1. US-Presidential Election 2008

Barack Obama, winning more than 2206 delegates (including 441 superdelegates) has succeeded to clinch the Democratic Presidential nomination, required 2118 delegates to claim victory, and declared 'tonight I can stand before you and say that I will be the Democratic nominee for President of the United States', while Clinton signaled that she may be willing to become Obama's Vice Presidential nominee if it helps Democratic Party to win the White House. Clinton, the most successful female Presidential candidate in US history, ended her courageous campaign with an emotional speech, asking her voters to get behind Obama, endorsing his nomination and giving her full support to him. Obtaining a historic nomination becoming the first Afro American to be a major party's Presidential candidate, Obama doesn't want to decide under pressure to offer Clinton a spot on the ticket, what could be a big mistake, and seems to be in now hurry for his VP decision. However Obama and Clinton agreed on a joint public rally in an effort to unify Democratic party, cooperate in harmony and help retire her pending $20 Million campaign debt through new contributions from Obama's supporters. Having a huge fund raising success, Obama rejected Public Financing of his general-election campaign, becoming the first Presidential contender of a major party to do so. Former Vice President Al Gore, who lost the Presidential Election 2000 against Bush, many think the 2000 election was stolen from Al Gore, endorsed vigorously a Obama and will be probably on the team if Obama wins the White House. With less than six months until Election Day, Democrats must turn their full attention to the General Election, aiming to reverse eight years of failed Bush/McCain policies that have weakened the United States. John McCain, 73, who secured his nomination, which will not become official until the Republican National Convention in September, is said to be a problem-solver who could bring spending under control, avoiding the steady collapse of the government's financial house. Federal budget has increased to $3,1 Trillion from $1,8 Trillion; the national debt is now $9 Trillion, more than the combined GDP of China, Japan and Canada, and adding Medicaid, Medicare and Social Security commitments, as a nation there is a $50 Trillion hole, an invisible mortgage of $450.000 for every American family. The federal spending, the war on terror, federal judgeships and energy independence are all significant issues. General public concern, discontent and widespread dissatisfaction will conduce voters to choose the candidate they trust more to secure America's place in the world, a candidate with strong leadership qualities and capable to introduce and fight for a change. President Bush mentioned in a speach to the Israeli Parliament those who defended greater engagement with 'terrorists and radicals', interpreted as a clear reference to the presumtive Democratic nominee Obama, whom Republicans try to portray as weak in the fight against terrorism. Obama's campaign accused President Bush of launching an unprecedented attack, endorsed by John McCain, as an intention to influence the presidential election and Obama is ready and willing to fight Republicans over foreign policy and national security issues. If Obama can convince American voters he can protect them, then he cannot loose! The easiest way for McCain to lose Presidential election in November is to allow Democrats to tie him to Bush, considered an electoral liability for the Republican Party. With six consecutive months of job declines, rising rates of home foreclosures and high energy and food prices the economy gets at the forefront of the Presidential race and the debate is open. While McCain proposes tax cuts to stimulate the economy, giving most of the benefits to the wealthy and corporations, Obama is talking about a redistribution of the tax burden to reduce economic inequality, a real plan focusing on fairness and growth.

Are the US ready for an Afro-American President Obama, a change we can believe in? It's only Obama who really brings along a change!

http://usaelectionpolls.com/rss/current-democrat-polls.js

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2. Economic Outlook - Excesses & Consequences

