Jacob's Soap Box

22 November, 2008.

ll tyranny needs to gain a foothold is for people of good conscience to remain silent.

(Thomas Jefferson)

Finally! I was glad to see that notwithstanding of all impotent naval so-called powers, the Indian Navy has blown a Somali pirate mother-ship out of the water, literally that is. Good on you India, go after the bastards!

Gulf Of Aden

The area in the Indian Ocean between near the entrance to the Red Sea (also know as the Gulf of Aden) and the Somali and the Kenyan coasts are notorious in their sea pirates activities going back to the 1980’s, this is not a new phenomena.

We, in the shipping industry are well aware of it, so are the marine insurance companies who require that shipowners, pay additional insurance premium know as extra war insurance cover, for vessels passing through that area and other areas piracy infested areas to cover additional underwriting risks.

Whilst in early days the attacks were only on small and slow ship and were concentrated around the Island of Socotra, as no action has been taken over the years, the audacity of the Pirate increased to a point that they are now endanger the global oil supply as we have just seen with the hijacking of the 318,000 deadweight tonnes (DWT, about 2.3 million barrels) Saudi owned tanker Sirius Star about 450 nautical miles (520 statue miles) from the coast of East Africa.

Sirius Star

At US$55.00 per barrel, the Sirius Star cargo is valued at about $130 millions add to it the value of the ship at $120 million, that gives the pirates a “catch” of a quarter of a billion dollars, not bad for a day’s work

Apart from the historical event (can I say it?) of being the largest vessel ever hijacked, the Sirius Star hijacking represent a new level as she was hijacked in a position that until now was considered safe from piracy attacks. The vessel if far too large to transit the Suez Canal (or the Panama for that matter) thus must go around Africa. She was hijacked on the shipping route used by the thousands of oil tankers sailing from the Persian Gulf into the Atlantic Ocean around Africa.

The Sirius Star was enroute to the USA.

* * * * *

Have you ever wondered how a small bunch of Somali lowlives are able to disrupt world shipping whilst the great navies of the world are seemingly powerless? The answer is two words: Human rights! No, this is not some kind of a joke.

You see, according to the various UN treaties on Human Rights, should any other signatory country’ ship, capture and arrest the pirates, once they are onboard a ship, they are in fact in on a territory of the flag of the ship, thus they can immediately claim asylum seekers status.

Consequently the Navy commanders who are there to protect shipping are under strict instructions not to capture the pirates or if they captured to let them go immediately, but NOT turn them to the authorities.

The ground on which asylum can be sought is that should the pirate be returned to Somalia, according to the Sharia Law the applicable law in that country, they, the pirates, may face the death penalty for piracy or at least getting their hands chopped off for stealing. It sure looks like the inmate running the asylum.

Did I say Sharia Law? Yes I did, and yes the pirates are Muslims but oh no! We should mention it because it may offend some people!

The emotional “compassionate” liberals claim Islamophobia. They are quick to point out that it is all to do with the fact that Somalia is a dysfunction country, that the pirates being Muslims is only incidental because all Somalis are Muslims and thus their crimes have got nothing to do with Islam.

Oh really? Let us see; There are ten major areas around the world that are notorious piracy activities, those are:

• The Straits of Malacca; between the Island of Sumatra (Indonesia) and the coast of Southern Thailand, West Malaysia and Singapore.
• Bay of Bengal; off the coast of Bangladesh.
• South China Sea; off the Island of Borneo (shared by Malaysia, Indonesia and Brunei) and the northern Philippines island.
• Philippines; Off the (Muslim) Island of Sulawesi.
• Sunda Straits; between the Indonesian Islands of Java and Sumatra.
• East Africa; off the coast of Mozambique.
• Gulf Of Guinea; off the coast of Nigeria.
• South America; off all counties, and
• Gulf of Aden; Between Yemen and Somalia.

( The Straits Of Hormuz, the entrance to the Persian Gulf, was also in the list until the navies of the USA, Britain and Australia started to patrol it to avoid smuggling of arms into Iraq)

Further, according to Associated press, one of the fighting splinter groups claimed to have been going after the pirate that hijacked a Muslim ship. Strictly speaking, by my own past dealing with her owners, the ship is not own in Saudi Arabia but the point is that it is thought to be thus according to the LA Times of 21 November:

MOGADISHU, Somalia — A radical Islamic group in Somalia said Friday it will fight the pirates holding a Saudi supertanker loaded with $100 million worth of crude oil.

Abdelghafar Musa, a fighter with al-Shabab who claims to speak on behalf of all Islamic fighters in the Horn of Africa nation, said ships belonging to Muslim countries should not be seized.

“We are really sorry to hear that the Saudi ship has been held in Somalia. We will fight them (the pirates),” Musa told AP Television News

Who do you think finance this “radical Islamic group”? Chances are the same people who finance other “Islamic groups”, any suggestion? Could it be that some of the ransom money find its way to such group as protection money?

Do they think that we are all morons to believe that there is no relations between the “Islamic groups” in Somalia and the pirates or that being Muslim is not a factor in sea piracy.

* * * * *

No concept has ever been abused more then the notion of Human Rights and more so by, for and on behalf of people who preach total submission under a religion by that name, Islam. Islam, submission in Arabic, is not a religion as we know it in Christianity or Judaism, slam is a religion, a way of life, a law and a political movement, all in the name of Allah and his prophet Muhammad.

Unlike Judeo-Christianity whereby the general rule that is that anything which is not specifically prohibited is permitted, in Islam anything which is not specifically permitted is prima facie prohibited, except perhaps riding Rolls-Royce when it comes to replacing camels.

This is why we see Falafel stands and music shops burned in Baghdad or their owners executed under the Taliban rule in Afghanistan.

Nothing demonstrates the abuse of human rights in Islam as the status of women. Under Islam, women have a few rights, must mostly obligations. For example, a woman is not permitted to leave her houses without permission from the man of the house (typically husband, father, or brother), she must be obedient to her husband at all times, she must be “ready and willing to have sex any time here husband wishes (except when she menstruates) and a husband has the right to beat his wife.

Woman must submit to her husband

A child may be married and such marriage may be consummated, when a non-Muslim does it is both child abuse and paedophilia but when a Muslim does it, it is diversity of culture. So what is so bad if a woman must obey her father in arranging her marriage or the fact that in (Islamic) court woman evidence valued half that of a man.

