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 | Leave a comment

The Common Interests of BP and Georgia, And Your Money

Ever since the Russia-Georgia conflict became the hot news item, the share prices of British Petro moves as CNN news stories are read.  BP almost became the barometer of this crisis.  Why BP?  They got their pipelines there.  BP is also having a power struggle from Russian government which wishes to take more control of BP’s operation in Russia.  Therefore, if Russia will occupy the land where BP’s pipelines are, it will carry more political risk to BP.   

 

Therefore, any news of resolution will help BP’s price.  The closing price of BP on 08.08 F is US$60.86 at LSX.  The closing price on Monday is 58.7701 down 3.4%.  The good news on Tuesday brought up the price to $59.32.  Just now, Bush’s announcement helped bring up the price to US$59.60.

 

BP is not traded in the US.

 

However, all US oil companies are going up, exactly because they are away from the conflict area, consistent with the argument from Friday’s post: political risk of this conflict was already being priced in the currency market.

 

So in the short run, Chevron, Exxon, Petro Canada, Marathon and ConocoPhillips are all going up.  Of these 5 companies, 4 are US and 1 is Canada.  The other oil company that is falling is of course Shell which is much closer to the conflict area.

 

Is the cease fire going hold?  First of all, here is the six point agreement:

1)       Negotiate the status of the 2 separatists provinces

2)       Non violence

3)       Ultimately stops military actions

4)       No interruption against humanitarian aids

5)       Georgian forces returned to permanent positions

6)       Russia returns to pre conflict positions

 

Now, Russia’s intent is on regime change because the sitting Georgian president is pro West and took Georgia to NATO.  Nothing here actually addresses the core issue.  If there is more information to what is public available, then a cease fire will actually take place.  Else, this is to buy time.  Aljazeera confirms (in addition to US/UK media) Russian troops are still moving.  Therefore, EU or France actually got a worse deal than staying silent.  A broken deal just proves than EU/France is an irrelevant and ineffective broker.  

August 13, 2008 Posted by | Current Events, 石油, 美國, economics, Investment, market, middle east, opinion, politics, stock | 1 Comment

Why is Hamas ready for peace?

Carter says Hamas is ready.  Why is Hamas “ready for peace” all of a sudden?  What does it mean to us?  Carter’s full transcript is here:

 

http://abcnews.go.com/print?id=4641038

 

Middle East is a difficult place to negotiate peace.  It is even more difficult between Israel and the rest of the Middle East.  Israel, due to historical baggage or lack of military depth, does not deal with anyone who does not recognize its existence. 

 

Hamas understands they do not much chips to bargain with since Palestine is small, no resources to fight.  The best they can do is to use their quantity and determination to maximize the damage in order to draw a negotiation.  Their pledge to destroy Israel could be a real commitment among the religious zealots but cannot be taken seriously among the politicians in Hamas. 

 

The question for Hamas should always have been timing: Are we ready to negotiate?  They could have been ready for a while and we just do not hear much about it.  These are the reasons they could be ready: they are confident they will be able to direct the debate in the next referendum, should a truce be produced with Israel and Abbas; Egypt is pushing toward an end game; they have completely digested their political gain from 2006 and military seizure of Gaza.

 

If peace deal is produced, Hamas would want to defeat it if it is not to the Hamas’ liking.  Given that they are a grass root movement and they had a good election infrastructure proven by 2006 election victory, they should be able to feel that they are the ones who will have the veto power of the next peace process product: a truce. 

 

Ever since Israel no longer manages the Gaza border with Egypt, this border became open and thus the border management became the responsibility of Egypt.  And it would be difficult for Egypt to say no for people moving in and out of Gaza.  So, this border management issue became a refugee management issue literally.  For Israel, since peace means co-existence, two-state is inevitable.  So, why border with it? Let it be someone’s problem.  And if it became Egypt’s problem, Israel can make the argument that Egypt is failing in the war against terrorism.  Now Egypt may have a greater incentive than before to push for a quicker resolution. 

 

Hamas would not want to get eat more than they can chew.  They were the underdog; they had to win over Fatah in order to face Israel.  Then they won the election without “representation” internationally.  Now they have a complete control of some territory, they now do not only have some vague concept of militia before the international media, but the military force in Gaza, electoral majority from 2006 election, they can be ready. 

 

Hamas have a few good chips on their hands: 1) any deal needs democratic affirmation and they had the majority, so their opinion counts; 2) they out gunned everyone in the last battle (Gaza), they are here to stay and no one can get rid of them; 3) the pledge of “destruction of Israel” is on the table for negotiation. 

 

For Israel, they know they will always be outnumbered.  Even within Israel the Arab population is the fastest growing population.  Peace cannot come from military might, for it requires an extinction of the enemy.  When Hamas did not have any kind of mandate, Israel could afford not to negotiate to Hamas.  After 2006, it would be a difficult proposition.  Both sides needed a proper stage to facilitate en entry. 

 

Carter may want to project this issue in the election.  If Bush really wants to accomplish something like he said he was going to try, he could use this opportunity.  Israel would want to wait and see who the next president is to formulate their next course of action.  2008 is unlikely to be the year for this kind of breakthrough. 

 

The most important thing is Hamas will recognize a referendum.  Hamas refusal to recognizing Israel will be dropped if the populace takes peace and precedence.  Hamas cannot recognize Israel without a price.

 

April 21, 2008 Posted by | Current Events, Democrats, Election 2008, middle east, Money, opinion, politics, Republican, Thoughts, wordpress-political-blogs | Leave a comment