Figures released show that US economic growth fell sharply in the last three months of 2007, as the credit crunch took effect, slowdown triggered by a slump in building activity by 16,9%, the biggest fall in 25 years, as housing prices collapsed. President Bush signed a two year bipartisan $168 Billion US economic stimulus plan with tax rebates for consumers and tax relief for business to calm financial markets and help desesperate homeowners. The Federal Reserve put into force liquidity measures with repeated interest rate cuts and lowered interest rates for banks for overnight loans from 2,25% to 2% (Fed Funds rate) and the discount rate from 2,50% to 2,25% (Federal Discount rate), taking into account the poor economic growth of only 0,6% on an annualized basis in the first quarter, declines in consumer spending, housing prices and business investment, along with spreading unemployment reaching 5,5% in May, staying steady at 5,5% in June and expecting to peak 6,4% in 2009. The Government reported the GDP in the first quarter grew better than initially estimated at 1%, however it is expeted to slow down to 0,4% during the April - June period. The IMF estimates overall losses caused by the subprime mortgage crisis at $1 Trillion or higher, including loans and securities related to commercial real estate, the consumer credit market and corporations potential losses; total losses of the US residential mortgage market could reach $565 Billion, compared to about, $400 Billion in writedowns and credit losses already booked by financial firms. With the US economy in a serious slowdown, dropping consumer confidence to the lowest in 28 years, falling again sharply in June, as anxious shoppers grapple with surging food and fuel costs and sales of new cars and trucks plunged to their lowest level in more than a decade, there is an increasing awareness that the US economy is exposed to economic contraction, entering into a 'soft' recession and might grow only about 0,5% this year, while world growth could reach 3,7%, but also fall below 3%, a level some consider would represent a global recession. The US one year inflation increased to 4,2% in May (including food and enegry) and it will be a task of the Federal Reserve to monitor inflation carefully, as economic weakness and high inflation increase stagflation fears. Expressing concern about rising inflation and inflation expectations the Federal Reserve leaves rates unchanged, but a tightening of US monetary policy with increasing interest rates is expected in the second half of the year. The economic growth forecast 2008 for the 27-nation European Union is 2% and for the 15-nation Eurozone 1,8%, while inflation rate outlook this year for EU is 3,6% and for the Eurozone 3,2%, but reaching already 3,9% in the EU and hit 4% in the Eurozone in May. The European Central Bank/ECB, alarmed about inflation trends, especially with oil prices soaring to unpredictable highs, combined with a lower growth increasing stagflation fears in the Eurozone, raised its main interest rate from 4% to 4,25% and considering rising inflation risks a another rate increase to 4,5% in September is possible. OECD has cut combined gross domestic growth forecast for its 30 members to 1,8% for 2008 and 1,7% for 2009. According to the IMF emerging economies will not be immune from a general slowdown of economic growth among wealthier countries. Brazil and Russia, commodity producers and beneficiaries of higher commodity prices,  will have lower growth rates, while the somewhat frenetic growth in China and India, commodity consumers, will continue with close to 10% and 8% in 2008 respectively. As result of a weaker short term Dollar, the Dollar quoted commodities are getting more attractive, obtaining major attention from investors, not only from Asia and the Gulf nations, which sell Dollar as it comes down, while the volatility and sensibility of stocks and bonds goes on. Especially oil (energy) and gold (metals) and other commodities, such as agricultural commodities, are used as hedge against inflation and the weakening Dollar, as rising commodity prices will offset dollar declines. However higher energy and agricultural commodity prices originate further inflation pressure in both rich and poor countries, posting an additional threat to global economic and political stability. To ease effects of global credit crunch, the Federal Reserve, the European Central Bank and the central banks of Canada, UK and Switzerland agreed to inject in a coordinated action cash and securities into the money markets, helping financial institutions, with growing losses due to record defaults on US home loans, to solve liquidity shortages and to extend out more credit, in an effort to increase demand and stop general economic decline. And the Federal Reserve acted again to further reduce persistent liquidity pressures, increasing size of its cash auctions and allowing credit card debt, student loans and car loans as collateral for Fed loans, also jointly with the European Central Bank and the Swiss National Bank increased currency swaps in nearly 50% to provide more Dollars to their banks, which are also holders of Dollar loans in the mortgage sector needing Dollars to meet their obligations. Since the subprime mortgage crisis Sovereign Wealth Funds (SWF), flush with cash thanks to high oil prices and surging Asian exports, already injected almost $69 Billion on recapitalizing the rich world's biggest investment banks (Citigroup, Merrill Lynch, UBS, Morgan Stanley, Barclays, Standard Chartered, HSBC), 'the rescue of capitalism' finest'. In an emergency deal, authorized by the Treasury Department and the FED, JPMorgan Chase agreed to buy the troubled fifth largest US investment bank Bear Stearns for a mere $2 per share in a stock swap transaction worth just around $236 Million, increasing price per share to 10,13 and worth of revised deal to about $1,2 Billion, to win over stockholders threatening to derail deal. JP Morgan Chase first-quarter earnings dropped 50%, Merrill Lynch reported worse than expected earnings for the first-quarter and Citibank lost $5,1 Billion in the same period, Well Fargo's profit fell 11% and Bank of America's earnings 77% to $1,21 Billion, Goldman Sachs and Lehman Brothers confirmed both smaller than expected first-quarter profit declines of 53% and 57%. However Lehman Brothers announced a record net loss of $2,87 Billion for the second quarter ending May 31 and plans to sell $6 Billion in stock to improve capital base,  existing also speculations the recent troubles may force a sale of the firm, while Goldman Sachs earnings for the same period dropped 'only' 11%  to $2,09 Billion amid credit losses, withstanding the turmoil in the credit market better than other banks, as Morgan Stanley reported also a second quarter net income of $1,026 Billion, but down from $2,363 Billion/57% a year ago. The Federal Reserve has let it be known that it will lend Lehman Brothers (and any other investment bank it deems worthy) enough money to avoid collapsing like Bear Stearns, also into next year as long as financial market turmoil persists. Citigroup may take as much as $9 Billion and Merrill Lynch another $4,2 Billion in writedowns in the second quarter, considering sale of a 20% Bloomberg stake worth about $5 Billion and  eventually its 49% Black Rock stake worth some $10 Billion to raise capital, as even more bad debt is on the horizon. Most of these banks iniated significant job cuts to reduce costs and as profits are further declining, mainly due to subprime mortgage related losses write-offs, Standard & Poor's downgraded top investment banks Lehman Brothers, Merrill Lynch and Morgan Stanley and revised outlooks to 'negative' on Bank of America, JP Morgan Chase and Citigroup, having already lowered the outlook of Goldman Sachs from 'stable' also to 'negative'. Important rating firms, like Standard & Poor's, blamed for awarding high ratings to subprime mortgage securities agree to reform some of their core business practices. Banks continue to feel credit stress and the magnitude of credit related losses in the financial sector is prolonging and deepening its negative impact on the stock market and on the economy! UBS, Europe's biggest casualty of the US subprime crisis, which so far has written down about $38 Billion of investments linked to US home loans market, confirmed further writedowns of up to $7,5 Billion, reducing results for the second quarter to nearly break even. Eventually the home market, which shows continued weakness,  might reach bottom line. However housing prices continue to fall and sales are still slowing, and the number of foreclosed homes returning to the market for sale are boosting uncomfortably inventories. At the end of March about 1 in 11 American mortgages were past due or in foreclosure, or about 4,8 Million loans and the problem is continuing to worsen and will be more severe than initially feared. The Senate passed a bipartisan package of tax breaks for homeowners and businesses hurt by the faltering economy - a step in the right direction - called the Foreclosure Prevention Act, which offers little aid to nearly 8000 families suffering foreclosure each day. The Federal Mortgage Plan to refinance homeowners who had fallen behind their mortgage payments, with stable, government-insured loans, has failed to really ease foreclosure crisis. A new broader housing aid bill began moving through Congress, including a program, aimed at rescuing qualified homeowners in danger of foreclosure and seeking to remain in their primary home, allowing to refinance into more affordable 30 years-fixed-rate-loans, an overhaul of the Federal Housing Administration, stronger regulations of mortgage giants Fannie Mae and Freddie Mac, a refundable tax credit of up to $8.000 for first home owners on purchase of unoccupied housing to slow the fall of plunging home prices, an amount of $150 Million to expand counseling for borrowers to prevent foreclosure, establishing stricter disclosure rules and payment requirements for lenders, and a Housing Trust Fund to cover expenses related to the foreclosure rescue plan for three years to be used to create affordable rental housing. This aid bill, having the House already approved a similar legislation, cleared an important test vote in the Senate, raising hopes for a final passage by mid summer, and there are expectations President Bush will not veto it as threatened by his Administration. Fannie Mae and Freddie Mac with a combined capital structure of about $83 Billion and exposures of more than $5 Trillion face themselves increasing risks and may not resist to keep housing market afloat, if housing slump is prolonging and house prices go through another steep decline! Their shares tumbled sharply as future accounting rules could force them to raise extra capital, which regulators probably will not demand, and the Federal Reserve warned housing market problems would likely continue into next year. Increased risks require global Government action and taxpayer's money to solve damages already caused and to reduce future problems. Financial institutions worldwide are urged to fully disclose their risk exposure in order to bring about a necessary return to financial market confidence. G7 countries/the Group of Seven Industrialized Nations endorsed plans to overhaul the credit rating process for structured products, to strengthen risk management practices and to force banks to hold more capital to guard against risks, reducing investments into complex credit products, holding such assets in their trading portfolios and creating off-balance sheet investment vehicles, all activities at the heart of the recent turmoil; also expressed concern about sharp fluctuations in major currencies and their possible implications for economic and financial stability. The Federal Reserve Bank of New York insists the U.S.financial system needs urgently stricter regulations and stronger supervision to protect against future crisis. Obama economic adviser explained that investment banks that obtain Federal Reserve Bank loans during financial crisis should face much closer regulatory scrutiny! Henry Paulson, US Treasury Secretary resumed: 'Financial markets have been reassessing risk, repricing assets and deleveraging. It took time to build up recent excesses and it will take time to work through the consequences'. The Basel Committee on Banking Supervision, which sets global standards for regulation, has underlined determination for closer risk controls on banks. However the regulatory framework Basel II is still a poorly addressed solution due to contradictions and inconsistences in its application around the world. The Federal Reserve and other US banking regulators, worried about financial markets, are also working on stricter rules for credit card issuers, prohibiting unfair practices, such as arbitrarily raising interest rates on outstanding balances. Other priority issues to deal with are the high energy prices and shortages and high prices for food, calling the World Bank for action on global food crisis. United Nations officials say the food crisis, worsened by soaring energy and food prices, could cost up to $30 Billion, emerging the impact of biofuels on food prices as a critical issue to government policies diverting food crops to energy use, and putting some nations in the difficult position to guarantee food for the poor and maintain economic growth.

Can the stagnant US economy recover and calm fears about a longer, wider and deeper worldwide economic slowdown?

Are markets self-correcting, should authorities impose stricter regulation or does a code of self-regulation of the financial institutions help to resolve finance market problems and return confidence?

Finance services and banking should set the very highest standards for ethical behaviour - Sir Evelyn de Rothschild. Do you also believe that this is something that has deteriorated in the past few years?

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Gold $920,-    07/08/08 ->tendency $1.000 per ounce ----->

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2.a) Gold

Global gold production in 2007 reached about 2.444 t (tonnes). The world's largest producing nation with 276 t was, for the first time, China, replacing South Africa which mined 'only' 272 t, in a notable steady ongoing decline in gold output, followed by the United States/255 t, Australia/251 t, Indonesia/171 t, Peru/167 t, Russia/150 t, Brazil/125 t and Canada/93 t. The largest proven and probable ore reserves are in South Africa, the United States (Nevada, Alaska, California, Colorado, New Mexico, Utah), Russia, Canada, Brazil, Ghana and Simbabwe; total reserves are estimated at 60.000 t. Of the 161.000 t ever mined, about 15% is thought to have been lost, and of the remaining 137.000 t central banks and supranational institutions hold around 32.000 t, while 105.000 t are in private hands in coin and bullion - around 22.000 t and in jewellery - around 83.000 t. Here are some official gold holdings - the United States/8.136,2 t, Germany/3.433,2 t, France/2.977,8 t, China 650 t, with record total reserves of up to $1,65 Trillion, is supposed to increase gold reserves to some 2.500 t, IMF/3.217 t, worth actually some $92 Billion, having the Group of Seven rich nations (G7) approved the sale of gold by the IMF, as part of a broad reform of its budget, raising resources by selling gold. The IMF confirmed that it will sell 403,3 t of Gold worth some $11 Billion, which is unlikely to happen until after the Presidential elections this year, in a way that would avoid to disrupting the market. The largest share of final demand at around 70%/$44 Billion, comes from jewellery, accounting India, the world's largest gold jewellery market by volume for around 555 t, followed in terms of consumption demand by the United States, the global second largest gold jewellery market with 306 t, China with 302 t, the Middle East (Saudi Arabia, Dubai), Turkey and Italy. Gold trade is a chief driver of economic diversification in the Gulf region, having Dubai imported 559 t in 2007 and re-exported 287 t into the vigorous Arab and Indian markets. The industrial and dental uses account for around 12% of gold demand, while investment demand is estimated at 18%, around $11,3 Billion. The sharp fall in South African gold output and the forthcoming sale of IMF gold may - at this time - trigger more buying interest, especially from anxious investors, private householders to defend their wealth, and the big sovereign buyers - the big central banks outside the G7 -, who want to build up their gold reserves. Gold has reinstated its age old position as the best hedge against inflationary times and increasing wealth in Brazil, India and China is contributing to leave demand outstripping mine supply. It looks as if the general fundamental outlooks for gold continue to be quite positive!

