You have a market that was completely dark for 200 years and instead of letting a little bit of transparency in there, they just opened the windows completely and all the shades and everything, and it was complete sunshine,'' said Jeff Stambovski, a senior high-yield bond salesman at Miller Tabak Roberts Securities LLC in New York until he quit in 2004 with the advent of Trace. ``I saw Trace come in and we just sort of looked at each other and we knew what was happening.''

For more on the changing shape of the bond and credit markets, see Bloomberg's article, "Bond Traders Lose $1 Million Incomes on Transparency".

Monday, October 23, 2006

Savvy investment managers doing well with commodities

A Bloomberg.com article reports that experienced hedge fund operators are doing well with their commodity-focused investment vehicles, despite a slump in the leading commodity indexes.

In, "Pickens, Farmer double their money during 2006 commodity rout", reporter Saijel Kishan describes how experienced fund managers are achieving postive returns at a time when the Goldman Sachs Commodity Index is down year-to-date.

Hedge fund returns are trouncing those offered by indexes of commodities, stocks and bonds. The Goldman Sachs Commodities Index, which the investment firm said in December would gain 9.5 percent this year, has lost 12 percent. The Dow Jones Industrial Average is up 12 percent, while 10-year Treasury notes have returned about 8 percent.

``Those that have worked for more than 10 years at the big commodity trading houses have seen it all before, they know how the markets work and how tricky they can be,'' said Jeremy Charlesworth, a director at London-based BDO Stoy Hayward Investment Management Ltd., which invests $40 million in commodity funds. ``Gray hairs are of great benefit.''

T. Boone Pickens and Michael Farmer (of the Red Kite fund) are among those highlighted for their fine performance, but not everyone came up winners.

Interesting to see mention of the fact that Ospraie Point Fund was liquidated in June after losing 29 percent on commodities related bets; Ospraie Management LLC head Dwight Anderson was recently highlighted as "The Commodities Specialist" in a chapter of Steven Drobny's recent book, Inside the House of Money.

Of course, the larger Ospraie Fund remains intact and it's quite possible that they will reorganize and introduce another commodities focused fund in the future. Crain's Newyorkbusiness.com reported last month that Ospraie had, "jumped back into the commodities fray, hiring several key executives to manage two separate energy funds."

Sunday, October 22, 2006

Share lending deceit

I read an interesting editorial in the weekend edition of the Financial Times on the subject of broker share loans. In, "The story brokers don't want you to read", money manager Arne Alsin describes the process by which stock brokerages take advantage of retail investors and disrupt the shareholder voting process.

Brokers lend investor property to short sellers, often at annual yields in excess of 10 per cent, without notice to investors. After lending investor property, brokers have the gall to keep 100 per cent of the proceeds.

Broker lending of investor property generates $10bn a year for the brokerage industry. Because brokers are reluctant to share this booty, they wilfully and systematically discriminate between investors. They discriminate between those investors who have information and those who don’t have information.

Investors who know when their shares are lent (in other words, institutional investors) demand a piece of the action. And they should. Those investors deserve to be compensated when their property is lent to someone else.

Investors who do not know when their shares are lent (retail investors) are treated differently. Brokers regularly loan out the property of uninformed retail investors and keep all the proceeds. Those property owners cannot demand a piece of the action if they do not know about it in the first place.

To understand how retail investors are being shafted by "hypothecation" agreements and their own ignorance, read on at the link above.

Note: Alsin's "Turnaround Fund" at one time held shares in Overstock.com (OSTK), a company whose CEO famously asserted they had been besieged by a conspiracy involving naked short sellers. As of 9/30/06, OSTK remains as one of the fund's largest individual holdings.

Has this experience colored Alsin's commentary? Let us know what you think, as I'm still trying to fully understand the whole "naked shorts" debate.

Friday, October 20, 2006

Marc Faber speaks with Bloomberg TV

Thought I'd post this October 17 article from Bloomberg in which Marc Faber is quoted. He feels that gold and oil are probably in a good range for buying right now; although they might go lower in the near term, they present a good opportunity, according to Marc.

Also be sure to check out the side link for Bloomberg's video on demand. You will see a link for a video interview with Marc Faber entitled, "Marc Faber favors Taiwan stocks, commodities and gold". Click on it and it will open in a new window. Good stuff.

Thursday, October 19, 2006

Investing for retirement

This is not an area in which I claim to be an expert, but I think you may benefit from hearing the advice of a financial advisor who probably is.

If you'd like to hear some real straight dope on what you'll need to consider in arranging your savings and investments for retirement, listen to last week's Financial Sense Newshour with Jim Puplava.

