ARE YOU BUYING A PIG-IN-A-POKE OR THE BROOKLYN BRIDGE?

In late 1800's, naive immigrants flooded into New York City from around the world. America was settling "new lands" rapidly and it was known as the land of opportunity. While no one can produce an accurate count, it is known that quite a large number of immigrants paid good money to purchased some or all of the Brooklyn Bridge. Several individuals paid $1,000 or more, a tidy sum in those days. In at least an instance or two, when the mark was not able to pay the full $1,000, an inbound or outbound lane was sold for $500. Others merely bought shares. Every now and then, New York Police were forced to take action against "owners" who were trying to set up toll booths. George Parker, who sold the bridge any number of times, provided a new owner with a well forged deed, bill of sale and other documents. George spent the last 8 years of his life in prison where the other inmates enjoyed laughing at what seemed like tall tales while they learned as much as they could about his trade.

Several notches down the totem pole from the likes of George Parker, were the pig-in-a-poke sellers. Many an immigrant bought a pig-in-a-poke sack in anticipation of starting a profitable American business. Too often they learned too late that the pig was a worthless raccoon, possum or alley cat. Even "sleeping" clumps of dirt were sold. Pastors, politicians and authors, who earn their living telling good stories, have tended to "clean-up" the worst of the abuses. In the revised versions, the pompous, arrogant, rich, city slicker has often been bested time and again by an "ordinary Joe". In "Adventures of Huckleberry Finn", Samuel Clemens ruffled quite a few feathers when it was the old, ignorant, black slave, Jim, who turned out to be the one honorable man among the many characters.


GEORGE BUSH?

Is George Bush the country bumpkin that he sometimes seems to be? To hear him speak, you would never guess that he has an Ivy league education. Would you like to play a game of high stakes poker against him?

In poker, the really big pots are often the ones where the winner's hand is just slightly better than the loser's. Bush has won many a close hand, including his 2004 election. The loser in poker is willing to bet big because he knows his hand is very good. The common misconception about poker is that the winner is the one who bluffs the best or most. Bluffing is an important part of the game but, the better players don't bluff often; just when you think they are bluffing, they have a great hand. Indeed, the successful bluff is often for a small pot and even then it is often only a semi-bluff. When a great player is successful bluffing for a small pot, he picks up a few chips for free and when he gets caught, he has successfully "advertised". The player who holds the top card set (three of a kind) is not going to go fold meekly, even when there is the possibility of a straight or a flush, provided he has seen his opponent bluff before. Did Bush fall on his face in Saudi Arabia just to advertise?

What kind of game is Bush playing?

Last week, Bush made a big deal about going begging for Saudi Arabian oil. Many an American felt embarrassment by this action. It became easy to empathize with Marcellus who in Act 1 of Hamlet said, "there is something rotten in the state of Denmark". A fish rots from the head down so Shakespeare's reference was to the head of state. Bush seemed impotent. To make matters worse, John McCain jumped-in with his promise to end the war in Iraq by 2013. 2013 seems like a very long time for all who hope for a quick end to the war, which is the hope of the great majority of voters. Recent polls show 69% of Americans disapprove of Bush's job performance. After his graveling, I will not be surprised if his disapproval rating reaches a new all time record. Are Bush and McCain members of the Keystone Cops? Or, are they managing expectations?

I happen to be among the 28% who believe Bush has done a good job. I believe Bush has turned the tide against terrorism. According to National Geographic, when Bush came into office, al-Qaeda had bases in 35 countries; al-Qaeda had thousands of "jihadist" in training. In the years prior to the Bush terms, America had been hit again and again by terrorist. A truck bomb had blown a hole in 7 stories of one of the World Trade Towers, several aircraft had been hijacked or blown-up, massive bombs had exploded at three American embassies and the USS Cole, an American Battleship, had been bombed. Hundreds of Americans, military and civilian, had died with virtually no response from the US Government. Within about 60 days of the September 11, 2001 attack, the biggest of the training camps were destroyed and the al-Qaeda leadership was in hiding. Quite a few terrorist bombs have exploded since 9/11, some in Europe, but none in the USA.