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Crude oil $136,07  per barrel - 07/08/08     (Investment Banks price forecast $150,- up to $200 a barrel, OPEC President Khelil was quoted oil price could rise as high as $170 per barrel this summer, before pulling back, and GAZPROM, Russia's gas monopoly, predicted oil price could hit $250 a barrel in 2009.)

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2.b) Oil

The soaring crude oil price reflects tight inventories, shortage of refinery capacity, nervousness about political and military tensions in oil producing nations, refiners paying record premiums for the high quality crude oil they use to produce diesel and petrol, a decrease in the Dollar's value and above all, a flood of investments especially from pension and hedge funds, flowing into commodities, including oil, viewed as an attractive alternative investment to Dollars and hedge against the weaker US-currency. OPEC reiterated that there is no need to increase output; oil supply is enough and high oil prices are not due to a shortage of crude. At $120 a barrel the world's oil bill accounts for 8% of global economic output, twice as much as it was in 2006. Global demand, at 86 million barrels a day, growing an average of 1,8% per year since 2003, has slowed down in industrialized countries, but has been more than offset by growth in China + 410.000 barrels a day and the Middle East + 330.000 barrels a day.  

(Million Barrels per Day)

Of the 14 countries that produced more than 2 Million barrels a day in 2007, seven were OPEC members - Saudi Arabia/8,71, Iran/3,70, United Arab Emirates/2,50, Kuwait/2,47, Venezuela/2,39, Qatar/2,12, Iraq/2,08 -. The remaining 7 NON OPEC members, including United States/8,48, were Russia/9,88, China/3,91, Mexico/3,50, Canada/3,36, Norway/2,58 and Brazil/2,29. Russia, Norway, Mexico and Kazakhstan are the world's largest NON OPEC net oil exporters. The United States/-12,24 is the world's largest net oil importer; China/-3,77 is also net oil importer, while Canada/+1,01 is a smaller net oil exporter. NON OPEC oil production is expected to rise; the greatest increases were expected from Russia and Brazil, however Russia, the world's second biggest oil producer, shows actually a declining oil production, and some believe that the period of intense oil production in the oil reach western Siberia is over, fuelling concern that oil producers cannot keep up with strong Asian oil demand lead by China's continuing economic boom and India's rapid economic expansion, two nations granting fuel subsidies to ease the burden on the poorest in society, as oil production in Mexico is also slowing down, facing the state owned oil company PEMEX a cronical lack of cash and of technical capacity for deepwater exploration and production. There are increased hopes in Nigeria's offshore oil to replace disminishing worldwide reserves, while Saudi Arabia, the only OPEC member with the potential to expand oil production, put on hold any further capacity expansion plans. The world is not running out of oil! The biggest threat to the future of supplies is the lack of spare production capacity worldwide, warned Saudi Arabia's oil minister, and Libya's National Oil Corporation admitted that there was little more oil the OPEC could pump in case of a shortfall, confirming that there is not enough spare capacity to help. OPEC will spend up to $160 Billion over the next four years to increase oil production capacity. Shortfalls are caused by oil rich countries such as Nigeria, Kuwait, Venezuela, Iran and Iraq, where politics has stymied production growth. Oil rich Nigeria, where rebels are attacking oil wells and pipelines, is the lingering hotspot the markets are actually focusing on, worried also about Iraqui's oil exports through the north of the country hit by renewed crossborder raids by Turkish forces against Kurdish insurgents. During the visit of President Bush to Saudi Arabia, their leaders made again clear that they see no reason to increase oil production as they put sufficient oil on the market to meet demand of their customers, having increased already earlier this month supplies to clients mostly in the US by 300.000 barrels a day to compensate declines from Mexico and Venezuela, also suggesting that the US could go more aggressively for domestic exploration and expanding refining capacity! To ease dependence on crude imports President Bush called to end ban on offshore oil drilling, what would not guarantee any additional oil for as much as seven years. It seems that today's oil prices are influenced more by opinions and predictions from brokers and Investment Banks and have moved away from the nearly unchanged market fundamentals! Speculators are focusing on perceived risks to future oil supplies and the growth in oil demand from emerging economies. However the key problem remains the same: global demand, led by China, criticised for its fuel subsidies, but raising now cost of gasoline and diesel by 17%/18% respectively, is expanding strongly, accounting China for almost a third of the world's annual demand increase, and world supply not! Rising cost of fuel is producing protests all over the world and crude prices hitting a new trading record of more than $139 a barrel dominated the G8 meeting in Japan, multiplying fears global economy could be harmed by soaring oil prices, driving up inflation with the risk of social tensions forcing countries to look for alterntive fuel sources, and the 5 key energy-consuming nations, the United States, China, Japan, India and South Korea called again on oil producers to increase output to try to control oil prices. OPEC said no decision will be made until the next meeting in Vienna on September 9, however Saudi Arabia, the world's biggest oil exporter, is completing development of its giant Khursaniyah field soon, increasing its output capacity by up to 500.000 barrels a day and is willing to bring production and supplies from actually 9.450.000 barrels a day, already 300.00 barrels a day higher since last month, to a total of 9,7 Million barrels a day in July, or more if the market requires it! The kingdom, complying with a huge expansion program in its oil industry to increase its spare oil production capacity to up to 12,5 Million barrels a day by the end of 2009, said at a meeting with important producers and consumers on Sunday in Jeddah, it is capable to boost this level another 2,5 Million barrels a day to 15 Million barrels a day if needed. Saudi Arabia is concerned today's record prices might damp economic growth and lead to a lower oil demand, improving countries their energy efficiency, developing alternative sources of energy, including nuclear power. Saud Arabia wants oil price stability in the global market, a fair oil price not hurting producers neither consumers, and is worried about harmony between buyers and sellers, asking consumer countries to take measures to control and stop speculations in the futures markets to bring oil prices down from the actual unreasonable levels. The king called on OPEC to pledge $1 Billion to help developing nations with the effect of high energy prices, also offering an additional $500 Million in soft loans from Saudi Arabia. However the fresh oil offered by Saudi Arabia is less than expected and does not offset the recent output losses in Nigeria caused by attacks on production facilities, contributing only little to calm market concerns. Oil prices jumped above $140 a barrel as Libya said it is studying options to cut output in response to possible US legal actions against producer countries reducing oil production, arguing the market is well supplied and demand will drop due to warmer temperatures in energy hungry Europe and the United States. OPEC president Khelil favours cutting oil output, so do Algeria, Iran and Venezuela. Iraq, with the world's third largest oil reserves, is opening its giant key producing oilfields to Britsh and US companies to restore its oil infrastructure and to raise output from the actual level of 2,5 Million barrels per day by a combined 1,5 Million barrels per day.

visit my blogs on energy (in spanish): http://petroleo1.blogspot.com/ on China (in german): http://chinaheute.blogspot.com/ and on Russia (in english) http://russia4you.blogspot.com/

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2.c) Sovereign Wealth Funds/SWF

