Why We Are in Secular Bull Market in Commodities

TRIBUTE PAID IN OIL\r\nby Hugo Salinas Price\r\nPresident, Mexican Civic Association Pro Silver\r\nJune 20, 2008\r\n\r\nAccording to the data presented by David Galland in his article “Turning off the Taps”, recently published at www.financialsense.com, México is exporting 184,000 barrels of oil less than its programmed quota of sales to the U.S. The article says the deficit amounts to 11%. Therefore, the daily quota must be about 1,673,000 barrels of oil daily, but the actual net export of oil is approximately 1,489,000 barrels a day.\r\n\r\nIf we multiply 1,489,000 barrels a day by 360 and by $112 dollars, the present price of Mexican oil, we get the amount of some $60 billion dollars of annual exports of Mexican oil to the US.\r\n\r\nMexico’s oil production is in decline due to the on-going exhaustion of the oil fields being exploited.\r\n\r\nIn 2004, Mexico exported 50% of the oil extracted. Some years ago, Mexico reached its peak production and if we estimate very conservatively that production is declining at a rate of 5% a year, in four years – from 2004 to the present - production must have declined by 20%.\r\n\r\nIn the meantime, Mexico’s own consumption of oil has increased. So that by 2014, Mexico will have no excess oil production available for export. Galland conjectures that by 2014, not a single barrel of Mexican oil will be exported.\r\n\r\nThe whole world is presently feeling the first effects of the general exhaustion of world oil fields: “Peak Oil”. Unless “Peak Oil” is an imaginary problem, the price of oil is therefore going to continue rising with brutal effects upon the world economy. Not only Mexican oil production is declining; we are dealing with a decline in world production of oil. \r\n\r\nFor this reason, there will perhaps be no reduction in the amount of dollars entering the Mexican economy for the remaining years during which there will be exports of oil. The price of oil will go to $200, to $300, to $400 hundred dollars a barrel and more, as the economies of the world struggle to obtain the oil required for their industries.\r\n\r\nToday, there are at least two world centers which will be able to pay those prices; they will have no option but to pay them, because without oil, the lights will literally go out.\r\n\r\nThose centers are the US and the Eurozone. They will be able to pay the necessary price to get their oil, because both the US and the Eurozone can manufacture digital dollars and digital euros at will. Iran is willing to accept Japanese yen in exchange for its oil.\r\n\r\nThe rest of the world, which needs the oil but does not have the advantage of having a currency accepted as a “reserve currency”, will have a terrible time obtaining the dollars or euros necessary to purchase oil. Their economies will be strangled for lack of fuel.\r\n\r\nWe must note something that is of fundamental importance: neither the US nor the Eurozone are actually paying for their oil with exports of goods and services to the oil producing countries. They “pay” with bank digits, created by computers; these payments are registered in the form of credits in the computer memories of banks in the US and in the Eurozone. We should have to include Japan among the countries which are able to purchase oil with their own currency.\r\n\r\nThese bank digits are not credit instruments in favor of those who receive them, as for instance dollars were, when they were formerly redeemable in gold; they are simply numbers, because they do not incorporate a promise to deliver something to the beneficiary, the oil exporter. A credit instrument is the promise to deliver something, and a bank digit is not “something”. It is just a number and nothing more. \r\n\r\nSo we can quite correctly say that the US and the Eurozone – and other countries whose currencies are considered “reserve currencies” – are “paying” for their oil imports with nothing at all. The Romans called such an operation “Collection of Tribute from the Conquered”.\r\n\r\nThis is what Mexico is doing; it is exporting precious oil from its oil fields in relentless decline in exchange for – nothing.\r\n\r\nIt is true, of course, that dollars and euros can be used (for the time being) to purchase things in the rest of the world. They are good for that, because they are accepted as a means of exchange. However, those means of exchange are most certainly not a means of payment. Payment is the delivery of something in exchange for something. Bank digits are not something. They are simple numbers.\r\n\r\nThis fact is glaringly evident when we contemplate the gigantic “monetary reserves” of China, which has recently accumulated $1.68 Trillion in reserves which include dollars, euros and some other digital currencies. The Chinese really do not have the faintest idea of what to do with this monstrous amount of digits and they, like the Arabs, have formed financial entities which are called “Sovereign Wealth Funds”. The purpose of these funds is to find unsuspecting countries upon which to unload these bank digits in return for tangible resources.