Power And Dollar

USA Election 2000 – Iranian Edition (And Your $$)

The Iranian election becomes another election mess.  The American (the first edition) version requires a Supreme Court to give a final answer.  Iranian one?  A Supreme Leader gives a final say. 

And the Supreme Leader says the incumbent wins.

In a situation like, just like the American original version, a decision made by that few individuals, the decision is ultimately political, whatever the cloak it is actually.  In the American original version, it is under the cloak of law.  In the Iranian version, it is under the religious leader’s cloak.  Note that the Supreme Court Justices are life time appointments just as well.

What ticked?  Not bribe.  As usual, what is the alternative of the decision?  Supreme Leader weighted between incumbent and challenger.  Who is a bigger threat to the Islamic Republic?  Or for that matter, to the power of clergy?

Challenger is always about “change”.  Incumbent is always about “you know what you get.  Don’t rock the boat.”  This applies to any institution (note, not necessarily a country), any selection process (note, not election), any candidate. 

The next question is: what about the protests?  Supreme Leader is confident he can manage the internal crisis.  If the protests get any worse, it will be between a Tiananmen Square (Iranian Edition) and End of Soviet Union (Iranian Edition).  Certainly, Supreme Leader thinks the worst scenario is Tiananmen Square.

Alright, so what does one care about this latest news episode?  Political instability drives up the prices of commodities, in particular, the commodities the geography produces.  So, in this case, oil.

Oil will become more expensive, if this goes on.  The only way oil does not increase further is traders believe the recession is so bad there is no demand for oil anyway, i.e. demand will decrease even if the quantity of supply is not being affected by the political instability of Iran. 

Oil exploration companies’ stocks go down (not up).  The core material of their product gets more expensive, so their profit margins get squeezed.  Consider the following company, BP:

http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=1&chdet=1245437692449&chddm=10220&q=LON:BP&ntsp=0

The companies that get affected less so are the American oil exploration companies who have less exposure to Middle East (or think about the Canadian oil companies).  And if you happen to own renewable energy companies’ stock, you should see prices going up for your stocks.  Given today is Friday, one may be tempted to clear their stock inventory just in case the next episode of this Iranian Election comes up and affect the portfolio. 

The things that really distort the prices of stocks affected by Iranian election are: Obama’s announcement on health care and Obama’s announcement on the merger of OTS and OCC.

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June 19, 2009 - Posted by | activism, advocacy, Current Events, 石油, 美國, election, Electioneering, middle east, opinion, politics, wordpress-political-blogs

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