SWF, government-backed investment vehicles, have proliferated in recent years thanks to high oil prices and surging Asian Exports, to a total worth of about $3 Trillion, but growing fast while amassing enormeous currency reserves. There is concern about investments compromising financial stability and sensitive sectors, such as energy or defense. However host countries and SWF see that their interest lies in building confidence and the behavior of Sovereign Wealth Funds has been so far without fail! Reserves in China reached $1,65 Trillion corresponding to 1/2 of China's GDP and in Russia $500 Billion or 1/3 of Russia's GDP and there is pressure that China and also Russia, both keen to protect their exporters, should appreciate their exchange rates faster to reduce inflation, which would slow down accumulation of reserves. China and Russia have established important SWF, while Japan, with the world's second largest foreign exchange reserves, which reached $1,01 Trillion, has not yet a SWF. The IMF will exercise its own judgement as to whether a country is in breach of the requirement not to undertake currency manipulation for trade advantage, creating also a code of 'best practices' to guide SWF, - expecting SWF from the countries that are getting the funds money to accept the same rules and avoiding over-regulations! The US launched an 'Invest in America' programme and wants that the Group of Eight rich countries (G8) leads by example, saying to review a transaction on other grounds than national security is unhelpful and unproductive! US GDB is about $12 Trillion, the total value of traded securities (debt and equity) denominated in Dollar is estimated to be more than $53 Trillion, and the global value of traded securities is about $165 Trillion. Total assets under management by private hedge funds, a broad category of private investments funds that seek high returns, and as consequence often take on considerable risks, posing also a certain risk to the global financial system, are estimated to be around $2 Trillion. Combined the top 50 hedge fund managers in 2007 earned $29 Billion, John Paulson of Paulson & Company earned $3,7 Billion, followed by the hedge fund managers James H.Simons and George Soros each earning almost $3 Billion. In that context $3 Trillion and more worth of SWF is quite significant but not so huge. Important sovereign wealth generator are China, Russia and Kuwait, and over the past 5 years the fastest growers have been Nigeria, Oman, Kazakhstan, Angola, Russia and Brazil. Abu Dhabi, the oil-rich Emirate of the Gulf region, has actually the largest Sovereign Wealth Fund, the Abu Dhabi Investment Authority/ADIA with around $900 Billion and Abu Dhabi is today the world's richest city! A number of Middle East investors is not interested to invest outside the region, as local real estate investments and infrastructure investments are giving higher returns than foreign investments and Middle Eastern investors have been repatriating their assets, reinvesting especially into the Gulf region's spectacular mega projects. Due to high oil prices the fundamentals of Gulf economies are strong and they are set for a period of sustained economic growth in the short and medium term; there is a rise in foreign investments into regional markets, leaving volatile western markets, to benefit from local outperforming price/earning ratios. Singapore's GIC, one of the largest SWF, warns that we could be facing a recession which is longer, deeper and wider than any recession that we have encountered in the last 30 years and considers its investments in UBS and Citibank as long-term investments with good returns when markets stabilise again.

Sovereign Wealth Funds/SWF - Listing & Updates & Deals & Related Investors: http://swfmoney.blogspot.com/

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3. Globalization

Can globalization help to reduce effects of recession? Sure, however there are social and economic costs to globalization. Trade liberalisation rewards competitive industries and penalizes uncompetitive ones, and foments greater movement of people, goods, capital and ideas due to increased economic integration, which in turn is propelled by increased trade and investment. Global income is more than $31 trillion/year, but 1,2 billion people of the world's population earn less than $1,- a day and 80% of the global population earn only 20% of this global income, existing in many countries a large gap between rich and poor. The 3 billion people living in 24 developing countries that increased their integration into the world economy enjoyed an average 5% growth rate in income per capita, longer live expectancy and better schooling. The digital and information revolution has changed the world's learns, communicates, doing business and treats illnesses. Globalization has helped reduce poverty in a large number of developing countries, but too many nations and people have been left out. Important reasons for this exclusion are weak governance and policies in the non-integrating countries, tariffs and other barriers that poor countries and poor people face in accessing rich country markets and declining development assistance! But that does not justify a retreat to nationalism and protectionism, which leads to deaper poverty and is fundamentally hostile to the well-being of people in the developing nations! The challenge is to make globalization work for all, including the poor people of the world! Pope Benedict XVI called for globalization of social and economic justice!

Can globalization, an increasingly interconnected world, the international marketplace, with a greater transparency produce more global stability, reducing vulnerability to crisis?

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4. Global Warming

As interdependence increases worldwide economically and politically taking effect globalization, humankind is called to deal with priority issues, such as the greenhouse effect. The greenhouse gases that have already been put into atmosphere threaten the survival of many ecosystems and wildlife species. The dramatic change in West Antarctic Ice could produce a significant rise in global sea levels; Antarctic ice sheet is melting rapidly, as much as 36 cubic miles of ice a year. The continued greenhouse effect is an effect caused by greenhouse gases, such as carbon dioxide, nitrogen oxide and methane, that cause infrared radiation to be hindered when escaping the earth's atmosphere. Sea level rise, warming temperatures, uncertain effect on forest and agricultural systems, and increased variability and volatility in weather patterns are expected to have a significant and disproportional impact in the developing world, where the world's poor remain susceptible to potential damages and uncertainties inherent to a changing climate. Going oil and gas prices up, reliance on coal is rising especially in China, India and the United Sates, meaning that global emissions of carbon dioxide will increase and there is little hope of averting the worst effects on climate change! Wasting many years denying the real threat of global climate change, the Bush Administration, obliged by court order, released a report about global warming and it's harmful impact in the United States! John McCain, presumtive Republican nominee, calls for a mandatory limit on greenhouse gas emissions in the United States and Obama, the Democratic candidate, is also strongly supporting plans for a clean energy future, increasing investments in renewable fuels, and considers climate change as one of the greatest moral challenges of our generation! The Kyoto protocol, ratified by over 166 countries, but not by the Bush Administration, entered into force in February 2005 and is due to end in 2012, and the US, mayor developing countries and big polluters like Brazil, China and India become fully engaged in signing up to a post-2012 agreement, centred on the United Nations Framework Convention on Climate Change/UNFCCC,  which is scheduled to finish in late 2009, having G8 leaders agreed to consider and adopt the goal of achieving at least 50% reduction of global emission by 2050, but not yet assuming any short term commitments. British Prime Minister Gordon Brown listed climate change to the greatest threats to Britain's peace, as are war, terrorism, disease and poverty. Lights were switched off across Australia last night at 8pm for Earth Hour, drawing mixed results and reviews. Earth Hour aims to raise environmental awareness - of global warming - by encouraging homes and businesses to turn off their lights for one hour. San Francisco and Phoenix and Canada's Vancouver will switch off at 2pm today, while other cities in 35 nations are following. The poorer countries are calling on industrialized nations to guarantee financial help to adapt to the impact of climate change. Only up to $300 Million annually will be available through a U.N. adaption fund with a maximum of $1,5 Billion a year, which is much less than the $86 Billion the U.N. Development Program estimates is needed annually by 2015. The US, Japan and Britain said they will contribute to a clean technology fund, administered by the World Bank, that will dole out $5 to 10 Billion over three to five years, starting operations in July 2008. Pope Benedict XVI said the world needed to care for the environment, but not to the point where the welfare of animals and plants was given a greater priority than that of mankind, attacking climate change prophets of doom, warning that any solution to global warming must be based on firm evidence and on an agreement of sustainable development capable of ensuring the well-being of all while respecting environmental balances. According to the International Energy Agency/IEA the world needs to invest about $45 Trillion in energy in coming decades, build some 1.400 nuclear power plants and vastly expand wind power in order to halve greenhouse gas emissions by 2050 and prevent energy shortages, within a new global energy revolution, transforming the way we produce and use energy.

Is it too late to stop climate change?