In the 3rd hour segment of the October 7 broadcast, host Jim and co-host John Loeffler discuss retirement planning and the need for income producing investments, especially those that can match or outpace inflation.

Why is this topic so important? For the simple reason that many Boomers will overestimate their financial preparedness while underestimating the eroding effects of inflation on their savings and investments.

If you like what you hear, check out the other 3rd hour "Big Picture" broadcast segments; Puplava and the gang have been devoting a lot of time to the issue of retirement planning lately. You can see a summary of each show's focus at the Financial Sense Newshour page, as well as their "Big Picture" segment archive.

Tuesday, October 17, 2006

Merc and CBOT to merge

The rumors are finally true. Today the Merc (CME Holdings) announced that it will acquire the Chicago Board of Trade (CBOT Holdings, as it is formally known these days) in a deal that combines the two largest U.S. futures exchanges.

We've often heard speculation that the longtime rivals would merge, but until the two firms went public, it never seemed like it would come to pass. Now that CME has grown in size and stature as a publicly traded corporation, they have the motivation and the means to swallow up their smaller rival, CBOT Holdings.

With a market cap of over $18 billion at today's trading price, CME is valued at over twice the $8.1 billion CBOT Holdings (BOT) commands at today's share price. CBOT Holdings has jumped over 13% in response to the buyout, and CME is up 3% as well.

Looks like everyone seems pleased about the deal. I hear from my father, a longtime CBOT member and trader, that the Merc will abandon their building and set up trading operations in CBOT's roomy digs. Now the combined entity will benefit from the Merc's forward thinking brass, and the combination of CME and CBOT's excellent offerings. Salud.

For more, see Reuters news update.

Monday, October 16, 2006

Bastiat on patents & monopoly

A very interesting article taken from Mises.org and reproduced at Marc Faber's site, Gloomboomdoom.com. In this essay, Nicholas Snow tells us about the "Three Stages of Invention", and Frederic Bastiat's philosophy on economic protectionism.

What would Bastiat make of our patent laws? Read on to find out. (Note: article link is to a PDF file).

Sunday, October 15, 2006

Rock n' Roll & CBGB's

This week's rock and roll post coincides with the closing of Manhattan's legendary music club, CBGB. Whether you were a regular there, or just read about it in the liner notes to Ramones Mania (like me), you know what this place means to many rock and roll fans.

You can read on for CBs memories as chronicled by Paul Collins for Slate and Jim Farber of the NY Daily News, but we prefer to keep on rockin'. Enjoy.

Mott the Hoople - "Golden Age of Rock n' Roll".

Dinosaur Jr. - "Freak Scene"

Small Faces - "Itchycoo Park"

Wilson Pickett & The Midnight Movers - "I'm In Love"

The Yardbirds - "Stroll On" (with Jimmy Page and Jeff Beck).

Saturday, October 14, 2006

Commodity dichotomy

Sorry for the dumb post title, but it just came to me. There is some important commodities related information to share, so please read on.

The Bear Mountain Bull has highlighted a divergence currently taking place in the commodity sector. It seems that while commodity indexes based on futures contracts are down sharply in recent months, spot commodity indexes are hitting new highs.

See the BMB site for more on this; you might find more to like while browsing their blog (there's some good market commentary, personal finance info, and general observations on the economy).

FT recently reported on changes in the copper market that have come about because of large investment demand. In "Structural shifts in copper market", Chris Flood writes:

New institutional funds flowing into the copper market have resulted in a historic shift in the relationship between prices and stocks, according to Bloomsbury Mineral Economics (BME), the metals consultancy.

The copper market has developed into a hybrid that is part industrial metals and part investment vehicle.

Investment demand has created a “virtual deficit” in the futures market, equivalent to 250,000 tonnes, which acts as a more powerful influence on prices than any slight rise in inventories.

However, BME stressed there was no speculative bubble in copper prices. This was shown by the narrowing in the spread between cash and three-month prices that purely speculative flows would have increased.

Instead, copper’s price behaviour had been altered by “remorseless” pressure from investment buying, mainly via commodity index funds that hold about $105bn in futures, equivalent to about 600,000 tonnes of the red metal.

I guess this news also falls into the same category/theme. Increasing interest in commodities and commodity futures have led to increased investment, and a resulting change in time-honored patterns.

Friday, October 13, 2006

Jim Rogers Q&A on commodities

At FT.com you can read the latest "ask the expert" Q&A panel featuring Jim Rogers. Readers have sent Rogers their commodities related questions and he responds in kind. Check it out.