\r\n\r\nThe bank digits in the Chinese reserves are only means of exchange. The Chinese are going around the world trying to find places to deliver these digits, for which they otherwise have no use at all. Now, if the Chinese reserves were gold, they would be in no hurry to get rid of them nor would they consider them excessive. But the reserves are not gold; they are simply bank digits which live in the computers of the countries that issue those digits.\r\n\r\nFor Mexico, what are the consequences of delivering oil from Mexican territory in exchange for bank digits?\r\n\r\nI shall not go into detail on how Mexico distributes the digital income from the “sale” – properly speaking, tribute – of oil to the US.\r\n\r\nWe are talking about some $60 billion digital dollars which are available to various Mexican entities every year. Part of those digits are applied to the importation of merchandise for consumption. Part to pay for imports of machinery and services by PEMEX, the oil company. Part of that income is used by PEMEX to pay salaries and expenses in Mexico, for which it needs to sell its dollars in exchange for pesos with which to effect payments. Part of the oil income goes to the Federal Government, which also exchanges dollars for pesos. When dollar digits are exchanged for pesos, the dollar digits wind up as Reserves in the Bank of Mexico, and increase the total reserves of bank digits held by the Bank.\r\n\r\nNet – net – net: What left the country was oil; what came in was bank digits. Part of the bank digits left the country for importation of goods. But a good part remained here. As a reflection of that, the reserves of the Bank of Mexico now stand at a record.\r\n\r\nThe result of exporting oil is that every day we have more money in circulation. 27% of that money is nothing more than paper bills or metal coins; the remaining 73% is only bank digits called “pesos”. This is imaginary money which Mexicans have in the banking system of the country.\r\n\r\nThus the dollar digits coming into Mexico cause monetary inflation, a constant increase in the mass of money in circulation which makes each unit of pre-existing money less valuable. Of course, the most common and inevitable result of this is rising prices.\r\n\r\nWe are importing inflation from the US because the oil we export is not paid for with goods and services coming from the US to Mexico; we are given a simulated payment, which is payment in bank digits. This imported inflation is contributing to the general rise in prices taking place in the country. On June 18, the Mexican government decreed an emergency freeze in prices of 150 food products to last until the end of 2008.\r\n\r\nThe high price of oil is not a blessing for Mexico because it does not mean that we get more things of value from the rest of the world; it means that we receive now, and shall receive in the future, quantities of bank digits which are going to cause an increase in the price of things which Mexicans have to purchase in order to live.\r\n\r\nWhat we are suffering is happening in all the countries of the world which have export surpluses. They are all importing monetary inflation and local prices are going up.\r\n\r\nChina, the great manufacturing power and exporter, is an example: too much digital money is entering China and thus prices in China are on a tear; both their internal prices and now their exports will be rising in price. Chinese products have to go up in price and soon they will be sold for higher prices both in the US and in Mexico: digital monetary inflation originates in NY City, passes on to China and from there, it returns to the US and to Mexico in the form of higher prices for Chinese products.\r\n\r\nWhen oil reaches $200 dollars a barrel the situation will be even worse. Prices in Mexico will be forced to rise, including wages, for workers will be shortly demanding higher and higher wages. The higher oil goes, the higher prices will rise within Mexico and the higher the prices that imports will cost.\r\n\r\nNow we are entering a period in which prices are going to rise for two different reasons.\r\n\r\nThe first cause will be the growing scarcity of oil in the world. The Central Banks cannot do anything about this rise in prices caused by a greater and greater scarcity of oil. From here on, oil will be subject to a rationing due to scarcity, but the countries which have the advantage of issuing reserve currencies can “jump the waiting line” for their ration and simply issue more banking digits to ensure their supply. When they “jump the waiting line” and create more digital money to get their oil, they are creating a world inflation of prices.\r\n\r\nThe second cause will originate in the world’s financial system which is terribly damaged by bad investments made in recent years. The main Central Banks will create gigantic quantities of money in an attempt to save the busted banks. This tsunami of digital money intended to save the banks – bankers are always saved – will destroy the value of the dollar and consequently the value of the Mexican peso.