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5. His Holiness Pope Benedict XVI Joseph Ratzinger

Faith is Hope. Holy Mary, mother of God, our Mother, teach us to belief, to hope, to love with you. I invoke God's blessing of joy and peace. One can only be a Christian in the Church, not beside the Church! I invite you to observe how the Holy Spirit is the highest gift of God to humankind, and therefore is the supreme testimony of his love for us. I invite you to give time to prayer and to your spiritual formation. Lead others to love Jesus more and more and that you may follow him faithfully. Everything collapses if truth is missing. These are just some prayers, blessings and statements by Pope Benedict, who has developed an intense scientific activity. Many publications constitute a point of reference for many people, specially for those interested in entering deeper into the study of theology. In his usual clarity he made notable contributions to Church and to the Christian Society. He is the teacher, the thinker and the ponderer of deepest meanings. People came to see Pope Paul II and they come to hear Pope Benedict XVI. The Vatican announced that Pope Benedict will meet with Muslim religious leaders and scholars at a Catholic-Muslim forum in Rome later this year, explaining that the Church is eager to improve relations with moderate Islam. Many Muslims remain wary, saying the Pope has created the impression that he is insensitive to their faith. Followers of Islam increased in such an extraordinary way that today 19,2% of the world population is Muslim, while 17,4% is catholic, representing until now the most important religion. King Abdullah of Saudi Arabia said we have lost sincerity, morals, fidelity and attachment to our religions and to humanity, deploring the desintegration of the family and the rise of atheism in the world, a frightening phenomenon that all religions must confront and vanquish, and calls for dialogue among monotheistic religions, project which the King discussed with Pope Benedict XVI during his landmark visit to the Vatican late last year. Pope Benedict XVI visits US, as he views the United States as essential 'battleground' in what he considers the 'war' of today's era - proving that modernity doesn't have to stamp out religious faith! Faith and work of the Church in our society is important to us all! US President George W. Bush sees the Pope as a powerful moral figure and received him as head of state and friend. Pope Benedict XVI spoke of his affection for America, a land of hope and opportunity for millions across the world, and offered his support to strengthen the United Nations, where he has promoted human rights as basis for ending war and poverty!

Is the Catholic Church getting more efficiently involved in world affairs as to achieve a better understanding with other important religions helping to ease political tensions?

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Die gesamte Summe, verteilt auf fünf Jahre, fließt nur, wenn Schalke alle erreichbaren Titel gewinnt. Unterm Strich begegnen die Königsblauen dem Branchenprimus Bayern München und dem bis dato recht blassen VfL Wolfsburg finanziell nun jedoch auf Augenhöhe. Als Auflaufkind war übrigens für Gazprom der Politpensionär Schröder unterwegs, der ja auch sonst unermüdlich daran arbeitet, dass zwischen Russland und Deutschland nichts ins Stocken gerät.

Übernehmen kann Gazprom den FC Schalke 04 aber nicht. Anders als in England, wo Popstars, arabische Scheichs und russische Millionäre in der Premier League auf Einkaufstour gehen, gilt in Deutschland die 50+1-Regel, nach der der Verein immer 50 Prozent der Stimmen plus eine halten muss, um Herr im eigenen Haus zu bleiben. Allerdings wackelt diese Regel, bringt sie doch die deutschen Vereine im internationalen Wettbewerb ins Hintertreffen gegenüber den Clubs, die Milliardäre sich als Privatvergnügen gönnen. Noch nehmen die Vereine jedoch Rücksicht auf jene ihrer Fans, die unter Furcht vor Heuschrecken leiden und den endgültigen Untergang des hemdsärmeligen, bodenständigen Bolzsports befürchten. Und schließlich ist es auch gerade diese Bodenständigkeit und Verwurzelung, die ein Sponsor wie Gazprom sucht, um sich in die Herzen der Fans zu spitzeln.

Sympathieträger hat Gazprom auch dringend nötig. Bislang beliefert das russische Unternehmen deutsche Firmen, die die Energie an den Endkunden weitergeben. Doch diesen Zwischenschritt möchte Gazprom zukünftig umgehen. Immerhin wird gerade der europäische Gasmarkt liberalisiert. Aber noch verbreitet der Name Gazprom für die deutsche Nase vor allem einen Geruch von Staats- kapitalismus, Oligarchie und Machtmissbrauch: Gesellschaftliches Engagement, das Endkunden nicht leicht vermittelbar ist. Manche Zungen behaupten gar, Gazprom sei vom Kreml gesteuert und mit der Monopolstellung des Unternehmens würde bald in Moskau europäische Politik gemacht.

Doch während nun Gazprom im Zuge seiner Marktexpansion den Anschluss an lokale Identitäten sucht, auf dass der heimische Herd glücklicher Endkunden bald ohne Umwege mit Gas aus Sibirien beheizt werde, finanziert der Konzern Schalke auch den Zugang zum internationalen Fußballmarkt. Dabei riskiert der Verein eine Heimniederlage ganz eigener Art. Noch ist man auf Schalke zu Hause. Doch der Preis der Champions League sind teure Spieler, VIP-Logen und sehr auswärtige Spiele. Und auch wenn Gazprom schon mal Fanflieger zur Verfügung stellt, um die erhöhte Mobilität der Schlachtenbummler zu unterstützen, wird aus dem Klub von nebenan immer mehr ein Global Player. Lokale Identität wird ein Fall für die Merchandising-Abteilung.

In diesem Spannungsfeld zwischen heimeliger Lokalität und der großen weiten Welt steht Schalke aber nicht allein. Hier bildet sich die Logik des entfesselten Weltmarktes ab, die wahrlich nicht mehr nur den Fußball prägt. Und so ist Gazprom auch nicht einfach Aushängeschild des neuen russischen Kapitalismus der Putin-Ära, sondern vor allem Ausdruck der neuen Grenzenlosigkeit im Gasmarkt. Und nicht selten führt der Versuch der grenzenlosen Akteure, sich Wurzeln zu kaufen, zu weiterer Entwurzelung.

Prangen Deutsche Bahn, T-Com, RWE oder EnBW auf der Spieler- brust, so erregt dies kaum Aufsehen. Hat die nationale Vernetzung zwischen Wirtschaft und Sport doch für beide Seiten ebenso segensreiche Wirkungen wie diejenige von Politik und Wirtschaft. Wie gesagt: Gesellschaftliche Verantwortung wahrnehmen, nennt man das. Amen. Doch wenn der Russe kommt, ist alles ein bisschen anders. Diffuse Globalisierungsängste werden flugs auf den Globalisierungsnachzügler Russland projiziert. Erspart doch die Jagd nach dem Sündenbock in der Ferne die Konfrontation mit den heimischen Ursachen. Kaum sind wir den mittellosen Besatzer losgeworden, kommt der reiche Russe.

Gazprom geht auf Nummer sicher. Bringen Schalker Spielerbrüste nicht den erwarteten Imagegewinn, so gibt es ja immer noch die neue euro-asiatische Eishockeysuperliga KHL (Kontinentalnaya Hokkeynaya Liga). Dort ist Gazprom Hauptinvestor. Und wer weiß, wenn das funktioniert, vielleicht wird dann auch irgendwann Uli Hoeneß' Traum von einer europäischen Fußballliga wahr. Mit Heimspiel im Moskauer Zentralstadion.

Derek Brower in Deauville, France
June 10, 2008

Already struggling under rapidly rising energy costs, Europe is facing further crippling rises as Gazprom said Tuesday, June 10 that natural gas prices in Europe could rise to as much as $1,500 per 1,000 cubic metres (cm) by 2009 on the back of strong international oil prices. The company's boss, Alexei Miller, added that prices for its exports to Europe had already increased to $410 per 1,000 cm, compared with the company's earlier expectations of $400 per 1,000 cm this year.

Speaking to a posse of invited journalists in the sleepy Norman resort of Deauville, Miller said he expected oil prices to reach $250 per barrel next year. The head of Gazexport, Alexander Medvedev, suggested that with gas prices in Europe linked to the oil prices, that would yield a gas price of $42 per million British thermal units, or $1,500 per 1,000 cm.

The figure struck some analysts attending the briefing as "speculative," but a Gazprom spokesman suggested to bne that both the forecast oil price and the formula to calculate the resulting gas price were being used internally by the company.

While the price warning will come as a shock to the EU, which imports over 150bn cubic metres a year (cm/y) of gas from Gazprom, the company is in little mood to compromise. Miller said he was "concerned about protectionist tendencies" in the bloc, and took a swipe at a clause that Brussels introduced into its energy liberalisation programme last year that could prevent the Russian gas monopoly from buying assets in the EU. "I ask how wise is it that the Commission invented this clause," he said, adding that it could prevent "much-needed investments to satisfy the demand security of gas supply of our European customers." He likened the clause to "creating a barrier to the Gulf Stream, because the Gulf Stream [also] warms up all of Northern Europe."

He added that Gazprom is "not the only company that thinks so" and that it would coordinate with its [European] partners to oppose the clause in order to prevent an "energy deficit and de-industrialisation" in Europe. French and German companies oppose some of the EU's liberalisation programme, which would force them to separate parts of their businesses to increase competition.

