Monday, March 20, 2006

Chávez: 'George W Bush, you are a donkey'

His excelency Hugo Chavez barked yesterday afternoon and flung fresh insults at his United States counterpart: "George W Bush, you are a donkey and a coward. Come here, Mr Danger, you are a coward, murderer, genocidal, alcoholic, drunk, immoral -- you are the worst, Mr Danger, you are sick, and I know so personally."

The venezuelan mad man was so 'undiplomatic' that his own media would not reproduce the insults completely.

Thursday, March 09, 2006

Chavez: Playing Mussolini to Iran's Hitler

Joshua Sharf writes today, and I quote:

"We all know that Hugo Chavez is playing Mussolini to Iran's Hitler. We also know that Venezuela has been supporting Colombia's insurgency, hoping to destabilize a democratic US ally. And we also know that drug money has been supporting al Qaeda activity, even as we shut down domestic money pipelines.

This matters because most of al Qaeda's merchant fleet are small ships. They probably couldn't hit the US from across the ocean, but they can from South America. And the trip from Africa to South America is much, much shorter." (end of quote)

Oil Scenarios 2006

Or the "Venezuela - Iran - Al Qaeda Alliance" impact on Oil prices, World Economic Growth and Peace.

The effect of higher oil prices is to depress output and incomes, and to fuel inflation. Oil exporters obviously reap rich rewards, but it is less clear how great the effect on oil importers is. The consensus is that increased oil prices have a dampening effect on growth prospects.

According to analysis by the International Energy Agency (IEA), the effect of a sustained $10/B increase in oil prices would be to lower world GDP, other things being equal, by at least 0.5% in the following year (MEES, 10 May).

Regressions analysis may be mathematical but it's an art, not a science. And some scenarios are quite dubious. However experts have speculated on likely scenarios in the event of an international crisis.

1. The fall of the of Saudi Arabia (9,4 MBD) generates $262 a barrel.

2. Iran (3,9 MBD) declares an oil embargo a la OPEC in 1973, which Browder thinks could cause oil to double to $131 a barrel.

3. Venezuela (2,5 MBD) embargo by Hugo Chavez ($111 a barrel).

4. Nigeria (2,4 MBD) in Civil War ($98 a barrel).

5. Iraq (1,5 MBD), major attacks on infrastructure by the insurgency ($88 a barrel).

6. Algeria (1,4 MBD) in unrest and violence ($79 a barrel).

My two scenarios

Scenario “A”- It is the sum of Browder´s 2+3 and is discussed today in at least one Venezuelan paper. The linear effect of this scenario would be to increase oil prices to a staggering 190 US $ /B. Since today price is at about 60 US $ /B, the potential impact would be of a 130 US $ per barrel with a 6-7 % reduction in world economic growth expectations.

Scenario “B” - If madness triumphs and this scenario is complemented by some mildly successful al-Qaeda terrorist attack on Saudi facilities, that lets say takes 20% of Saudi production off the market, oil price would increase up to 360 US $ /B. Which translated into world growth depression means up to a 15 % reduction in world GDP?

To make things worst some world regions would be more hit than others. For every 10 $ of increase, the GDP of OECD member countries would decrease by 0.8%, with Eurozone countries would loose 1.0% of GDP. Developing countries would be hit particularly hard since on average they use twice much oil to produce a unit of output as more developed countries. According to estimates, the loss of GDP in Asia from the $10/B increase would be 1.6% and 3.2% in poorer highly indebted countries. The effect on sub-Saharan Africa would be worst, as 6% of GDP per every 10$ increase in oil price.

The previous paragraphs mean that GDP reductions would be as follows:

Scenario A
Iran and Venezuela stop producing:

Reduction of growth in %
OECD -10
EUROZONE -13
ASIA -20
LEAST DEVELOPED -41
SUB SAHARAN -78

Scenario B
Iran and Venezuela stop producing and al-Qaeda succeeds moderately in Saudi Arabia:

Reduction of growth in %
OECD -24
EUROZONE -24
ASIA -38
LEAST DEVELOPED -122
SUB SAHARAN -737


MY CONCLUSIONS

1. In both scenarios, Least Developed and Sub Saharans countries economies practically cease to move; at least the modern sectors of those economies would stop all together.

2. In Scenario B, a global economic semi paralysis is almost general in the world.

3. Those economic effects will no pass with no international political response. It is impossible to imagine it.

4. The "Venezuela - Iran - Al Qaeda Alliance" could be risking its destruction as political entities if they dare to implement this devilish "Oil Shock Srtategy".

5. TiMe will say...

...///...

Sources:
- OPEP Monthly Report
- Middle East Economic Survey
- Bill Browder World Economic Forum 2006, Davso, Switzerland.
- El Nuevo País (Caracas) March 09, 2006.
- Peaking oil production
(http://www.hilltoplancers.org/stories/hirsch0502.pdf)