\r\n\r\nSuddenly, in 2014 there will be a great fall in the number of digits entering Mexico, because there will be no more oil to export. The social and political trauma will be enormous. The kind of government to which we have become accustomed will not survive the huge financial hole caused by the absence of $60 billion dollars of annual oil sales, or whatever tens of billions future exports may amount to.\r\n\r\nI see an endless number of articles by experts on our present day problems, but I think I am the first, or among the first, to point out that we are in a huge mess in this world, because the world has disregarded the fundamental change in the nature of the dollar, on August 15, 1971. On that date, the dollar was no longer both a means of exchange and a means of payment. It became only a means of exchange. No one seems to have noticed the difference!\r\n\r\nIt is because the world has not taken notice of this fundamental change in the nature of the dollar, that we have the present mess. I need only refer to the explosion in Central Bank reserves which has taken place in recent years, as “means of exchange” accumulate in Central Bank computers (not vaults!). The amount stands today, at close to $7 TRILLION (valued in dollar digits), which is a sum utterly unnecessary for handling trade and other international so-called “payments”
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India''s growth outstrips crops\r\nBy Somini Sengupta\r\nPublished: June 22, 2008\r\n E-Mail Article\r\n Listen to Article\r\n Printer-Friendly\r\n 3-Column Format\r\n Translate\r\n Share Article\r\n \r\n Text Size\r\n\r\nJALANDHAR, India: With the right technology and policies, India could help feed the world. Instead, it can barely feed itself.\r\n\r\nIndia''s supply of arable land is second only to that of the United States, its economy is one of the fastest growing in the world, and its industrial innovation is legendary. But when it comes to agriculture, its output lags far behind potential. For some staples, India must turn to already stretched international markets, exacerbating a global food crisis.\r\n\r\nIt was not supposed to be this way.\r\n\r\nForty years ago, a giant development effort known as the Green Revolution drove hunger from an India synonymous with famine and want. Now, after a decade of neglect, this country is growing faster than its ability to produce more rice and wheat.\r\n\r\nThe problem has grown so dire that Prime Minister Manmohan Singh has called for a Second Green Revolution "so that the specter of food shortages is banished from the horizon once again."\r\nMultimedia\r\nPhotos: A harvest that falls short\r\n» View\r\nToday in Business with Reuters\r\nCitigroup''s global investment bank braces for layoffs\r\nAt Saudi meeting, calls for action on oil prices, but little agreement\r\nBollywood figures it can teach Hollywood a thing or two\r\n\r\nAnd while Singh worries about feeding the poor, India''s growing affluent population demands not only more food but also a greater variety.\r\n\r\nToday Indian agriculture is a double tragedy. "Both in rice and wheat, India has a large untapped reservoir. It can make a major contribution to the world food crisis," said S. Swaminathan, a plant geneticist who helped bring the Green Revolution to India.\r\n\r\nIndia''s own people are paying as well. Farmers, most subsisting on small, rain-fed plots, are disproportionately poor, and inflation has soared past 11 percent, the highest in 13 years.\r\n\r\nExperts blame the agriculture slowdown on a variety of factors.\r\n\r\nThe Green Revolution introduced high-yielding varieties of rice and wheat, expanded the use of irrigation, pesticides and fertilizers, and transformed the northwestern plains into India''s breadbasket. Between 1968 and 1998, the production of cereals in India more than doubled.\r\n\r\nBut since the 1980s, the government has not expanded irrigation and access to loans for farmers, or to advance agricultural research. Groundwater has been depleted at alarming rates.\r\n\r\nThe Peterson Institute for International Economics in Washington says changes in temperature and rain patterns could diminish India''s agricultural output by 30 percent by the 2080s.\r\n\r\nFamily farms have shrunk in size and quantity, and a few years ago mounting debt began to drive some farmers to suicide. Now many find it more profitable to sell their land to developers of industrial buildings.\r\n\r\nAmong farmers who stay on their land, many are experimenting with growing high-value fruits and vegetables that prosperous Indians are craving, but there are few refrigerated trucks to transport their produce to modern supermarkets.\r\n\r\nA long and inefficient supply chain means that the average farmer receives less than a fifth of the price the consumer pays, a World Bank study found, far less than farmers in, say, Thailand or the United States.