And there is the question of honour. The whole honour of her family lays between any young Muslim girl’s leg, failing to maintain, what Muslim call honour may and will cause the young women her life, she will be beaten, stoned or otherwise murdered by her father and/or her brothers. Mind you, being raped is not a valid excuse to “loss” of honour.

Can you imagine the outcry if our respective parliaments would make a law that prohibits women from leaving their houses without permission of their husband or, if unmarried, their father or brother. Yet such law exists right under our noses but our governments afraid of dealing with it, for a fear of being labelled racist or Islamophobic .

In the very first paragraph of their book Fleeced, co-authors Dick Morris and Eileen McGann say:

FACT: The mainstream media in America is distorting the news to deliberately downplay terrorism. The Society of Professional Journalist has actually recommended that reporters “avoid using word combinations such as ‘Islamic terrorist’ or ‘Muslim extremist’.”

In her book Londonistan Melanie Phillips writes:

… on the day that four Islamist suicide bombers blew themselves and more than fifty London commuters to bits, the [Metropolitan] deputy commissioner [of Police], Brian Paddick, stood before the television cameras and made the noteworthy comment: “As far as I am concerned, Islam and terrorist are two words that do not go together”*

[* The quote is attributed to Ian Herbert of ‘The Independent’ of 8 July, 2005]

Astonishing, to say the least. Now, would you trust the media and the multicultural infested authorities to tell that sea piracy is a Muslim problem too when they have such evidence? Not a chance!

* * * * *

If you think that Muslims that enjoy human and other rights, far and beyond anything they had imagined possible in their original countries, are grateful for the hospitality their new home countries extend to them, you are wrong! Not only they are ungrateful and in some cases hostile, many consider any gesture of goodwill as a weakness on the part of their host countries. I experienced that attitude in person I am sorry to say.

Too “racist” for you liking? Listen to what Ayaan Hirsi Ali, a Somali asylum seeker in Holland at the time ⁽¹⁾, has to say about her countrymen and women, asylum seekers, in her book Infidel she says:

We had always been sure that we, as Muslims and Somalis, were superior to the unbelievers …

[the Somali Muslims’] reaction was to crate a fantasy that they as Somalis knew better about everything then the inferior white people.” you don’t need to teach me how to use a thermometer, our Somali thermometers are much more advance” – that kind of attitude. His breath smells of pig. He’s only a bus driver. How dare he think he can tell me how to behave”

Sure there are decent people who were born into Islam and go about their day like most of us, but how many of them actually condemn those who carry abuse of human rights, let alone atrocities?

So you see, whilst the Political Correct brigade is in complete denial of the evil of Islam “superior” Muslim Somali pirates putting innocent seamen life at risk, much like be FBI before 9/11 and the British police before 7/7, who displayed more concerned for potential terrorist Miranda Rights then their own citizens’ lives.

How difficult is it to proclaim a law by which convicted sea pirates cannot apply for asylum? Then send the navy down and blow the Pirates out of the water.

______

⁽¹⁾ Ayaan Hirsi Ali went on to become a member of the Dutch Parliament, she renounced Islam became a vocal critic of Islam, particularly the treatment of women. She came into international fame with the murder of the Dutch film maker Theo Van Gough who was murdered by a Muslim.

8 November, 2008

Once upon a time there was a hollow man with a large ego who, since he was ten years old, dreamed that one day he would become the leader of his people.

Not much is known the man’s childhood because the man had been quite vague about these days and in some cases downright deceitful.

From the little we know, the man’s father died, some said from effect of alcohol, when he was a young boy, leaving the men’s mother to car for him. Notwithstanding the hollow man did well at school and proceed to one of the best universities from which he graduated with high distinctions.

University life also served as a stepping stone for politics for the hollow man. Like some many student his age, he joined the student branch of the party that believe in social reform, trade unions, redistribution of wealth and socialism albeit the word itself does not form a portion of the name of The Party.

After graduation the man went to “work” on his dream. He carefully selected his place of employment on the basis of their political potential; mixing with powerful and wealthy people who can advance his ambitions. He was particular careful to avoid real responsibilities as those can lead for the occasional failure that may blot future résumés.

The hollow man was elected to the legislature when he was in his early forties. His arrival was marked by his famous inaugural speech, hollow or not, his self publicity machine went to work as he waited the opportunity to spring into the limelight.

Indeed when the opportunity arrived he challenged the “establishment” of the party for the party nomination and despite “family ties” and the experience of his opponent the hollow won his party nomination. A bitter election campaign followed.

The hollow man’s opponent now was a conservative man named John, much senior in age and with over 25 years experience as an elected member who also enjoys the benefits of incumbency. The hollow man would need all his wits to and a lots of money to win this battle.

The ensuing election campaign was one that was never seen before. The conservative opponent experience and age were portrayed as stuck in the past, the same old failed policies of the past in clear reference to his opponent’s age whilst the hollow man himself was portrayed as “young” and “cool”.

The hollow man has prove himself as a great orator although despite the hysteria of the young generation, his rhetoric was somewhat lacking when it came to the older generation. He was further greatly assisted by the mainstream media who almost in unison were all openly actively supporting him.

He opposed the war in Iraq but supported the War in Afghanistan (and saw no inconsistence in that) he supported socialistic program but described himself as economic conservative in fact many people said that he walked the two sides of the streets on just about any issue as he modified his policies to suit his audiences

He stuck to meaningless, yet emotional slogan such as change, hope and working families. He was the first to exploit the power of the Internet for political campaigning.

He won the election in the following November decisively, although not in what you would all a landslide.

*****

No, my friends, this is not the story of Barack Obama, that was the story of the election of Kevin Rudd in November 2007 as the Prime Minister of Australia by removing John, Mr. John Howard from office.

*****

I was struck by the similarities between the two from the first time I heard Barack Obama and I often mentioned it to my American conservative friends. As we down under have an handicap of 12 months on you Americans, let me tell you about the “achievements” of our hollow man whilst you were busy with your elections, a sort of Back To The Future, as I dubbed it at the time.

Firstly soon after taking office, our government ratified the Kyoto Protocol an utterly symbolic step but nevertheless gained a round of applause by the world greenery convention in Bali. You see our hollow man LOVES the world stage.

At the same time, and in an attempt to further impress the global eco-whackos, our illustrious Prime Minister and our Minister for the environment and stupid statements, inflated their chests and ordered the Australian Navy into the Southern Oceans to chase away the Japanese Whaler to discover that, according to the Antarctic Treaty to which Australia is a member, no military vessels are allowed – what started in a blast ended in a whimper by sending a “Custom Vessel” to “monitor the whaling.