The evaporation of civilization

Has anyone read this essay by Hugo Salinas Price, posted at 321gold.com? If I'm reading it correctly, "The Evaporation of Civilization" seems to argue that cheap energy is accelerating the decline of our civilization. Here's an excerpt:

Oil energy has overwhelmed almost all institutions in the world. This is a terrifying fact, for a society without institutions is the definition of a barbaric society. A world without enduring institutions which limit and order human life is a barbaric world. The last remaining institution is the one that characterizes barbarism: the Army. That is what we are approaching today.

Price feels that an abundant energy source has hastened the decline of our social institutions, helping to create a world in which we're always running faster just to keep in place. This stage of our human existence is also marked by the use of false "money" and an overwhelming regard for science of measurement in place of philosophy.

I'm not sure if all his points can be substantiated (I'll have to look up some of those bits about "free energy" and the like), but there is an interesting perspective at work here. Mr. Salinas Price has managed to weave these issues into a big picture view of the problems we face today. How does his view strike you?

LSE & Nasdaq: update

A bit of an update on the exchange merger front. FT reports that Nasdaq could take control of the LSE going if hedge funds tender their 20 percent stake at £13. That stake, when combined with the 25.3 percent share of the LSE Nasdaq already owns, could clear the way for a takeover.

Will Nasdaq get their deal or will another bidder swoop in to take the prize? Andrew Hill, reporting for the October 11 edition of the Financial Times, had this to say:

At the moment, a bid from Nasdaq represents LSE investors' only realistic exit. If the US exchange can afford it - a big if - that leaves only one question: will Nasdaq bide its time until next May, when the floor on its bid price drops away, or step in earlier?

It seems that Nasdaq is now in a stronger position to take control, or are perceived to have an advantage that did not exist last May when their credit rating was cut to junk status by S&P. More to come, as it unfolds.

Wednesday, October 11, 2006

Estimate puts Iraqi death toll over 600,000

The death toll in Iraq has climbed to over 600,000 since the beginning of the US-led invasion, according to a survey released by Johns Hopkins Bloomberg School of Public Health and Al Mustansiriya University in Baghdad. The survey findings were published today's online edition of the The Lancet, according to Bloomberg.com.

The methodology behind the survey is currently being debated; President Bush has said that he does not find the report to be credible.

``I don't consider it a credible report; neither does General Casey and neither do Iraqi officials,'' Bush said when asked about the study at a White House news conference. The study's methodology is ``pretty well discredited,'' he said.

The survey collectors visited 47 randomly selected areas and interviewed over 12,000 particpants to find the numbers of births and deaths for each household during a specified time period. The numbers were then multiplied to represent Iraq's total population of 26 million. For more on the survey methods, see Bloomberg's report and this Chicago Tribune article.

Many of us are taken aback at the total put forth in this survey. Could this estimate really be close to the mark, or is there a serious flaw in this style of statistical survey? Are the Lancet studies politically motivated to put out such shocking figures at election times, as some have suggested?

We have been getting reports of civilian deaths in Iraq numbering in the tens of thousands over the past year or so. This in itself is highly tragic and horrifying, especially given the ridiculous rationalizations for going to war that were bandied about before and after the fact.

I think it's time we took our heads up out of the sand and start paying attention to this war and the suffering that has occured in its wake. I really don't know how many people were even alert to the fact that an estimated 30,000-50,000 civilians were killed in Iraq since the invasion began. Will an estimate that increases the death toll by a factor of ten or more wake people up?

Monday, October 09, 2006

Silicon valley firms look to London's AIM

We knew that foreign resource and mining companies had flocked to London's Alternative Investment Market (AIM) in recent years, but it still came as a bit of a shock to learn that Silicon Valley firms were looking to do the same.

The front page of today's Financial Times carried this report by Chris Nutall:

Dozens of Silicon Valley companies are lining up to float on Aim, London's junior market, as US businesses weigh up ways to raise funds at home amid the high cost of going public under the Sarbanes-Oxley Act.

More than 100 technology companies have been considering listing on Aim, say industry insiders. London Stock Exchange officials have made at least six visits to the Bay area in the past year to hold seminars and raise awareness.

Gary Benton, a technology lawyer for 22 years in the area and a partner in the Palo Alto offices of Pillsbury Winthrop Shaw Pittman, said the level of interest in the London market was unprecedented.

"Even though Aim has been around for 12 years, no one paid attention to it until six months ago. Since then there's been a pretty steep curve of interest."

As the FT's report mentions, the high costs and hassles associated with Sarbanes-Oxley are driving smaller corporations away from America's financial markets. Instead, these firms hope to find refuge from such burdensome regulation by listing abroad.