\r\n\r\nSurinder Singh Chawla knows the system is broken. Chawla, 62, bore witness to the Green Revolution — and its demise.\r\n\r\nOnce, his family grew wheat and potatoes on 20 acres. They looked to the sky for rains. They used cow manure for fertilizer. Then came the Mexican semi-dwarf wheat seedlings that the revolution helped introduce to India. Chawla''s wheat yields soared. A few years later, the same happened with new high-yield rice seeds.\r\n\r\nIncreasingly prosperous, Chawla finally bought his first tractor in 1980.\r\n\r\nBut he has since witnessed with horror the ills the revolution wrought: in a common occurrence here, the water table under his land has sunk by 100 feet over three decades as he and other farmers irrigated their fields.\r\n\r\nBy the 1980s, government investment in canals fed by rivers had tapered off, and wells became the principal source of irrigation, helped by a shortsighted government policy of free electricity to pump water.\r\n\r\nHere in Punjab, more than three-fourths of the districts extract more groundwater than is replenished by nature.\r\n\r\nBetween 1980 and 2002, the government continued to heavily subsidize fertilizers and food grains for the poor, but reduced its total investment in agriculture. Public spending on farming shrank by roughly a third, according to an analysis of government data by the Center for Policy Alternatives in New Delhi.\r\n\r\nToday only 40 percent of Indian farms are irrigated. "When there is no water, there is nothing," Chawla said.\r\n\r\nAnd he sees more trouble on the way. The summers are hotter than he remembers. The rains are more fickle. Last summer, he wanted to ease out of growing rice, a water-intensive crop.\r\n\r\nThe gains of the Green Revolution have begun to ebb in other countries, too, like Indonesia and the Philippines, agriculture experts say. But the implications in India are greater because of its sheer size.
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India''s growth outstrips crops\r\nBy Somini Sengupta\r\nPublished: June 22, 2008\r\n E-Mail Article\r\n Listen to Article\r\n Printer-Friendly\r\n 3-Column Format\r\n Translate\r\n Share Article\r\n \r\n Text Size\r\n(Page 2 of 3)\r\n\r\nIndia raised a red flag two years ago about how heavily the appetites of its 1.1 billion people would weigh on world food prices. For the first time in many years, India had to import wheat for its grain stockpile. In two years it bought about 7 million tons.\r\n\r\nToday, two staples of the Indian diet are imported in ever-increasing quantities because farmers cannot keep up with growing demand — pulses, like lentils and peas, and vegetable oils, the main sources of protein and calories, respectively, for most Indians.\r\n\r\n"India could be a big actor in supplying food to the rest of the world if the existing agricultural productivity gap could be closed," said Adolfo Brizzi, manager of the South Asia agriculture program at the World Bank in Washington. "When it goes to the market to import, it typically puts pressure on international market prices, and every time India goes for export, it increases the supply and therefore mitigates the price levels."\r\n\r\nIn April, in a village called Udhopur, not far from here, Harmail Singh, 60, wondered aloud how farmers could possibly be expected to grow more grain.\r\n\r\n"The cultivable land is shrinking and government policies are not farmer friendly," he said as he supervised his wheat harvest. "Our next generation is not willing to work in agriculture. They say it is a losing proposition."\r\nMultimedia\r\nPhotos: A harvest that falls short\r\n» View\r\nToday in Business with Reuters\r\nCitigroup''s global investment bank braces for layoffs\r\nAt Saudi meeting, calls for action on oil prices, but little agreement\r\nBollywood figures it can teach Hollywood a thing or two\r\n\r\nThe luckiest farmers make more money selling out to land-hungry mall developers.\r\n\r\nGurmeet Singh Bassi, 33, blessed with a farm on the edges of a booming Punjabi city called Ludhiana, sold off most of his ancestral land. Its value had grown more than fivefold in two years. He made enough to buy land in a more remote part of the state and hire laborers to till it.\r\n\r\nMeanwhile, Chawla''s neighbors migrated to North America. They were happy to lease their land to him, if he was foolish enough to stay and work it, he said. Today, he cultivates more than 100 acres.\r\n\r\nLast year, on a small patch of that land, he planted what no one in his village could imagine putting on their plate: baby corn, which he learned was being lapped up by upscale urban Indian restaurants and even sold abroad.\r\n\r\nAt the time, baby corn brought a better profit than the government''s price for his wheat crop.\r\n\r\nThis had been the Green Revolution''s other pillar — a fixed government price for grain. A farmer could sell his crop to a private trader, but for many small tillers, it was far easier to approach the nearest government granary, and accept their rate.