Another attack is possible any hour of any day, but the most recent attacks have been concentrated in places like Afghanistan, Pakistan, Iraq, Lebanon, and India. The USA continues to be the leader in demanding an end to terror.

WHAT DO YOU THINK?

Why did Bush make such a big splash, only to fall on his face, in Saudi Arabia? Why did the Saudis insist that they could do no more and then mention later that they increased production a week ago by 300,000 barrels? Why did the news media treat this 300,000 per day addition as so inconsequential to be a joke?

Some interesting facts are that Saudi Arabia spent about 9 billion dollars over the last several years to develop a "new" field. This field just started at the 300,000 barrels per month level, it will gradually increase to the 500,000 level later this year and it should reach 1.2 million barrels per day sometime next year. The timing has been coordinated with the timing of a new refinery in India. This refinery is a state of the art facility. Much Saudi Arabian oil is a thick goo that contains sulphur, metals and other impurities that must be removed. The new Indian plant, which was built expressly for export, is designed to take the worst goo and convert it to the best petroleum products. Chevron owns 5% and has dibs on the first 100,000 barrels of gasoline per day.

Perhaps a part of the answer is that 300,000 barrels per day is only about 3 and one half tenths of one percent of world wide daily consumption. The addition was a joke but it was a joke that bush knew the punchline to before he went to ask!

THE BIGGER STORY

The good folk at Strafor.com offer other interesting facts. Iran just leased an ocean tanker to store another 270,000 barrels of oil. This increases the Iranian off shore storage capacity to about 30 million barrels. Why do you suppose this oil is being held off the market? Is it due to sanctions by the 5+1? Is it due to a game of hard ball by Iran?

Last week, Chavez was rattling his sword and his mouth again. He talked about cutting off oil to the USA while he talked about supporting rebels in Columbia. It is possible that the problems with Nigerian production are related to sympathy for Iran. In other words, the heat is on. At a time when Obama complains about the lack of negotiations with Iran, the negotiations are hot and heavy. When Crocodile Dundee pulled out his long knife, he negotiated with a common criminal without saying a word. Yesterday afternoon, Bush called on Iran's Arabian neighbors to support his request for Iran to stop enriching uranium. Bush continues to draw the noose around Iran tight.

Iraqi government troops continue to take on militias that were supported by Iran in the past. Iraq has been having quick success against these foes. Does this imply that Iran is in the process of proving it is willing to go along to get along? In addition to progress in Sadr City and Mosul, the Iraqi government is reportedly in control of Basra, which is Iraq's southern oil portal. Iraq has kept its oil exports up to a high level for several months in a row, the control of Basra suggest the pipes are available should other wells be developed. International companies have lined up in preparation to develop other Iraqi fields. Within 5 years or so, Iraq could be the second largest oil exporter.

OTHER BIG GUSHERS!

Brazil is aggressively developing its monster Tupi field. Brazil is paying as much as $600,000 per day per deep water rig. Exxon and others are paying $400,000 to $550,000 per day for deep water rigs. Brazil has moved up its projected start date to 2009. In the mean time, Thunder Horse, in the Gulf of Mexico, is supposed to start in 2008. It is not clear if this oil will flow prior to the election.

Let me know what you think. Is Bush selling a pig-in-a-poke? Is he more ambitious than that? Is he selling the Brooklyn Bridge? Or, is he just a dumb old country boy from Texas trying to fit in a 10 gallon hat?

Please note: if a deal is made with Iran, those 30 million barrels plus more in storage on land will hit the market fast. Venezuela has let it be known that it wants to continue to export oil to the USA. James Williams, The Energy Economist, says that Venezuela needs the USA more than the USA needs Venezuela. The problems with 800,000 barrels per day from Nigeria could be over quickly. It is possible that we are about to hit a very big gusher! The EIA monthly report is due. It could show a decline of as much as 6% in US consumption!

How high would the stock market climb if a big Middle East settlement is made?