This was only the first of making policy on the run as we have learned since.

Next the government celebrated a sorry day to the indigenous people of Australia, another divisive feel-good symbolic act that socialists are really good at. You see, this was our equivalent of the race card or the coming together cliché we often hear (and I thought that coming together is something people do in the privacy of their bedrooms 🙂

Next we had a funfest summit of one thousand of the brightest and smartest in the country to “recommend” future action Australia should take in the 21^st century. Before the election Kevin07 had told Australians that he had a plan for the country, after the election he needed Kate Blanchett and her like to tell him what to do.

In fact he did not need them to tell him what to do, going by the list of invitees, he needed them to tell him to do what he wanted to hear – the diversity of opinion was limited only by Kevin Rudd’s opinion. It was totally a Kevin07‘s scripted event.

Talking about Kevin07, Within a few month after taking office, our PM was dubbed Kevin707 after the RAAF (the Australian air force) Boeing 707 that used by the PM. By last September, when he was in office for merely 10 months, Kevin707 had accomplished 16 overseas trips, the man really likes the world’s stages which he spins to portray him as international statement. He enhances his image further by selectively leaking private conversation he has with word’s leaders to big note himself.

And of course there is climate change, the imaginary “crisis” that politicians love to exploit by spreading fear that enable them to push their agenda. Until about one year ago, it was only Australia and the US that stood firm against that global deception, Australia “fell” last November with the election of the Rudd government and the USA will no doubt follow under Obama.

It will not be long before we all can play the “spot the difference” game between Kevin07 and Obama08, In the meantime I have placed my bullshit detector on “silent”

© Copyright Jacob Klamer 2008

1 November, 2008

I have no idea why my Google Desktop brought up an article from 6th June, 1967 in my news tracking but it certainly brought up a blast from the past.

It was one year to the day since I had completed my (compulsory) military service in the Israeli Navy. I was a young third officer on a merchant marine ship, named Har Bashan. Our usual employment was to carry Chiquita Bananas from Central and South America to the Gulf (of Mexico) ports, the US East Coast and to Europe.

On the day, 6th June, 1967, we were in a “port” named Turbo in the Gulf Of Darien in Colombia (I dare you to find it on the map) which was in fact an anchorage, about 2 miles away from shore, where ships were loaded bananas from barges.

You have to bear in mind prior to the Six Days War, Israel was not perceived as a militarily strong country, that war in fact changed the perception about Israel for ever. Nor had Israel particularly strong relations with the United States at the time who had more then their own share in Vietnam. Israel’s main supplier of arms were France and Britain (in this order) for which Israel paid in hard cash whilst the Soviets armed Egypt and Syria to the teeth mostly by grants and on the never never “loans”.

For the previous two weeks we were getting worrying news from home about the pending invasion of Israel by Egypt and Syria. Nasser’s grandstanding about the forthcoming elimination of the Zionist state and the return of the Arab refugees to their homes – the term Palestinians in the context of Arab refugees was not invented yet – the United Nation was quite, there was neither calls for “restraint” nor was anyone was labelled as “the aggressor”, just silence.

Despite the fact that the ship flew the Israeli flag, I was the only Israeli officer onboard, all other Israeli nationals were “ratings” (non ranking officers crew members) and there were not many of them either. The captain and Radio Operator (sparky) were Italians, the Chief Officer was Norwegian, the second Officer was Dutch, a (semi deaf) Irish Electrician and down in the Engine Room they were Spaniards, Italians and the odd Yugoslavian – a tower of Babylon. Perhaps my position on the ship symbolised the state of Israel those days, near TOTAL ISOLATION.

For the preceding ten or eleven days we had crossed the Atlantic Ocean on our way to Turbo. The only sources of news we had were the short waves services of the BBC and the Voice Of America (VOA). Kol Israel (Israel radio) in Jerusalem was out of range since we entered the tropics as it’s relative low output could not penetrate the atmospheric noise typical to that part of the world (the fact that Kol Israel beams its signal towards Europe and North America made compound the difficulty). Unfortunately the shop’s Italian Radio Officer (sparky) showed little interest in getting the Israeli national on board, the daily news bulletins from our home maritime shore station Haifa Radio.

The little news we got was not good, to put it mildly. The UN Peace Keeping forces in the Sinai Peninsula folded up and went hone at the first “request” by the ruler of Egypt, Colonel Gamal Abdul Nasser, leaving the Egyptian army a clear path to the border with Israel. I Israel there was a full and general call up of all the military reserves (all men till the age of 45 and beyond), the civil defence and volunteers literally dug up the country with trenches and shelters in schools yards, near residential buildings, in parks and around towns, villages and the kibbutzim.

The mood in Israel was sober indeed, every Israeli “knew” that this was going to be a bloody war with many civilian casualties, some went as far as doubt Israel ability to withstand a coordinated attack by Egypt and Syria, with a possibility of Jordan joining in, and a massive support they received from the Soviet Union, that may, it was thought, extend to sending their own troops to assist. A second Holocaust in 22 years was a distinct possibility in many people’s minds.

The tones of the BBC and the VOA progressively resembled obituary rather then news reporting. Its resonated as “oh well the experiment of a Jewish state was a good idea at the time, but”, of course no one said it out right out in that many words, or did they?

About a day or so before we arrived to Turbo, my immediate superior the Norwegian Chief Officer “declared”, with some satisfaction as I recall it, that there will be no Israel within a few days and added Israel is finished, kaput. Whilst I am not a betting man, I was willing to bet him that he was wrong and he took the bet. Until this day I don’t know whether it was my patriotism or my belief in Israel’s strong will to survive that made be bet. I was far from certain of collecting on the bet and not because I thought that should I win the Chief will not pay up.

We arrive at Turbo in early morning hours of 5th June, the day the war erupted. Because of a 7 hours time difference with Israel, we already knew that the war had started but no more then that. The BBC reported that the IDF (the Israeli Army) spokesman confirm that “there are military clashes in the south” (or words to that effect) and that there was a complete blackout on news from the front.

From the other side of the border, the Egyptian media reported that their forces reached a point two hours away from Tel Aviv. We knew not whether there are Soviet troops on the ground and/or Soviet pilot up in the air.

There was nothing coming from the United Nation or any of the then four “Great Powers”, USA, USSR, UK and France. Despite the lousy reception I had my short wave radio tuned to Kol Israel in Jerusalem just in case I decipher some useful news in the myriad atmospheric noises of the tropics and more important to confirm to myself that they, in Jerusalem, are still transmitting, a scary thought indeed. I also asked the sparky if he can still get 4XO (Haifa Radio) which he confirmed. Not much comfort but some hope, I thought.