\r\n\r\nFor years, those prices remained miserably low, farmers and their advocates complained, and there was little incentive for farmers to invest in their crop. "For farmers," said Swaminathan, the plant geneticist, "a remunerative price is the best fertilizer."\r\n\r\nSwaminathan''s adage proved true this year. After two years of having to import wheat, the government offered farmers a substantially higher price for their grain: farmers not only planted slightly more wheat but also sold much more of their harvest to the state. As a result, by May, the country''s buffer stocks were at record levels.\r\n\r\nNanda Kumar, India''s most senior bureaucrat for food, said the country would not need to buy wheat on the world market this year. That is good news, for India and the world, but how long it will remain the case is unclear.\r\n\r\nWill greater demand for food and higher market prices enrich farmers, eventually, encouraging them to stay on their land? There is potential, but other conditions, like India''s inefficient transportation and supply chains, would have to improve too.\r\n\r\nHow to address these challenges is a matter of debate.\r\n\r\nFrom one quarter comes pressure to introduce genetically modified crops with greater yields; from another come lawsuits to stop it. And from yet another come pleas to mount a greener Green Revolution.\r\n\r\nAlexander Evans, author of a recent paper on food prices published by Chatham House, a British research institution, said: "This time around, it needs to be more efficient in its use of water, in its use of energy, in its use of fertilizer and land."\r\n\r\nSwaminathan wants to dedicate villages to sowing lentils and oilseeds, to meet demand. The World Bank, meanwhile, favors high-value crops, like Chawla''s baby corn, because they allow farmers to maximize their income from small holdings.
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(Page 3 of 3) The market may yet help India. Chawla, for instance, has replaced baby corn with sunflowers, prompted by the high price of sunflower oil. For the same reason, he is also considering planting more wheat.
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Sekarang mining company yang nentuin harga .. gila …\r\n\r\n===\r\n\r\nChinese warned of record rise in ore price\r\n\r\nBy Javier Blas and Rebecca Bream in London\r\n\r\nPublished: June 22 2008 23:32 | Last updated: June 22 2008 23:32\r\n\r\nRio Tinto and BHP Billiton have asked their Chinese steelmaker customers to accept the largest ever increase in iron ore prices or risk the interruption of supplies from Australia.\r\n\r\nTraders and industry officials said the mining companies have demanded price increases for their annual iron ore contracts in excess of the record 71.5 per cent rise of 2005 and were fighting for increases of 85-95 per cent.\r\nEDITOR’S CHOICE\r\nLina Saigol: Reasons for lack of side bets on BHP bid - Jun-22\r\nIndonesia rules out Krakatau stake sale - Jun-20\r\nHigh cost of iron ore and coal hurts steel producers - Jun-15\r\nLex: ArcelorMittal and steel - May-07\r\nEssar Steel takes over Esmark - May-01\r\nOil and gas demand fuels pipeline makers - Apr-13\r\n\r\nRio and BHP have warned their Chinese clients some annual contracts will expire next Monday and they would cease supply under the old terms. They have told them the ore would instead be sold into the spot market, where prices are higher.\r\n\r\nThe bold step indicates that the heated annual price negotiations, already well beyond their traditional conclusion date, are set to move into a hostile phase.\r\n\r\nAnalysts said most of Rio’s iron ore contracts would expire on June 30. However, some BHP contracts do not expire until September, leaving the latter time to negotiate and allowing Rio to take the lead in the discussions.\r\n\r\nMacquarie, the Australian bank, said Rio was committed to securing a price in excess of the 85-95 per cent the market is expecting. “That stance suggests investors should be prepared for an extended and potentially hostile conclusion to the negotiations,” it said in a report.\r\n\r\nRio and BHP are demanding a larger price increase than Brazil’s Vale because their proximity to China reduces shipping costs.\r\n\r\nTraders said that freight costs from Australia to China collapsed last week by 37 per cent as at least one of the mining companies stopped booking some vessels for July to ship under the old contracts. That move signalled their intention to move shipments into the spot market if the negotiations failed.\r\n\r\nIf Rio and BHP carry out their threat of diverting shipments into the spot market, analysts said the steelmakers would be likely to retaliate by stopping buying for as long as possible. Although China has record high iron ore inventories, the country depended heavily on imports, they said, and it would not be long before it had to cave in and buy into the spot market.\r\n\r\nMorgan Stanley said in a report the ore market was under “unprecedented” pricing developments and . . . “remains very tight and in significant deficit”.\r\n\r\nRio and BHP declined to comment.
