COMPLACENCY OR JUST FUNDAMENTALS??
- Greatest risk level since early 2011 to sudden spread widening due to real or perceived supply disruption/ headline risk.
- Supply/demand fundamentals continue to pressure the WTI/Brent spread lower towards the long term average of +/- $5.
- As North American production continues to increase and replace imported oil increasingly the WTI/Brent spread will reflect and be contained to Brent oil price swings.
- OPEC continues to reduce production, $90 per barrel price acceptable to OPEC and OPEC expects increase in demand from improving economies in the second half of the year. Continue reading
The Names of the Fallen – Operation Iraqi Freedom. FOB Warrior, Kirkuk, Iraq.
On these walls are the names of the fallen soldiers of Operation Iraqi Freedom. The walls remain on what used to be FOB Warrior in Kirkuk, Iraq. Painted by their colleagues these walls would form a great foundation for a memorial in Washington, D.C. for all the fallen during this War on Terror. Remember them and all who have fallen or been wounded defending freedom and the United States this Memorial Day.
I wrote the following Op-Ed piece in the fall of 2011 while the US was negotiating with the Maliki Government of Iraq regarding the future status of any remaining US troops in Iraq after the previously agreed upon December 31, 2011 deadline for all troops to be out of Iraq. I reprint here because of the deteriorating situation in Iraq and the recent response by the Maliki government to a protest in Hawija in the Kirkuk Province. The response turned violent and 33 people were killed. Afterward the local tribal leaders’ comments were to the effect that peaceful demonstrations are over and it is time to pick up arms. That particular clash was Shia on Sunni. However, having taken place in Kirkuk is significant.
I lived in Kirkuk for three years as the senior economic development advisor with the Kirkuk Provincial Reconstruction Team (PRT) and to the Government of Iraq. Over the three year period my team and I engaged in over 600 missions outside the wire to meet with provincial political leaders, Baghdad ministerial leaders, the Governor, and local farmers and business leaders. In Iraq, PRTs were diplomatic outposts of the U.S. Embassy that partnered with Brigade Combat Teams, other U.S. Agency presence in Iraq, and the local provincial governments to foster political progress and build capacity critical for a stable and democratic Iraq. In the disputed province of Kirkuk we were welcomed and the local ethnic groups recognized the positive contributions and the stabilizing influence of the PRT and the U.S. Army.
The crisis in Europe and the Euro is not a surprise to students of economic history. Never in history has there been a sustainable single currency that crossed sovereign boarders. The Euro was intended as a big first step forward on the road to European economic and political union. The reality is that a unified currency cannot survive without political union. The vulnerability of the Euro as a single currency is the same as any fixed rate currency regime or a gold standard for that matter. If sovereign countries, as the term implies, have independent fiscal policies, labor policies, and overall economic policies then those more profligate countries will pressure a currency that they have no control over. This has happened throughout the monetary history. Indeed, it is why there are no fixed rate currencies regimes today, nor a gold standard. For all the insistence by gold bugs that a gold standard will prevent these sorts of crisis’s that occur from fiat money printing, it is precisely the pressures that printing money relieves that make fixed rate regimes unsustainable. Governments have an uncontrollable appetite for money and the theoretical discipline of fixed rate regimes is no match for politics.