The following day, 6th June, I suddenly heard it on the BBC from their man in Jerusalem, the report was much like to the Guardian story quoted below, down here. My initial reaction was a total disbelief, I truly thought and said it out loud that if Israel needs to revert to such exaggerations as the Arabs do, we are gone! it was a frightening few hours indeed.

As we all learned many times since that day, it was the United Nations that got me out of my misery. Sure enough the Soviets were calling for a cease fire, the Americans the Brits and the French declared that they are “neutral”, in the words of the Guardian:

President Johnson last night condemned the war as “needless and destructive” and gave first priority to trying to end it through the United Nations Security Council.

Yes! We are in business again.

Had it erupted today under similar circumstances, instead of needless and destructive the six days would have probably be worded as disproportionate or inordinate use of force or such UN politically correct Newspeak.

AS a side comment, it is interesting to note that there is no mention of the term Palestinians in the Guardian article below. The reason is simply that in 1967 the Arab refugees were just that Arabs, they became Palestinians with the raise of the Palestinian terror, but this is a whole separate subject.

*****

[Quote]

This article appeared in the Guardian on Tuesday June 06 1967 . It was last updated at 15:17 on January 06 2006.

Israel claims land and air successes as Britain and US declare neutrality

• The Guardian,
• Tuesday June 6 1967

Israel claimed early today than it had achieved victory in the air by destroying 374 Arab aircraft. It also claimed that Israeli ground forces had captured the towns of Rafah astride the main road from the Gaza strip to the Suez canal and El Arish, farther west.

A tank battle involving more armour that was used at Alamein was reported to be in progress between Israel and Egypt in the Sinai desert. After a day of confused reports this sector and the Gaza strip, in which Israel claimed to have made important advances, were emerging as key areas in the war.

Attempts were being made at the United Nations last night to sponsor a Security Council resolution agreeable to the four big Powers calling for a ceasefire, but the Soviet delegate said he had heard of no agreement. In Moscow the Soviet Government condemned Israel for an act of aggression and demanded that it should immediately and unconditionally stop all military action. Tass reported that the Soviet Government “reserves the right to take all the steps that may be necessitated by the situation” and resolutely supported the Arab Governments and peoples.

The American State Department declared US neutrality “in thought, word, and deed”; Mr Brown told the House of Commons that Britain’s concern was not to take sides but to restore peace to the area; and the French Government announced the suspension of arms shipments to the Middle East, where Israel is its main customer. The American statement of neutrality aroused controversy in Washington where the White House denied that it meant the US did not care what happened.

Reports from Tel-Aviv last night said that Israeli troops were advancing in the Sinai desert and had captured the southern end of the Gaza strip, thus cutting off the rest of the strip from Egyptian forces. The Egyptian Supreme Command said that its armour had penetrated into Israeli territory after fierce fighting in which it had beaten off Israeli attacks and “annihilated the enemy force.”

The scale of the fighting outside Sinai is not yet known. Official Israeli statements said the attack had been launched by the Arabs in the divided city of Jerusalem, and along the Syrian frontier near Dagania. Israel also claimed that Syrian aircraft had attacked the Haifa Bay region and the Megiddo had been bombed by Jordanians.

In the battle for control of the air Israel claimed to have destroyed 302 Egyptian, 20 Jordanian, and 52 Syrian aircraft. Egypt said that 70 Israeli aircraft had been destroyed during attacks on airfields in Cairo and in the Suez Canal zone while Damascus Radio claimed 54 Israeli aircraft shot down over Syria.

Each side claims that the other struck first. Israel alleges that the first onslaught came from Egyptian tanks and planes in the Negev early yesterday. Cairo claims that the fighting started when Israeli aircraft raided Cairo and other parts of Egypt at 9 o’clock local time.

Mr Eshkol said in a broadcast that he hoped all peace-loving nations “will not stand by but will understand the right of Israel to live its life without the sword of aggression hanging over its head.” General Dayan, the Defence Minister and architect of the Sinai campaign of 1956, said: “We have no aims of conquest. Our only aim is to foil the attempt of the Arab armies to conquer our country.”

The Arab oil-producing countries meeting in Baghdad unanimously decided to stop the flow of oil to any country taking part in an attack on any Arab State or its territorial waters.

President Johnson last night condemned the war as “needless and destructive” and gave first priority to trying to end it through the United Nations Security Council. For the time being it appeared that the United States would not intervene directly to try to halt the fighting.

At an emergency session of the Security Council which adjourned after 50 minutes, U Thant, the United Nations Secretary-General, reported that UN Emergency Force (UNEF) units in the Gaza had been fired on by Israeli planes and three Indian soldiers killed.

[Unquote]

© Copyrights Jacob Klamer (except attributable quotes)

11 August, 2008

In ten years time, perhaps a bit earlier, perhaps a bit later, historians will ponder over a phenomena that became a global orthodoxy in the 1990’s known as “Global Warming” or in its more “correct” term “Climate Change”. What was it that made so many people believe in such a lie?

The world has known doomsday prophecy going back to biblical times, but nothing ever got close to the current global warming phenomena that invades every aspect of our life in a futile attempt to stop some imaginary calamity with as much probability as somehow stopping mother Earth rotating around the sun, or even slowing her down.

What are the underlining dynamics that lead to vast acceptance of the largest fraud ever perpetrated on human kind? A question that may well be a subject of a PhD thesis in History, Psychology, Political Science if those disciplines would ever develop the moral courage to say “we were wrong”.

It seems that there are elements in our times that wish to take us back to the eighteenth century, back to the squabble between the enlightenment movement and the orthodoxy.

By Orthodoxy I mean all forms of conformity without challenge including, but not limited to, religion and politics. The enlightenment movement refers the eighteen and nineteen centuries philosophical approach using observation, reason and/or proof. It sometimes referred to the period from Newton to Jefferson.

Earlier enlightenment brought philosophy and science together, Spinoza, Pascal and Leibniz did not distinguished between philosophy and mathematics. In fact mathematic theories are based on “logical assumptions” known as axioms (or postulates) that cannot be proven, for example if A=B and B=C then A=C (in fact the axiom is about all relations not only equality).

Orthodoxy is not necessarily negative as enlightenment is not inevitably positive, although enlightenment brought us Voltaire, Rousseau and Jefferson, it also brought us Karl Marx and subsequently Stalin. The Enlightenment era also brought us Liberalism a political term which means different things in different countries.