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brazil adalah salah satu negara yang paling diuntungkan oleh commodity boom (next exporter of oil, food, iron ore, ethanol) === Brazil Oil Reserves Will at Least Triple, Lula Says (Update2) By Cecilia Tornaghi and Adriana Arai Enlarge Image/Details June 26 (Bloomberg) – President Luiz Inacio Lula da Silva said Brazil will at least triple its oil reserves by exploring a new offshore area that includes the Western Hemisphere''s largest discovery since 1976. ``This is very promising for Brazil,'''' Lula, 62, said in a Bloomberg Television interview today at the presidential palace in Brasilia. ``We have to take advantage of this oil to develop the country.'''' A tripling of proved reserves from 12.6 billion barrels would move Brazil into the world''s top 10 nations in oil supplies, according to estimates from London-based BP Plc. Brazil, Latin America''s largest economy, would overtake Nigeria, currently No. 10 with 36.2 billion barrels, and put it close to Kazakhstan, which has 39.8 billion barrels. Lula, who is moving into the last two years of his final term, said he has changed his mind and won''t seek membership for Brazil in the Organization of Petroleum Exporting Countries because he wants the nation to focus on refining its growing oil output, not just selling crude abroad. ``I want Brazil to export refined products,'''' said Lula, who wore a light gray suit and a black tie peppered with white dots. ``I''m under no illusion that Brazil will join OPEC. I used to be, but am no longer.'''' Petroleo Brasileiro SA, the state-controlled oil company known as Petrobras, said in November that its Tupi field may hold 8 billion barrels of recoverable oil equivalent, the biggest discovery in the Americas since Mexico''s Cantarell field. Pre-Salt Tupi is part of an area called pre-salt that stretches 800 kilometers (500 miles) off the coast near Rio de Janeiro and Sao Paulo. Such reservoirs beneath as much as 3,000 meters (9,840 feet) of water and 7,000 meters of seabed may contain 50 billion barrels of oil, according to Peter Wells, director of U.K. research firm Neftex Petroleum Consultants Ltd. Oil prices, which jumped above $140 a barrel to a record today, will probably stay high enough to justify exploring the pre-salt fields, Lula said. The Tupi deposit and nearby offshore prospects may cost $240 billion to exploit, said Neftex''s Wells, a former Royal Dutch Shell Plc exploration manager. Lula declined to provide an estimate for the pre-salt reserves today, saying the exploration is just starting. The government is working on new regulations to ensure the state keeps more of the oil profits from the pre-salt fields than it does from other wells so there''s more money for education and health-care investments, Lula said. Poor, Rolexes ``It''s a chance for poor Brazilians to use this money as opposed to having people with a lot of oil and three or four watches and a Rolex in their pockets,'''' said Lula, who grew up in poverty. ``We want to take advantage of these riches to ensure that Brazil can take a great leap forward.'''' ``Not only is God a Brazilian, he''s now living in Brazil,'''' said Lula. Lula, whose rise to power panicked investors and brought the country to the brink of defaulting on its debt in 2000, has started the second half of this term with the nation boasting the highest credit rating in its history. After using the trust of the poor to buy time for his orthodox economic program to yield fruit, he has said he''ll deliver on his promise to make sure the benefits of growth are also felt by poorer families. Part of the future pre-salt oil revenue will also be used to enlarge a sovereign wealth fund Brazil is creating with about 14 billion reais ($8.7 billion) this year, Lula said. The fund will help finance the expansion of Brazilian companies overseas, he said. Oil Refineries Petrobras is investing more than $10 billion to build two refineries to handle expanding output of heavy crude oil from its Campos basin fields, the source of about 80 percent of Brazil''s output. A 150,000-barrels-a-day refinery in Rio de Janeiro will make products for the petrochemical industry and a 200,000- barrel-a-day refinery near the northeastern city of Recife will produce vehicle and other fuels. Petrobras also plans to build at least two more Brazilian refineries. The government and the state development bank own 37.5 percent of Petrobras''s preferred and common shares, and about 56 percent of the voting shares. Lula said he is determined to prevent inflation from exceeding the government''s 4.5 percent target. As evidence of his intent, he cited the decision to raise the government''s primary budget surplus before interest payments to 4.3 percent from 3.8 percent of gross domestic product. Threat of Inflation ``I worked a long time inside a factory and have lived in this country with inflation of 80 percent a month,'''' said Lula, who lost the small finger of his left hand in an industrial accident at 19. ``I know the impact this has on a person who receives a monthly salary. And it''s these people I want to protect.'''' Lula achieved the transformation of Brazil''s economic standing by combining a pragmatic mix of populist policies and capitalist economics that set off a 12-fold gain in the stock market''s value in dollar terms and created a record number of Brazilian billionaires. Since 2003, the Brazilian