Reliable friend

Diversification of import options was sensible for the EU, Miller said. But it was based on the erroneous assumption that Russia is not a reliable supplier. And he noted that attempts to develop alternative imports of gas from Central Asia had served only to increase the price of gas from countries in that region. "We call this a Caspian paradox - they thought that this would increase competition," he said of Western politicians who have sought agreements in the region. "But it brings the opposite result - consumers compete and not the sellers."

Miller also said that Austria and Slovenia were now ready to commit themselves to the South Stream gas pipeline - one of two new export projects Gazprom wants to build to Europe. The South Stream project would "complement" the Nabucco project, he said, referring to a Brussels-backed pipeline development that would import gas from Central Asia directly into Central Europe, avoiding Russian territory. Austria's OMV first told bne in April that it was considering joining the South Stream project; the company is also head of the consortium building Nabucco.

Speaking about TNK-BP, meanwhile, Medvedev said that, "if this asset were to be sold, we would be interested in buying it." But he reiterated the line that has emerged from the Kremlin, which over the weekend suggested it would let the shareholders in the company resolve the dispute on their own. "Today is corporate conflict inside the company," Medvedev said. "We hope it will be solved and then we will consider it."

TNK-BP is currently tearing itself apart in a shareholder battle as the Russian side - made up of Len Blavatnik's Access, Viktor Vekselberg's Renovo and Mikhail Fridman's Alfa, which forms the AAR consortium - fight BP over who remains in the company. AAR complains that BP treats TNK-BP ike a subsidiary; BP is understood to favour getting AAR to sell out to Gazprom.

Speaking about Gazprom's plans in the upstream, Miller said the company would spend $30bn this year, with the bulk to be concentrated on the Yamal Peninsula, and on new fields in Eastern Siberia and the Arctic Shelf. The Shtokman field, in the Barents Sea, would be on stream by 2014, supplying the Nord Stream pipeline to Germany.

Miller said the company would also become the world's largest within the next seven to 10 years, when market capitalisation, which stands at $360bn now, would likely reach $1 trillion.

Medvedev also told bne that the company hoped to trade all of its exported gas in rubles "within two to three years."
-15-140608

June 9, 2008, St Petersburg

For a company that could lose 20% of its global oil reserves and a quarter of its production over a murky dispute with its partners in TNK-BP, Tony Hayward's words to an investment forum in St Petersburg on June 6 were something of an anticlimax.

Russia needs to promote the rule of law and ease the tax burden on energy companies to boost flagging oil production, the BP boss told delegates. "If those three things are in place and applied consistently," he added, "then there will be very significant inward investment in the oil and gas sector.'' No threats to pull out and no warnings of an impending exodus of money if the Kremlin doesn't behave better.

Other executives echoed Hayward's comments as well as the pleading tone of them. Rex Tillerson, head of the world's largest oil company ExxonMobil, even praised the Sakhalin-1 project - where his company is involved in a protracted dispute with the Kremlin about whether it can export the natural gas - as an example of "cooperation and inter-dependence." A touch bolder than Hayward, he added that there was "still no confidence in the rule of law in Russia - that will come with a track record."

Top line-up

Hayward and Tillerson were part of an impressive line-up of oil and gas executives sharing the stage. Among their peers were the bosses of Shell, Total, ChevronTexaco, ConocoPhillips, Dow Chemical, Schlumberger, as well as Alexei Miller and Vagit Alekperov, heads of Gazprom and Lukoil, respectively. Other senior executives were in the audience. A bomb in the room would have wiped out the top tier of the world's energy sector.

The line-up confirms that the St Petersburg International Economic Forum hasn't just supplanted its London rival, but consigned it to the dustbin of history. Critical voices were notable in their absence and the forum's emphasis was on the Russian economy, but high-profile attendance from other sectors suggests that even Davos now has a genuine rival.

But what the energy session said most clearly was that the Western majors want access to Russian crude like never before. Forget whatever anyone has said about the Kremlin's consolidation strategy of the last few years putting energy companies off the country - if they're in, they want to stay there; and if they're not, they want to be there.

Yet ever since Gazprom grabbed control of the Sakhalin-2 project from Shell in 2006, it has been obvious that the majors will only be allowed access as junior partners in Russian-led ventures. Total's minority stake in the Shtokman gasfield development now looks like a model. The company's chief, Thierry Desmarest, praised the arrangement, even if some analysts say the French firm's participation in the project is effectively as a hired service contractor for Gazprom, which keeps control of the reserves.

Gazprom's ascendancy isn't just above the Western majors. At the conference, the gas company's boss Alexei Miller reminded customers in Western Europe who was in control of the gas they need. Referring to the company's two proposed gas export pipelines to Europe, Nord Stream and South Stream, Miller said he found it "astounding" that Gazprom's participation in such projects meets opposition in the EU, "especially if one takes into account the acute energy deficit currently facing the European economy."

Despite doubling investment in the upstream to $30bn this year - "real investments in the energy security of Europe" - Gazprom was "encountering problems that are completely unrelated to either production or real business issues," Miller said. "One gets the impression that certain European officials are still unable to decide what it is they fear more - a real energy shortage, or the fictitious Russian threat."

And he also warned customers in the bloc that Russian consumers would remain the company's priority. Russia supplies the EU with about 156bn cubic metres a year (cm/y) of gas, while domestic demand is 420bn cm/y. As domestic prices rise to European levels over the next few years, Miller said, so will the profits - and importance - of the Russian market. The notion that its Russian customers are an expensive drain on a company that would rather do business with premium consumers in the EU would soon end, he said.

In another sign of the company's self-confidence, Miller said that Gazprom will establish a new gas exchange in St Petersburg, to be on line by 2009. When the Nord Stream pipeline, which will export up to 56bn cm/y from Russia to Germany, comes on stream, "international gas trading will commence in St Petersburg", Miller said. And the trading will be done in rubles.
-10-140608

June 9, 2008

Between his call in Berlin for new relations with Western Europe and his blunt critique in Petersburg of the US' role in the global financial crisis, Dmitry Medvedev's real thrust - to strengthen the rule of law in Russia - is already facing a test. And it is one that could define how investors see the first year of his presidency. Whatever Medvedev's rhetoric of the past week, it is an oligarch-led squabble over TNK-BP that could sandbag claims that Russia is becoming a safer place to invest.

Forget the barbs in his Petersburg speech on Saturday, June 7 aimed at the US and its "economic egotism" and "aggressive financial policies" that have left most of the world poorer. They were part two of a broader theme that began more softly in Berlin, where Medvedev sought to build on a "common heritage" to suggest that Russia's place is in "Europe civilisation." US pre-eminence in a uni-polar world remains the Kremlin's bugbear - for Western Europe, Medvedev is bearing olive branches.

But Medvedev knows that an end to Russia's "legal nihilism," as he terms it, is just as important for the country - and arguably more difficult than building bridges (and pipelines) to Europe. For average Russians, an end to endemic corruption in everyday life would transform Medvedev's reputation. Putin didn't manage it, despite similar rhetoric, so the attitude on the street about Medvedev's campaign is "wait and see," as one lawyer told bne. Take him at his word, though, and the domestic priority is clear: "It's the law, stupid." Investors agree, which is why TNK-BP will be a test case for the Kremlin's power.

Oil on troubled waters

In January, a clause preventing the Russian investors in TNK - Len Blavatnik's Access, Viktor Vekselberg's Renovo and Mikhail Fridman's Alfa, which forms the AAR consortium - from selling their stake in the company expired, effectively putting their 50% on the block. Gazprom early on declared its intention to buy the stake, when Alexander Medvedev, deputy chairman of the board of executive directors, told bne in November that the assets "would fit well" with those of the gas giant - though reports in St Petersburg on Sunday, June 8 said Gazprom would keep out of the dispute. Rosneft also wants to buy the stake.

But now TNK-BP is tearing itself apart in a shareholder battle. BP is understood to favour a deal with Gazprom. The two companies have already agreed a wide ranging, though as yet undefined, agreement as part of the sale of TNK-BP's stake in the Kovykta gasfield to Gazprom last year. That deal hasn't been completed, however, in part because of the cloudy future of TNK-BP. The motives of the AAR shareholders are less clear, with each having put different valuations on their stake, ranging from $15bn to $30bn. Troika-Dialog values the stake at around $20bn. One theory is that Fridman may be making a play to gain control of the company himself, though it is more likely to be a price-raising bluff.