In America a liberal is often used as synonym to socialist whilst in Australia the Liberal party is the conservative side pf politics, for this reason I prefer the use of Leftist or socialist to describe the non conservative part of politics.

New Orthodoxy

In recent times we are called to forget all about reason and proof and to accept dogmas put before us as truths. I refer particularly to issues that are shoved down our throats without reason or proof. We suppose to accept theories such as anthropogenic (human caused) global warming and damage to the ozone layer, other alleged human induced damage to the environment from shopping plastic bags, plastic bottles, fertilisers etc etc etc.

The different between Neo-Orthodoxy and the traditional one is that the very same philosophies that opposed the (traditional) orthodoxy in favour of reason and proof are those who stifle discussion about reason and proof by using the very same tactics of the old orthodoxy; calling names and excommunication. Back in the nineteen century the church label you as sinner or a deviant and bar you from community activities by a decree, or by hanging, burning, stoning or beheading you depending on your religion.

In case of global warming the neo-orthodox will have you believe that the science is settled, that there is a scientific consensus and that their modelling represents a scientific proof that global warming is a result of human activities. (I have already dealt with those lies in past blogs).

However, if you are a scientist and wish to validate, let alone disprove the global warming hypothesis, you will quickly be labelled denier or skeptic, accuse of being funded by the oil companies, be effectively excommunicated from the scientific community and research funding. Some of the proponent of global warming have gone even further calling for silencing any dissention to global warming by legislation. Middle ages stuff.

Far fetched? Not at all. If you present radio or TV In Australia you will be taken of the air with a large fine for your station if you broadcast or allow the broadcast of any information questioning the harm from smoking (active or passive) or broadcast any information on possible beneficial qualities of smoking, e.g. that smoking seems to be beneficial in combating Parkinson Disease. The Global warming Nazis are pushing for a similar laws for their issue.

The neo-orthodoxy is not limited to global warming. Multiculturalism is often confused with multi-racism, extols the diversity of cultures within one community for the sake of diversity and opposes assimilation of cultures. Again you are asked to accept multiculturalism as if it was part of the Tables of the Covenant, no discussions, just (neo) orthodoxy.

You are not permitted to question multiculturalism without being labelled “racist”

Again there are anti-vilification laws in the (people’s republic of the) State of Victoria in Australia that will ensure your imprisonment if you are convicted of vilification against Islam but you mat vilify Christianity or Judaism all you like. You will still be convicted of vilifying Islam even if you quote the Koran’s inconvenient (to Muslims) bits, in other words, the truth is not a defence (!?).

I define the multicultural equation as:

To criticise the majority is a human right but to criticise a minority is vilification (or racism).

Ayaan Hirsi Ali is Somali born, a woman who suffered genital mutilation as a young girl, who escaped from an arrange marriage by seeking and receiving refugee status in the Netherlands. She became a member of the Dutch Parliament and come into the forefront of the news when her partner in production of anti Islam movie, Theo Van Gough, was murdered in mid daylight Amsterdam Street by a Muslim. Her name was found on a note pinned to Van Gough’s body by a knife. She now lives in The USA.

According to her web site:

She has since [the murder of van Gough] become an active critic of Islam, an advocate for women’s rights and a leader in the campaign to reform Islam. Her willingness to speak out and her abandonment of the Muslim faith have made her a target for violence and threat of death by Islamic extremists.

Ayaan Hirsi Ali has 24/7 protection from Muslims that declared her a target, one would expect that she know something about being frighten by Muslims, yet there are still neo-orthodox in the media who are convinced that they know better. Watch one such attempt by one Avi Lewis who must be the greatest dickhead (oops) in Western media:

On The Map with Avi Lewis: Ayaan Hirsi Ali & Islamophobia

Here you have it, super arrogant neo-orthodox moron, who incidentally now works for Al-Jazeera. Yes, there are people in position of influence that despite all evidence to the contrary protray Islam is just another religion (of peace).

The Science Of Marxism

No inverted commas! No, this is neither a joke nor a sarcasm. This is what true Marxists believe even as we speak. Marxism is a science no different from mathematics physics and astronomy hmmmmm hahahha (sorry I could not stop myself)

According to The History Guide dot org:

Just as Darwin discovered the law of development or organic nature, so Marx discovered the law of development of human history”

And if you think that this is a oncer here another one; someone named David North gave a series of speeches to the Social Equity Party (SEP), an American Marxist organisation, in August 2005 and among other thing he said:

But whether Marxism is a science depends, to a great extent, upon 1) whether the laws which it claims to have discovered reveal the real objective mechanisms of socio-economic development; 2) whether the discovery of those laws can adequately explain the preceding historical evolution of mankind; and 3) whether the understanding of these laws makes possible significant predictions about the future development of human society.

[Emphasis & highlight provided]

(In fact if you Google the term “Marxism as science” you will get some 2.7 million hits an indication that at least some people take the possibility seriously.)

We are all aware of the Marxist explanation of preceding evolutions and their ability for “significant predictions” in what they called Five years plans that were published at the expiration of the five years “proving” the soviet “success”. Well comrade, please tell me how come that the science of Marxism did not “significantly predicted” the fall of the Soviet Union?

It is no accident that the so-called science of global warming has been taken up by the Marxism “scientists” albeit they often deny their past.

The Anti-Smoking Neo-Orthodoxy

Try to debate the global warming deception and before long you will be reminded of the anti-smoking campaign as a parallel. By some twisted logic if you accept the “science” that smoking is harmful, you must accept the global warming “science”.

In fact the only larger deception ever perpetrated on mankind, is that of the anti-smoking lobby. Before you jump at me I will say this; smoking is addictive and smoking may be harmful to smokers in certain circumstances – how harmful and what circumstances we don’t know or are not told.

The allege health damage from passive smoking is a fraud!!! But more about it later (By the way, I don’t smoke).

We have legal limit for alcohol consumption, we are even told that consumption of red wine, within reason, is beneficial to our health. We have many safe intake limits on intake of all sorts of chemicals (we call medicines), including arsenic, but we have no such limits on cigarettes.

Why? Because cigarettes and smokers have been demonised by the neo-orthodoxy. Hey, they have never established, to my knowledge, what is the harmful substance in cigarettes, is it nicotine, is the tar or perhaps the (cigarettes’) paper.

Fact: Most of conclusions on the harm of cigarettes comes from statistical observations – NOT CLINICAL ONES!