currency gained 120 percent against the dollar and the benchmark stock index has jumped fivefold, beating all major markets in the world. Brazil became a net foreign creditor for the first time in January as rising export revenue boosted international reserves to more than $190 billion. Standard & Poor''s raised Brazil''s credit rating to investment grade for the first time on April 30. Shifting Perspectives ``I don''t think there''s much contradiction in what I used to say and what I say now,'''' Lula said. ``When I was a candidate, my world was one thing. When I was a metal worker, my world was my union. When you''re the president, you have to care for companies of 10 workers as well as those with 20,000 employees.'''' Lula said the U.S. will eventually use Brazilian ethanol fuel, which is made from sugarcane, because it''s 50 percent cheaper to make than corn ethanol and doesn''t curb food supply. U.S. Democratic presidential candidate Barack Obama''s comments that it wouldn''t be in the U.S.''s interest to replace gasoline with Brazilian ethanol fuel are just campaign rhetoric, Lula said. ``I''m convinced that whoever wins the election will start using ethanol made from sugarcane,'''' Lula said, speaking in a wood-paneled room decorated with paintings by Brazilian artists Di Cavalcanti and Djanira da Motta e Silva. Lula said he told President George W. Bush that the U.S. should help Central American countries start producing sugar ethanol for export to prevent social tension. Talking to Counterparts The Brazilian president said he''s been talking to Bush, U.K. Prime Minister Gordon Brown and other heads of government about the need to reduce farm subsidies and invest in Africa to boost food output. At the next Group of Eight meeting, in which countries such as Brazil and Mexico will also participate, Lula said he will propose a discussion about how potential speculation in futures markets for commodities may be driving up prices. The global food shortage is a ``great opportunity'''' for Brazil to become the ``bread basket'''' of the world, Lula said, adding he will announce a government program next month to finance farmers and double their output. ``Brazil has found its path and I believe that there is no way back. From here on we will only improve,'''' Lula said
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Contrast that with oil-fat Russia – a red-hot emerging market. As in many commodity-driven economies in the developing world, soaring energy revenue has largely insulated Russia, the world''s second-largest oil exporter, from the turbulence in global markets. Its gross domestic product is expected to grow 8 percent this year, and consumer spending continues to boom, with a 13 percent increase so far this year, according to Troika Dialog, a Moscow investment house. "We are overloaded with money, crazy amounts of money from the energy market," said Mikhail Bergen, a professor at Moscow''s Higher School of Economics. It marks a global economic role reversal of sorts. When financial crises hit the Asian markets in the 1990s and Argentina in 2001, the aftershocks spread to other emerging economies, plunging several into recession while wealthy countries went relatively unscathed. Rather than taking its toll largely on residents of developing countries, this economic downturn may cause the greatest damage to those living in the wealthiest countries on earth. The U.S. economy and financial system are more closely linked to those in other wealthy nations, particularly in Europe, where rising inflation and the weak dollar are adding to growing trouble. The United States and Europe have "similar economies and share the potential problems of industrialized nations in terms of property price fluctuations and financials," said Simon Johnson, chief economist at the International Monetary Fund. "And they find themselves sharing variable degrees of vulnerability."
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Commodity prices are plunging every day led by the free fall of the hot commodities like crude oil and gold. But don''t lose heart on commodities and panic because this is how market behaves, says investing legend Jim Rogers. Rogers told Commodity Online: "All markets all over the world in all asset classes have corrections all the time. That is how markets work." Rogers, the best known global guru on commodities, said the commodities market is these days hit by the prospects of growth slowdown in countries like China and and the large-scame economic pessimism in the US and Europe. On Friday, crude oil prices plunged further to $112.39 a barrel on the New York Mercantile Exchange. In the last one month, crude oil has lost nearly $45. It had reached an all-time high of $147.27 a barrel on July 11. The dollar rose to 110.44 yen, the euro fell to $1.4670 and the pound dropped to $1.8628. Gold for December delivery dropped $28.90 to $785.60 an ounce on Friday on the New York Mercantile Exchange. Silver for December delivery plummeted $1.33 to $12.90 an ounce on the Nymex, while September copper fell 1.25 cents to $3.2925 a pound. Rogers said that one reason for the decline in commodities prices is the strengthening dollar index. "Naturally, dollar-based commodities like metals, gold, silver, copper and platinum and several agricultural commodities have been falling. But I would say this is how market operates. So dont lose heart on commodities," he added.