And now the Russian shareholders have revealed some of their hand. Under the pretext that BP treats TNK-BP as a subsidiary and not a 50/50 joint venture, they have demanded the removal of the partnership's chief executive, Robert Dudley. BP has so far refused, but after the authorities raided the company's offices in March, the pressure has increased again in the last few weeks: the interior ministry has called Dudley in for questioning over alleged tax and labour law problems. And TNK-BP's foreign executives now face the threat of their visas expiring - sabotage by the Russian shareholders, claim some reports.

In St Petersburg on Saturday, June 7, BP boss Tony Hayward said he expected the "well-publicized" dispute to be resolved soon. He was understood to have met with Fridman during his visit to the city's investment forum. But the dispute is still rattling BP and other investors.

In a speech at the St Petersburg economic forum, Hayward called on Russia to encourage spending, respect property rights and apply the rule of law. Other energy executives echoed the plea. But if the actions of the interior ministry in its investigation of TNK-BP suggest a repeat of the political campaign in 2006 that saw Shell lose control of the Sakhalin-2 gas project, Medvedev's credibility will take a hit.

There are solutions in the air. Some of the forum gossip suggests that Dudley could be sacrificed. BP can afford to lose him, but not its stake in TNK-BP. The venture accounts for 24% of the UK major's global production and almost 20% of its reserves - and remains the only real growth opportunity in both categories, which remain the most important data for an oil company's valuation. Hayward's entire strategy in Russia - from acquiescent speechifying to Kremlin cheerleading - has been designed around keeping BP's position in the country intact.

But the real solution rests with the Kremlin, which is why TNK-BP has become a test case for Medvedev's presidency. Confusion about which of the two energy champions - Rosneft or Gazprom - will buy into the oil firm could be ended at a stroke by the president. If he can't do that, it suggests that the oil and gas factions beneath him remain ungovernable. On June 8, reports suggested that the Kremlin now favoured letting the shareholders "sort it out themselves" and that a Gazprom bid wasn't in the offing. That's the kind of signal that investors might have welcomed in some cases, but will worry BP in this one.

Meanwhile, any suspicions that the authorities are being used to execute the aims of oligarchs within TNK-BP offers an example of the very legal chaos that Medvedev has promised to end. That gives him an opportunity to exercise his power in support of the primacy of the law - and reassure the kind of investors Russia will need if it's to boost its flat-lining oil production. Either Medvedev has the power to do so, or he doesn't.
-17-140608

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The government plans to allow Gazprom to raise the domestic price it charges for gas, while the oil sector is set to benefit from tax cuts, writes Derek Brower

CHANGES are afoot in the Russian energy sector. With Dmitry Medvedev, Russia's new president, barely into his job, a reshuffling of the administration triggered a surge in the country's stock prices. But domestic gas-price increases and a reduction in taxes on oil companies could prove an even bigger boon to the country's energy industry.

Europeans – who import over 150bn cubic metres a year (cm/y) of Russian gas – have long called on the Kremlin to bring prices for domestic supply into line with prices paid in the European Union (EU). Gazprom, which needs money to invest in the country's upstream, would like the same. The company says it lost R9bn ($380m) in 2006 and R11m in 2007 by selling gas to domestic users at controlled low prices. Consumers in Russia pay $50-75/'000 cm, compared with prices of up to $300/'000 cm in the EU.

(...)

Outspoken, staunchly independent and passionate about the minutiae of Russian oil and gas policy, Jonathan Stern is riding a wave of interest in the country and its energy sector. Profile by Derek Brower

YOU GET the impression that Jonathan Stern doesn't suffer fools gladly. Ask a silly question and you don't get a silly answer, just a tone of exasperation, followed by a precise and succinct riposte. And these days, on the subject of Russia and its energy sector, he has to put up with a lot of exasperation. "Most western commentators have no perspective on Russia at all," he says, echoing the complaint of many who see a dichotomy between their experience of the country and its image in the Western media.

Stern's perspective extends back to the 1970s, when he began public life as a Sovietologist, an occupation whose name, if not its techniques, disappeared with the fall of the USSR in 1991. In 1980, he published a book based on his PhD thesis: Soviet natural gas development to 1990: its implications for the CMEA and the West. It was, it turns out, a useful apprenticeship.
(...)

Reuters
June 9, 2008

Read Full Article Here

Morgan Stanley Analyst Sees Oil Driven To $150 By July 4

Dow Jones
June 6, 2008

Read Full Article Here

Gazprom predicts oil will reach $250 in 2009

Financial Times
June 10, 2008

Gazprom, Russia’s gas monopoly, on Tuesday predicted oil prices would reach $250 a barrel in 2009.

Read Full Article Here

As Mr. Kupchinsky testified, World's largest gas company Gazprom, owned by the Russian state, is connected to the organized crime in Russia through a large number of middle man companies. Gazprom currently supplies about 25 % of Europe's gas. The current Russian president Dmitri Medvedev was Gazprom's board chairman prior to being elected as the President of Russia. Former president and current Prime Minister Vladimir Putin must have been informed of Gazprom's dubious connections.

Here is a quote of Mr. Kupchinsky's testimony:

Some American experts downplay the lack of transparency and the dubious methods used by Russian state-owned companies to conduct business by saying “Companies in the US and Europe also do crooked things” and point to the Enron affair and recent accusations of wide scale bribery by the German company Siemens. The argument is that American “Russophobe’s” are holding Russia to a higher standard.

The difference however, is that the U.S. and Germany arrests and prosecutes criminal behavior while in Russia the crooks not only go scot free - they are awarded state medals for their actions, while individuals like Mikhail Khordokovsky, who opted to run a clean shop and refused to bow to Putin’s will, wind up prison.

One gas trading intermediary company, RosUkrEnergo, based in Zug, Switzerland, is owned 50 percent by Gazprom and 50 percent by two Ukrainian businessmen who hid their identities for years and who are alleged to be linked to Russian organized crime. This is a classic case study of how the Kremlin and Gazprom conspired to protect what was believed to be a criminal enterprise.

Russian President Vladimir Putin, was directly involved in creating this company along with former Ukrainian President Leonid Kuchma in July 2004, and has publically defended RosUkrEnergo on a number of occasions saying: “Believe me; we don’t know the identities of the hidden Ukrainian owners [of RosUkrEnergo].”
Putin’s statement raises an important issue. Is it common practice for Gazprom, the world’s largest gas company, to sign multi-billion dollar contracts with individuals whose names they do not know? How can this state-owned company possibly conduct due diligence?

To make matters worse, Gazprom vehemently denied allegations in the world press that its partners, whose names they claimed not to know, were in league with Russian organized crime figures. Later when the public evidence became overwhelming, Gazprom and Putin accused the Ukrainian government of “forcing” the Russian side to accept the Swiss-registered company into the Ukrainian-Russian gas contract signed in 2006.

Who can believe that Ukraine can force Russia to do whatever it wants!

All of the testimony as a four page pdf-file is available here.

The current and former president of Russia connected to organized crime through World's largest gas company? Well, that is what I certainly suspected but this is the first time I am able to point at so prominent evidence to confirm it.

Price Of Oil Will Double

An ominous warning that the rapid rise in oil prices has only just begun

By Danny Fortson, Business Correspondent

12/06/08 "The Independent" - -- The chief executive of the world's largest energy company has issued the most dire warning yet about the soaring the price of oil, predicting that it will hit $250 per barrel "in the foreseeable future".

The forecast from Alexey Miller, the head of the Kremlin-owned gas giant Gazprom, would herald the arrival of £2-per-litre petrol and send shockwaves through the economy. His comments were the most stark to be expressed by an industry executive and come just days after the oil price registered its largest-ever single-day spike, hitting $139.12 per barrel last week amid fears that the world's faltering supply will be unable to keep up with demand.

Mr Miller's prediction is well beyond even the most heady market forecasts, the most extreme of which fall between $150 and $200 per barrel, and was explained only by vague references to demand from the developing world. It nonetheless stoked an already febrile atmosphere of growing public anger across Europe over a soaring fuel cost that is wreaking havoc at nearly every level of the economy.