Last March, in a commentary on exchange consolidation (see, "Exchange Fever"), I repeated the following arguments regarding SOX's negative impact on the financial markets:

The effect that such onerous legislation may have on smaller public companies is not the exclusive concern of overseas market professionals. Eliot Spitzer has now joined the chorus of critics that say Sarbanes-Oxley has overstepped its bounds and creates "an unbelievable burden for small companies." Amazingly, this same criticism has been leveled by Representative Michael Oxley, co-author of the legislation. Oxley has even urged the SEC to roll back some of the burdens facing smaller companies.

As we can see, the regulatory environment is not only taking its toll on existing companies, it's also drawing new listings away from the NYSE, Nasdaq, and AMEX.

Buddha sculpture goes for $15 mil

A rare bronze sculpture of the Shakyamuni Buddha was sold for $15 million dollars at a recent Sotheby's auction in Hong Kong. The sale price was an auction record for a Chinese work of art, excluding ceramics, and almost doubled pre-sale estimates.

Bloomberg notes that interest has shifted to traditional artworks and away from Chinese contemporary art, a recently fashionable area for collectors.

``China's Old Money has come out in force to buy the antique ceramics and the bronzes,'' said Lawrence Schiller, a film director and art collector, who bid at the auction. ``There are too many Chinese contemporary art pieces in the market, and buyers are wary about paying too much for them.''

The bronze statue of Shakyamuni Buddha was purchased by a businessman from the Chinese mainland who will display the work in a temple or gallery for one year. The question of whether the artwork, which had been in European hands, would be reclaimed by a Chinese buyer was definitely answered.

For anyone seeking a little background perspective on this topic, please see the post on "Tangible invesmtents".

Energy's future beyond carbon

I wanted to add a link to the September special issue of Scientific American Magazine. The cover theme is "Energy's Future Beyond Carbon", an examination of the possibilities for our post-hydrocarbon energy needs.

There are a couple articles in this issue that can be read for free online. I'm planning to see what they wrote about nuclear power in, "The Nuclear Option". I'll also check out the article entitled, "The Rise of Renewable Energy", which can be found at Berkeley's RAEL site.

Thanks to The Dines Letter for the heads up on this article series.

Sunday, October 08, 2006

Rock n' Roll jukebox

Tunes to lighten our spirits and energize us, because...well, why not? Besides, times like these can make you want to say, I'm "Going Underground".

Hey, I never thought models could be cool until I saw this. Elefant with, "Misfit".

Remember this one? L.A. Guns, "Never Enough". Now y'know where Nirvana got the idea for the "In Bloom" video from.

And last but not least, Roxy Music & "Ladytron". Even though they seem to be playing over the album track, this video is unbelievable. Enjoy.

Saturday, October 07, 2006

Russian journalist shot dead

From The New York Times:

Anna Politkovskaya, the veteran Russian journalist and author who made her name as a searing critic of the Kremlin and its policies in Chechnya, was found dead on Saturday in her apartment building, shot in the head with a pistol, the authorities and her colleagues said.

Ms. Politkovskaya, 48, was a journalist with few equals in Russia. She was a special correspondent for the Novaya Gazeta newspaper and had become one of the country’s most prominent human rights advocates.

In recent years, as the Russian news media faced intensifying pressure under the administration of President Vladimir V. Putin, she maintained her outspoken stance. And she became an international figure who often spoke abroad about a war she called “state versus group terrorism.”

She was a strident critic of Mr. Putin, whom she accused of stifling civil society and allowing a climate of official corruption and brutality.

She was found dead by a neighbor shortly after 5 p.m. A Makarov 9-millimeter pistol had been dropped at her side, the signature of a contract killing, Vitaly Yaroshevsky, the deputy editor of Novaya Gazeta, said in a telephone interview.

“We are certain that this is the horrible outcome of her journalistic activity,” he said. “No other versions are assumed.”

Very unfortunate and disturbing news. This is part of a now well-defined trend: muzzling the voices of those who speak out against corruption and criminality in high places.

Friday, October 06, 2006

Georgians deported from Russia

A group of 130 Georgians living in Russia were deported after Russian officials rounded up them up and put them on a plane bound for Georgia. Many were accused of immigration offenses and criminal activity, while others were simply told they were no longer welcome in Russia.

The deportations represent the latest in a series of shots exchanged by the two sparring nations. Tensions between the two countries increased last week after Georgia arrested four Russian army officers and charged them with spying on military installations. The soldiers were soon released, but this did not stop Moscow from staging a retaliation.

From the Times Online:

On the day that Tbilisi released the Russian soldiers, Moscow severed all transport and postal links with Georgia, and has also stopped issuing visas to Georgians, banned key Georgian exports to Russia and raided Georgian businesses in Moscow.