(You do remember that I sleep on the floor because 95% of people die in bed, don’t you?)

In recent TV ads it transpired that a featured terrible looking woman with what was described as mouth cancer from smoking is in fact a (non smoking) actress and her mouth cancer was pure makeup! I would have thought that if indeed smoking causes moth cancer they would have found a real candidate with no trouble.

The is true for some terrible looking muck that comes out an artery of a smoker, EXCEPT that the photo on packets of cigarettes is of an artery of a non smoking …. Pig!

But to the neo orthodox you are denier and anti social if you dare questioning their “science”.

Next time when someone comments on your smoking and its harm ask him/her what proof do they have (“everybody knows that” is not a proof).

Amazing, the very people who regard themselves as enlightened behave exactly as the middle ages Church did.

Have a fag.

© Copyright Jacob Klamer 2008 (except attributable quotations)

28 July, 2008

In  Part I I made some comparison between crude oil and tomatoes for the purpose of illustration. Crude oil, (and indeed petroleum products) and tomatoes are commodities, commodity is an undistinguished article of trade. This to say that you cannot distinguish, nor do you care to, assign value any characteristics which is not  generic to such article. For example you would assign monetary value to octan rating of your petrol (gas) but none to the refinery that produced it or the source of the crude that was used as stockfeed.

The same goes for tomatoes. You would assign value to it’s species, size, and degree of ripening but would not care less where it was grown or who grew it. The “brandlesness” of commodities means that the competition between the sellers (or buyers) is on price only, the nightmare of every marketeer.

In fact millions or even billions are spent on branding commodities by heavy advertising, the idea is to get you to believe that one brand of baked beans is better then the other thus be willing to pay more those beans that are labelled “Heinz” then for the generic brand of your supermarket, although both may well were canned by the same cannery and the only different between the two is the label on the can.

However, there are some fundamental differences between oil and tomatoes and that that is that tomatoes are product that it’s availability is established after it has been produced whilst oil has its value whilst it is still in ground. Further, tomatoes are perishable, meaning that they have a relatively short life after production, whilst oil does not change its qualities with time.

Suppose you bought tomatoes futures options from me for next season, I now MUST produced those tomatoes for you irrespective of market price to be ready to deliver to you should you exercise your option. But, and it is a big “but” if you will choose not to take delivery of my tomatoes because you will be able to get them cheaper elsewhere, I would have to cold store them whilst looking for buyers whilst my tomatoes still have value, otherwise I would lose all that I had spent on producing them.

On the other hand if the crude oil futures option is not exercised, it had costed nothing, such oil simply stays in the ground, the oil producer does not even has to pay for storage, his “next season” oil is waiting. He can offer it spot or just ‘sit on it” for a while.

A short Lesson In Economics

Economics is the art of explaining why the last (economic) prediction did not materialise.

(not me)

Firstly, although some would like to pretend otherwise, economics is not a science. Science is about observation and proving or disproving hypotheses, we don’t do that in economics. In economics we observe, theorise, hypothesise  and hop for the best. Economist cannot carry out experiments that prove or disprove anything.

Secondly, over the years economics was tainted with ideology between the two extremes of laissez faire a la (Milton Friedman) to John Keynes’s government knows best. Both gentlemen fail to convince me with their arguments, mainly because their explanation of (economic) events are mere OPINIONS, not facts.

Thirdly, most economic theories are based on two assumptions, one that all (or most) players act rationally and two that all players has the same information (not necessarily all of it).

Just think how rational is Hugo Chavez’s oil policy or the Arabs place oil embargo on the west in 1974. Further how much information professional traders have about electronic trading outside the USA.

We know, as a fact, that there is no shortage of oil, that the storage tanks of stockfeed (crude oil) and products are in good shape, all pointing to a supposed reduction of prices, yet crude oil reach its highest price ever a week or so ago (I’ll get to the current price fall later).

The feeble excuses from the so-called experts tells me that they are either fools or con artists, I doubt that the are fools. Sure the demand from China, India and other developing counties would certainly increase prices, but such increase is gradual. Chinese and Indian demand does not explain this:

Crude Oil Price Band

What about the hurricanes in the Gulf (of Mexico) excuse? How long a hurricane lasts? Three days, four, a weeks? How can that affect the GLOBAL crude oil prices when the storage tanks around the world are full. And once the Hurricane has gone and prices did not come back, they, the so-called experts need to find other “reasons” to explain the high prices,

How about Mahmoud Ahmadinejad threatening Israel and vice versa, Give me a break! Iran is on its last leg to stop being an oil exporter, they are already importing oil products because they lack refining capacity to satisfy their own domestic demand – petrol (gas) queues are commonplace in Iran of today. Iran is expected to continue to export oil until their Natural Gas (LNG) reserves can replace their oil export earnings which is essential for their development.

The crude market has already allowed for no Iranian oil export, when that finally happens the effect on the market will be negligible.

BTW Indonesia already stopped exporting oil for the same reason, domestic demand, and subsequently is no longer a member of OPEC, it did not make the news because the market had allowed for it.

Do you get the same feeling I have that Something is missing from the tale of crude oil prices.

Crude Pricing

As we saw in  Part I crude oil prices are set by reference to prices “Benchmark” or “markers”, those are West Texas Intermediate (WTI), New York Mercantile Exchange (NYMEX), Brent, (Europe), Tapis (far East) and of course OPEC Basket. These benchmarks are similar to the more familiar stock exchanges indices such as Dow Jones, FTSE (London), DAX (Germany), ASX (Australia),  TSE (Tokyo) etc. Each collects in formation on stock trading in real time and express it as an index.

A crude benchmark has two facets; characteristics (quality) and location where the crude is pumped (or gravity fed) into transport. The is expressed in US Dollar per barrel. Any variation in quality or delivery position is usually express as premium or discount off the benchmark, as the case may be.

For example, if the current freight cost from the Persian Gulf to US East coast is say $1.50 per barrel, the price for barrel of oil on the East Coast will be $1.50 higher then the price of similar oil in the Persian Gulf (all other things remain equal), simple logic.

Similarly if the cost of storage is $1.00 per barrel per month (I have no idea what the real costs are) and next month’s future price is say $130 per barrel, I’ll be happy to sell you oil I am holding for $129 today because it will give the same net that as if I sell it in a month time and pay out storage cost.

Crude oil in the ground has no storage costs thus a change in the oil futures immediately translate into the spot price. Do you see what I see?