The British Government was urging motorists yesterday not to panic-buy petrol in anticipation of a strike on Friday by lorry drivers who deliver petrol to forecourts for Royal Dutch Shell, assuring motorists that contingency plans would ensure sufficient supplies.

In Spain, the regional government of Catalonia enacted an emergency action plan to bring in fresh food and fuel supplies after nearly half of its forecourts ran dry and supermarkets shelves were left bare. The situation was the result of the second day of an "indefinite" nationwide strike staged by lorry drivers in Spain seeking their government's help to contain the effects of expensive petrol. Scattered protests by drivers and fisherman in France and Portugal also continued yesterday.

In a speech to the European Business Congress in Deauville, France, Mr Miller offered little prospect of relief. He warned that the world was experiencing a fundamental shift in energy prices that will end at a "radically new level. We expect that the oil price will approach $250 per barrel in the foreseeable future".

Philip Shaw, an economist at Investec Securities, warned that oil at that level would exert an extraordinary drag on the economy at a time when it is already decelerating at a rapid rate. "The word is ouch," he said. "Forecasts are forecasts though, and I think it should be treated with some level of scepticism."

The most visible result of $250 oil would be at the petrol pump, which is already at a record 116.9 pence per litre for unleaded. Because more than half of that price, about 68p, is due to duty and taxes, the general rule of thumb is that each $2 increase for oil means a 1p increase of petrol at the pump. Oil at $250 a barrel would mean an increase of almost 60p in petrol prices, even before VAT.

The price of everything from food to energy would see significant price rises. Household electricity and gas bills are particularly vulnerable. Power companies have begun warning of a second round of major tariff increases for household bills this year that they say they will need to push through just to break even.

Mr Miller placed some of the blame on financial speculators for oil's price rise – it has more than doubled in the past year – but said that the primary reason is simple supply and demand, driven by the rapidly expanding countries of the developing world, principally China and India.

It is a view shared by the International Energy Agency. In its monthly oil report, the developed world's energy watchdog said yesterday that the "abnormally high prices [for oil] are largely explained by fundamentals". But whether the price of oil will reach $250 is uncertain at best. Most expect it to reach a breaking point before that figure. The IEA said that the high price would eventually "choke off" demand and a balance between supply and demand would return.

What is certain is that for Europe, Mr Miller's role will become increasingly important as head of the continent's single biggest gas supplier. He also warned against "protectionist tendencies" in Europe, where worries have grown that the company is being used as a blunt negotiating tool of the Kremlin. "The relationship between Gazprom and Europeans is one of mutual dependence. We rely as much on European consumers as they depend on us," he said.

"In all frankness, I am concerned about certain protectionist tendencies resurfacing in the EU ... How wise it is that the European Commission invents an 'anti-Gazprom clause' to keep investments which are so needed for more efficient satisfaction of raising demand."

http://www.informationclearinghouse.info/article20080.htm

I also believe the general level of trust in government is declining quite markedly. At each site I visit, more and more people are complaining about government lies and corruption, and their complaints are increasingly characterised by real anger and resentment.

There will come a point, surely, when people will simply say enough is enough. I would expect that to happen well before oil prices reach $250 a barrel.

It makes you wonder whether there is some truth in claims that internment camps allegedly being built across America are in preparation for such an uprising.

Source and full article: The Independent

The chief executive of the world's largest energy company has issued the most dire warning yet about the soaring the price of oil, predicting that it will hit $250 per barrel "in the foreseeable future".

The forecast from Alexey Miller, the head of the Kremlin-owned gas giant Gazprom, would herald the arrival of £2-per-litre petrol and send shockwaves through the economy. His comments were the most stark to be expressed by an industry executive and come just days after the oil price registered its largest-ever single-day spike, hitting $139.12 per barrel last week amid fears that the world's faltering supply will be unable to keep up with demand.

Mr Miller's prediction is well beyond even the most heady market forecasts, the most extreme of which fall between $150 and $200 per barrel, and was explained only by vague references to demand from the developing world. It nonetheless stoked an already febrile atmosphere of growing public anger across Europe over a soaring fuel cost that is wreaking havoc at nearly every level of the economy.

Come and discuss this in the thread over at the News & Current Affairs forum.

Coming from Gazprom of course the story looks as much like a threat as a prediction - you are hooked, get used to to it. The comment stream in Times Online reflects this worry - its mostly about the blackmail thing. For example "Mary in Atlanta" says

My prediction is in 8 years the US will no longer be using oil as a primary source for energy. The West will rise to the occasion, trust me. The US should no longer allow itself to be held hostage by oil. And the people who discover a cheaper source of energy will be the "new rich".

Huh. Solar ain't enough. Uranium as well as oil will run out. Fusion is not "cheap" - yet. Roger Angel reckons we can do it with mirrors in space, but that ain't eaxctly "cheap" either. We are looking at three options.

• Change lifestyle, less energy.
• Spend huge amounts on fusion and crack the sucker.
• Wait for Malthusian collapse following the struggle for resources - a.k.a. war and famine.

I dag togs dagen hem av det sistnämnda laget när frågan var upp i Europaparlamentet. Låt mig först tydligt säga att vad parlamentet tycker i frågan har ingen praktisk betydelse, utan ska ses som opinionsbildning. Med rösterna 542 mot 60 uppmanar parlamentet att kommissionen ska göra en ny miljögranskning. Flera svenska parlamentariker deltog i debatten.

För tio månader sedan var jag i Europaparlamentet och träffade då bland andra utrikesutskottets nuvarande ordförande och den föregående. Det var två herrar med skilda åsikter, polacken Jacek Sayusz-Wolski underkände argumentet att EU förbundit sig att genomföra gasledningen bara för att det fanns med på en prioriteringslista - något som Nordstreams styrelseordförande (tillika förre förbundskanslern) Gerhard Schröder har hävdat. Sayusz-Wolskis företrädare på posten, tysken Elmar Brok höll inte med. Gasledningen följer väldigt mycket nationslinjen.

Av en slump sprang jag på representanter från Nord Stream som var i Strasbourg för att lobba och fick också en intervju med Sebastian Sass från bolaget. På vägen från Strasbourg fick jag i bilen mitt livs första samtal från en pr-firma efter en intervju. PR-firman ringde från Sverige och presenterade sig som uppdragstagare åt Nord Stream och ville veta när, var och hur intervjuerna skulle sändas. Det var inget jag hade problem med att berätta, men det är en tydlig fingervisare hur avancerat och tufft opinionsspelet i den här frågan är och hur mycket resurser som Nord Stream lägger på det. Vad som antagligen hade hänt var att Nord Streams representant meddelade sitt huvudkontor om intervjun, som ringde sin landsansvariga PR-firma som skulle skaffa sig koll för att rapportera tillbaka.

Samtidigt är satsningen på PR-firmor småpengar i sammanhanget. Gasledningen beräknas kosta 120 miljarder kronor.

TILLÄGG: Läser just i Resume att förre statssekreteraren Ulrika Schenström ska lockas till Nord Stream som lobbyist. Idag inleds också Nord Streams flört med svenska opinionen i Almedalen. Som sagt var, pr-kriget är viktigt och Nord Stream ligger under. Ett lag som går dåligt, men som har pengar försöker alltid köpa sig ur krisen genom att värva nya spelare...

(PO)

This news comes as BBC reports that French President Nicolas Sarkozy's push to reduce the EU's VAT (value-added tax) on gas this fall will be ignored or at least overshadowed by scrambling over contingencies following the Irish "No" on the Treaty of Lisbon. Expensive European gas is not about to get any cheaper.

~ Anemi

Deoarece nu cred în coincidenţe este evident că cea mai capitalistă ţară din lume este Rusia iar schema oligarhică se găseşte în emblema GAZPROM, apropo de ăia care cred în simbolistică şi admiră sensul de rotire oferit de litera G.

- Gaze, domnu'? Cît să fie? O sută de milioane de metri cubi? Bine, dar aş dori să purtaţi o şapcă roşie, să faceţi tumbe şi să îmi recitaţi o poezie. Da, domnu', cu plăcere, mai poftiţi pe la noi!