Yuri Chaika, Russia’s Prosecutor-General, insisted that its retaliatory measures were "being carried out within the framework of the law". The Kremlin has demanded that Tbilisi to show a "more constructive attitude" before it will consider abandoning its sanctions.


Russia's deportation move came amid a recent upsurge in nationalist sentiment; Russian President Vladimir Putin expressed a desire to protect the "interests of Russia's producers and population, the native Russian populations."

For more, see the BBC News story, "Georgia deportees describe ordeal", and The Economist's, "Cold war, hot tempers".

Google to buy YouTube (?)

Reports from the Wall St. Journal indicate Google is looking to acquire YouTube for $1.6 billion dollars. The talks have been described as tentative, and the deal could disolve at any time. Here's CIO.com on Google's bid to buy the leading online video community:

In September, YouTube nabbed almost 46 percent of all U.S. visits to video Web sites, while the video section of News Corp.’s MySpace.com came in second with 21.2 percent, according to Hitwise. Google Video came in third with 11 percent, followed by Microsoft’s MSN Video with 6.8 percent and Yahoo’s Yahoo Video with 5.6 percent.

YouTube, in typical startup fashion, approached the market aggressively, opening up their service to anyone wanting to upload their videos, and quickly became a phenomenon. It embraced tagging and sharing features, creating the most popular online video community.

Meanwhile, Google took a much more conservative approach, at first only featuring videos obtained through formal agreements with professional production houses. Consequently, users had to pay to view many of the videos in the catalogue. Months later, it added an upload feature for regular users, but closely policed submissions. It wasn’t until recently that it opened wide the service’s door and added tagging and sharing capabilities.

Yahoo, Microsoft and AOL are also playing catch-up to YouTube, whose model these large Internet companies are adopting.

YouTube has vaulted to the top by taking risks and giving people what they want. The site has become a social phenomenon due to the fact that almost anyone can make a silly video, upload their clip and become a YouTube star. It's almost like an Mtv for the "reality-TV" generation. Who will become the Billy Idol and Madonna of the YouTube age?

Thursday, October 05, 2006

Surprise!

News is that US Secretary of State Condoleeza Rice flew into Bagdhad today for a surprise visit.

Rice has recently been on a tour of the Middle East and her meetings with Iraqi government officials will likely involve discussions about the civil violence that is tearing the country apart.

The Reuters report of Rice's visit (linked above) notes that, "Washington has made the training of Iraqi security forces the focus of hopes to start withdrawing 140,000 U.S. troops."

Meanwhile, an adjoining article on the FT.com front page carries the headline, "US forces in Iraq to exceed 140,000". Published not two weeks ago, the opening paragraph of the article stressed the announcement by US officials that "American troop levels in Iraq were likely to remain well above 140,000 for the next few months". What is going on here?

Further down the page we read that, as recently as August, some members of the Senate armed services committe were surprised to hear that Iraq could be heading towards civil war. They must have been fooled by the use of the preferred term, "sectarian violence"!

In August, General Abizaid, the most senior Arab-American in uniform who has a reputation for being a straight talker, surprised many when he told the Senate armed services committee that Iraq could be heading towards civil war. This contradicted the Bush administration’s view that the situation was gradually improving. As many as 20,000 Iraqi civilians have been killed in 2006 – although estimates vary drastically.

Is anyone bothered by these figures or is that all they are: numbers?

Tuesday, October 03, 2006

Looking at global share indices

Sol Palha's recent contribution to Financial Sense is an overview of world markets entitled, "Dow 11700 and Other World Indices".

What's interesting about this piece is that moves in the world share indices are measured against the movements in their respective national currencies, as is the Dow Jones Industrial Average against the dollar.

From this viewpoint, Palha comments on the real underlying strength of the various international share indices versus the Dow. Here, Palha explains why it is important to look at the market's performance in tandem with its currency strength:

Currency devaluations or gains play a very significant role in market direction. The masses do not understand their significance and hence fail to recognize and understand what the main ingredients for a true bull are. Once you have knowledge of how currencies work you can then sit down and slowly position yourself for the larger long term moves. If the Dow should trade past 12000 almost every regular individual who has no knowledge of the currency markets will state that the Dow has put in a new high.

You may have seen this philosophy repeated in the works of Richard Russell and Marc Faber, who are also careful to point out the effect of currency devaluations on asset prices. Often, I have seen them (and others) measure a market index in terms of gold. This gives us a view of how market "X" or (asset "Y") has performed in real terms, for gold is the only form of money that has kept its purchasing power intact over time.