With regulations and people standing behind your back watching what you are doing, it is quite difficult, if not impossible, to fiddle the spot market, particularly if you are dealing with wet barrels (the physical oil) but with the advent of electronic trading, particularly on non-American markets, the possibilities of manipulating the market are endless, if you have the motive and the dough of course.

Knock Knock Who Is There?

Knowing the motives for trading in the future market tells us who are there. There are basically three reasons for trading any future market:

• Users of the product that is traded; those who take physical delivery.
• Hedging and other long term funds; those who use the (future) market to hedge their investments by reducing risk, i.e. shield them from market fluctuations, particularly downturns
• Speculators; those who are in the market to take advantage of short term changes in prices.

The only users of crude oil  are the refineries; to anyone else crude oil is a useless product. Refiners take positions on oil futures to protect the continued supply of future stockfeed (crude oil) at a known maximum price, remember, they can always not exercise their option to take delivery and buy in the spot market if the spot price is substantially (at least 10%) lower then their option price.

The refiners also participate in the futures markets by offering future contracts for their products, mainly gasoline and distillates (diesel and heating oils), thus it is only prudent for them to protect both their supply and the price the stockfeed needed to meet their obligations.

Sometime ago the aviation industry, namely the airlines “discovered” the futures market and have been high purchaser of jet fuel futures since. The do it to mitigate their fuel costs. The effectiveness of such strategy depends on many aspects but nevertheless the practices is wide spread among the airlines.

However, unlike Europe and Asia, the US does not have a futures market for jet fuel, thus the US airlines take positions on crude oil futures as a hedge against jet fuel price rises. But it goes further then a simple hedge, to hedge the costs  of one barrel (42 gallons) jet fuel the airlines need to buy 3 barrels worth of crude oil futures. Here you have it, a large demand for future “paper barrels” that is bought in order to be sold, those are the very same barrels that the refineries are bidding on to produce the jet fuel the airline are hedging – the dog is chasing its own tail!

Next are the hedge funds who use crude oil futures as part of their portfolio. One would expect the hedge to have commodity futures in their portfolio but the question is whether crude oil is more then just a part of the mix. To answer that one must know who are in the funds and what they actually hold.

Who Are The Real Speculators?

According to the Commodities Futures Trading Commission (CFTC) speculator is an entity that:

does not produce or use the commodity, but risks his or her own capital trading futures in that commodity in hopes of making a profit on price changes.

Such definition puts the hedge funds amongst the speculators, I disagree; speculation, in my view, must have short term aspect to it and whilst hedge funds may well speculate on occasions, by their very nature they are long term funds.

My definition of speculation is:

Speculation is trading with the object of taking advantage of short terms price differentials.

Hedge fund that hold a financial assets for 12 months is not speculating despite the fact that, by their nature, hedge funds “does not produce or use” anything. By the same token a refinery that produce products without having a ready market for it is speculating.

The reason I distinguish is that I see the speculators as harmless and their affect on prices minimal, this is not the case of the big funds, hedge and others such pension and super funds.

On 1 June 2007, the Dubai Mercantile Exchange (DME) , a joint venture between NYMEX and Mohammed bin Rashid Al Maktoum the ruler of Dubai (through a holding company) with the Sheikh of Oman in there too. Needless to say that DME is “regulated” by the government of Dubai, who???? … yes … Sheikh Mohammed himself!

Perhaps you care to take a look again in the crude oil prices and when prices last took off.

Since its inception, just over a year ago, DME traded about 390,000 future contracts (or 390 million barrels) of crude oil, this represents about 1 million barrels per day (mbpd) compares with United Arab Emirates (UAE) total production of about 2.5 mbpd.

How much UAE’s own oil is traded on the DME and what is the US portion is anyone’s guess but may I suggest to you that most of the oil comes from the UAE and Oman and most of it is in fact traded by American kind of hard to see the NYMEX get involved in exclusive trading between Arab Japanese.

Nice work Charlie, a semi American exchange operates under the radar of the American (or other consuming country for that matter) regulator, where the largest trader is the regulator. The optimacy of the golden rule, he who has the gold makes the rule.

And there is the so-called “Enron Loophole” that exempted electronic trading from  much of the regulation, whilst the loophole itself has been closed by the recent amendment to the Farm Bill, how much has skipped the eyes of the watch dog?

Here is a scenario, the total US annual consumption of crude oil is about 5.5 billion barrels, at “only” say, $125 per barrel makes the total value $690 billion, say $700 billion. The actual cash outlay to buy crude oil future is 10% of the value of the contract i.e. it takes a “mere” $70 billions to buy contracts that covers the US consumption for one year.

Question one: Who has the oil to offer such a quantity?

Question two: Who has $70 billion or so that can be used (or freed) to buy that quantity?

Question three: Do you still wish to explain oil prices by economic rules that are applicable to tomatoes?

© Copyrights Jacob Klamer 2008, all rights reserved.

27 July, 2008

If I knew what will be the price of crude oil tomorrow, I would not be here, I be sitting down on my own Island in the South Pacific, sipping Chivas Regal and employ a ghost writer to write my blogs. Seeing that I don’t know what will be the price of crude oil tomorrow, I will stay in Sydney, stick to tonic water and rant on by myself.

As someone who studies the subject formally I can tell you that Economics is the art (it certainly not a science) that provide excuses as to why the last economic prediction did not work. (Have you heard about the convention of clairvoyants that was cancelled due to unforeseen circumstances?)

Further, I suggest to you that anyone who KNOWS how to bring down the price of oil is a liar or a fool, myself included. Thus I try to shade some light on the issue that may assist you interpreting events and statements irrespective of their political origin.

What Is Crude Oil?

Crude oil is a mixture of petroleum products that is separated by a process we call refining (or distilling). The output of oil refining is called (petroleum) products  Crude oil is useless unless it is processed The relative amount of products in a barrel of crude oil, known as the characteristics of crude oil cannot be changed for a particular oil but it varies greatly between oil wells, in fact each well has it own “finger print” often , by identifying the well such spill has come from.

Light crude oil refer to oil with high content of “light” (or white) products such as petrol (gasoline), aviation fuel, kerosene etc. whilst heavy crude refer to oil with higher content of diesel, heating oils, fuel oil down to waxes and asphalt.

Traditionally oil is traded in barrels. A barrel is a volume measurements, it equates to 42 US gallons (about 35 imperial gallons or 159 litres). A barrel of light crude weighs less than a barrel of heavy crude oil, hence it is said to be “light”.