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Warren Buffett With his most recent 13F filing, Buffett details his portfolio holdings as of June 30th, 2008. In it, we can see that he started a new stake in NRG Energy (NRG) to the tune of 3,238,100 shares. Buffett was even more active in the energy sector than usual, selling all of his Conoco Phillips (COP) position. He was also once again active in the rails, increasing his position in Union Pacific (UNP) by 100% (doubling down). Also, Buffett increased his position in Ingersoll Rand (IR) in a massive way, increasing his position by 500%. Additionally, he maintained his usual large stakes in companies like Wells Fargo (WFC), American Express (AXP), Procter & Gamble (PG), and Kraft (KFT). George Soros In Soros Fund Management''s most recent 13F filing, Soros bought over an $800 million stake in Brazilian oil giant Petroleo Brasileiro (PBR). At the time, this massive purchase represented 22% of his entire portfolio and was his largest holding. And, interestingly enough, PBR is down nearly 30% since his purchase. Guess we''ll have to wait til the next round of 13F''s (next quarter) to see whether or not he still holds. Soros also made a big Potash (POT) purchase, increasing his position by over 2550% (from 65,500 shares to 1,747,707 shares). In another move, he also purchased over 9 million shares of Lehman Brothers (LEH), roughly a $180 million position at the time. He also made purchases in various commodity plays such as VALE (RIO) and Talisman Energy (TLM). All holdings were current as of June 20th, 2008.
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2Q08 INVESTMENTS\r\nSoros increases potash and FCX holdings, drops Apex Silver, CVRD, Southern Copper\r\n\r\nSEC reports indicated that billionaire investor George Soros apparently has developed a fondness for potash mining.\r\nAuthor: Dorothy Kosich\r\nPosted: Tuesday , 19 Aug 2008\r\n\r\nRENO, NV - \r\n\r\n \r\n\r\nÜber investor George Soros stocked up on potash mining shares during the second quarter, increased his Freeport-McMoRan Copper & Gold holdings by more than 1,600%, invested in the world''s largest uranium miner, Cameco, and dumped his holdings in Apex Silver, CVRD and Southern Copper.\r\n\r\nDocuments filed with the SEC revealed that among the gold companies in which Soros Fund Management maintained its holdings during the second quarter were AngloGold Ashanti, Barrick, and Newmont.\r\n\r\n Soros Fund increased its holdings in Potash Corp. of Saskatchewan Inc. by 2568%. PotashCorp holdings were reported at 1,747,707 shares as of 06/30/2008.\r\n\r\nThe fund also enhanced its Freeport-McMoRan Copper & Gold holdings by 1608%. The Soros Fund holdings reported 137,850 FCX shares as of 06/30/2008.\r\n\r\nAmong the fund''s new purchases was Canadian uranium miner Cameco for 10,600 shares as of June 30, 2008, as well CONSOL Energy Inc., the largest U.S. producer of high-Btu bituminous coal. The Soros Fund holdings were 158,000 shares as of 06/30/2008.\r\n\r\nThe fund also initiated holdings in Intrepid Potash, the largest U.S. potash producer. Soros holdings were 100,000 shares as of 06/30/2008.\r\n\r\nThe Soros Fund reduced to its holdings in IAMGOLD Corp. by 23.3%. However, the fund still held 77,853 shares as of 06/30/2008.\r\n\r\nSoros reduced to his holdings in Alpha Natural Resources Inc., a Central Appalachian coal producer, by 46.95%. The fund still held 348,000 shares as of 06/30/2008.\r\n\r\nMeanwhile, the fund sold out its holdings in the world''s largest iron miner, Brazil''s Vale (previously CVRD), as well as its holdings in U.S. silver producer Apex Silver Mines, and also in Southern Copper Corp.
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