Oil was a bubble - there's just no question about that now. First, the charts had the mathematical signal of a bubble. Second, and more importantly the price moves have just been absurd relative to underlying use and particularly labor value.
Did the labor value of the entire petro-economy decrease by 30% in a month? No, of course not. It's ridiculous.
The fact that oil is going down in the face of these events shows that a bubble is unwinding. The supply threatened here is huge compared to the amounts that were used to explain the bubble on the way up.
As for Tovarish Doss's tragi-comic idea that Vladimir Putin cares a damn about the idea that civilians are getting hit with artillery rockets, I point out a few things:
1) Russian infantry strategy gave the world three important military innovations (by adoption and perfecton of production, if not invention) at the end of and just after WW2, in reaction to the armor-plus-air blitzkreig strategy of Germany, later adopted by all the Western forces. First is the assault rifle - the Kalashnikov. Second is RPG. Third is the highly-portable artillery rocket. All of these are made to do the same thing: put tremendous amounts of firepower - albeit not very precise - in the hands of relatively small groups of infantry at relatively low cost per group.
2) These weapons have - because of their low cost and brutal effectiveness - become the weapons of choice for those infantries - including the Russians - who must arm themselves in a cost-conscous way. The artillery rockets Hizbullah uses come from the Russian concept - cheap, powerful, portable.
3) The Russians use these same weapons - including the artillery rockets - every time they attack anything with infantry. They used them against the Georgians, they used them with particularly horrifying effect against Chechen civilians. Artillery rockets hit civilians because they are not precise. In fact, they are designed to "clear" large physical areas of anything threatening, not hit specific targets accurately. That is the point of them and any military that uses them as its primary battlefield artillery - as the Georgians did and as the Russians do - will cause a terrible loss of life. Americans have artillery rockets but we rarely use them in all but all-out fighting scenarios. Instead, Americans use cluster munitions as the "ground clearing" munition of choice. Artillery rockets are - in effect - like really, really big cluster bombs.
Does Putin care if ethnic minorities are being brutalized in bordering republics? Clearly not. Otherwise he would be rushing in to save Turkmen and Tadhjiks and Khyrgyz and all the rest of them. But obviously he won't, he'd rather give Bush airbases to use in those countries. After the flattening of Grozny, it is, of course, completely absurd to suggest that Vladimir Putin loses a moment's sleep over the use of artillery rockets and their murderous effect on civilians. To fight in the Russian style is to use artillery rockets. War is a nasty thing and at least the Russians don't pretend otherwise with this "surgical strike" crap.
The morality play here is for the Kremlin to put on, I will simply say the following, which I consider undeniable:
If oil did not flow through Georgia, the South Ossetians would not be an adequate causus belli for Putin - certainly not to this extent.
Vladimir Putin's Russia is less than 200 miles from the huge oil reserves of Baku. If you think he wouldn't like to close that distance - in fact or in effect - you are crazy. If you think that it's a coincidence that Putin's action has closed BP pipelines at the same time the Kremlin is putting maximum pressure on BP, you're naive. It's basic geo-politics.
On Tue, Aug 12, 2008 at 2:32 PM, <sawicky at verizon.net> wrote:
> I looked into this in 2006 and didn't find much fuel for the suspicion of
> election-based
>
> oil price manipulation. There were no drops when you expected there might
> be.
>
>
>
>
>
>> ----- Original Message -----
>> From: Charles Brown
>> Sent: 08/12/08 03:45 pm
>> To: lbo-talk at lbo-talk.org
>> Subject: Re: [lbo-talk] Putin's Pipeline
>>
>>
>>
>> >>> <sawicky at verizon.net>
>> Meanwhile oil prices are floating down, which to me is strange.
>>
>> At the least, traders should be finding suckers who think the
>>
>> affair will weaken global supply.
>>
>> ^^^^
>> CB: I know this is a forbidden thought, but maybe someBushbody is
>> pressuring the traders to cool it so that prices will go down so Bush
>> and Republicans will look or seem better, which might help McCain .
>> Sorry. I didn't really say that
>>
>>
>>
>>
>>
>>
>>
>>
>> This message has been scanned for malware by SurfControl plc.
>> www.surfcontrol.com
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