Sweet crude oil refers to its acetone-like smell indicating low sulphur content (less then 0.5%). Oil with high sulphur content (Sour) has a vile smell (a Middle Eastern public toilet would smell like a rose garden by a comparison, believe me, I smelled them both). Getting rid of sulphur is expensive, thus crude oil with higher sulphur content ought to be cheaper as it is considered inferior. Over a short period refineries are locked into the type of oil they process, thus forced into individual sources that maintain similar characteristics of oil that is compatible with their refining abilities. Lesson one: Crude oil is not an homogeneous product.

Refining Oil

Oil refining is a (chemical) contentious process, meaning it runs 24/7 and cannot be stopped. Restarting a refinery takes about 7-10 days until it reaches full production, at a daily cost of $100/200,000 (depending on size), therefore it is designed around the concept of continuous flow of stockfeed (crude) oil and products.

Crude Oil Distillation

A refinery that is in danger or running out of crude oil will pay just about any price for a shipment of crude to avoid shutting down heavy costs. Similarly a refinery that is running out of space to store its products will give it away at bargain base prices just to make space for more product rather than to shut down production. The exact opposites are also true in relation to storage space.

Lesson two: the spot prices for oil and its products are influenced more by storage space than by any other factor, including supply and demand. This is why oil “inventories” are crucial to oil prices, this is the theory anyway.

I qualified the theory because inventories alone do not tell the whole story. Right now crude oil inventories around the world are high, in fact, despite what you are told, there is NO SHORTAGE of oil at present which should result in lower demand and current low prices, yet it prices continue to soar.

Production Allocation And Pricing

With the exception of all western countries, all the global oil production (getting oil out of the ground) facilities are state owned. As a rule, oil is sold in Production Allocations, sometimes referred to as allotments or vouchers, to a panel of buyers, generally comprises of oil companies and oil traders.

Oil allocations came into the news when Saadam Hussein’s abuse of the “Food For Oil” plan were exposed whereby “vouchers” were given out to 270 people and organisation, with no relation to the oil industry, as bribes or payment for “favours”.

To be on the “panel” of Saudi Aramco ( to have an Aramco registration number), one must be a refinery or show has a Processing Agreement with a refinery. Traders may receive allocations if their allocation is going to a refinery not already receiving Saudi oil by other allocations. Allocation may be for a period or spot, it include total quantity, shipment ports and quantities, approximate shipment dates and price. Price can be nominal, e.g. US$ 130 per barrel, or, most likely, by a reference to Crude Oil Benchmark also known as Price marker, e.g. West Texas Intermediate (WTI) less $1.00.

With the exception of posted prices that are set arbitrarily, benchmarks are price indicators based on market trading information, take account of quality, gravity and place of delivery. Brent, Tapis, West Texas Intermediate (WTI), OPEC Basket, Dubai Mercantile Exchange (DME). In the USA domestic crude is traded by reference to WTI, Rotterdam Brent is used by in Europe and the Tapis is used mainly in the Far East.

An example for an allocation is 1 million barrels (about 140,000 tonnes)  Saudi Light Crude Oil (SLCO) per month, ex Ras Tanura (an oil port in Saudi Arabia), in monthly shipments at the 3 days average Brent Rotterdam (price) less US$3.00 as at date of shipment and other details

This means that the actual price of wet barrel (oil that is physically delivered, as distinct from “paper” oil) is not known until it is taken possession of by loading it onto a ship, rail wagon or pushing it into a pipeline.  That can be literally months after it was bought and at a very different price that the one ruling at the time of purchase.

The market

If I promise you that I shall sell you next year tomatoes at next year price, you would not buy them from me because you have no reason to commit yourself now to next year prices, whatever they are. However, if I promise to sell you next year’s tomatoes crop at this year price (plus a small premium) AND give you the option whether to take those tomatoes off me or not (should the ruling market price is cheaper than my price), you may take me up on my offer, after all you have little to lose – If the price at your supermarket is a lot higher then mine, you buy from me, if it is a lot cheaper you will buy is from the supermarket, as simple as that.

Not to make too finer point on the issue, this is how a future market works, whether it is shares futures or commodities’, including oil. According to the New York Mercantile Exchange (NYMEX) rules crude oil is traded in 1,000 barrels, monthly (executable on the last trading date of each calendar month) for the current year and the following five years, after which contract are six monthly (June and December) up to 9 years into the future, or in the words of NYMEX:

Crude oil futures are listed nine years forward using the following listing schedule: consecutive months are listed for the current year and the next five years; in addition, the June and December contract months are listed beyond the sixth year. Additional months will be added on an annual basis after the December contract expires, so that an additional June and December contract would be added nine years forward, and the consecutive months in the sixth calendar year will be filled in.

You can have the right for a contracted quantity of oil (in 1,000 barrels multiple) for next months, three, 6 or twelve months, up to 2 years if I’m not mistaken.

All you have to have is 10% of the value of the contract up front, the 90% is payable on delivery, if you ever decided to take it. Should you fail to take delivery, you would lose your deposit.

Under certain trading rules, you may of course sell your future entitlement any time before the due date. That allows “paper oil” to be bought and sold many times over, by oil traders. Those trader who buy oil in the hope a price rise are called speculators. Speculation, per se, is not a bad thing provided that all the players in the relevant market are playing on the same levelled field and abide by the same rules – I suggest to you that this is not the case when we talk oil.

Tomatoes and oil

Suppose you trade in tomatoes and bought a contract for next season at a price. Next seasons tomatoes’ price will be determined by supply and demand when the time comes, a glut of tomatoes will produce a reduce price whilst a shortage will produce an increase in price. Thus if the season’s price is under your contract price, you will not execute you ‘future contract’ but simply buy your tomatoes spot. If the season’s price is high, you would execute you contract and sell your tomatoes with a great profit.

Now suppose the largest supermarket chain in your country control most of the tomatoes market by per-buying the crop from the growers and now suppose that that chain offer you a “future contract” on tomatoes, would you buy one?

Under such conditions you would not but tomatoes future in a month of Sundays because the market is already controlled by a player in the market who can dictate the price, no matter what you do, you will always lose.

This is basically the case with oil, and oil futures in particular. The market is controlled by oil producers, who are largely a cartel thus in a substantial control over the market. Buying oil futures from the oil producing countries is like buying tomatoes futures from Wal-Mart, in USA, Tesco in the UK or Woolworth in Australia, you would not do it!

(Continues in Part II)

© Copyrights Jacob Klamer 2008, all rights reserved