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  • Japan, the Persian Gulf and Energy

    The Prime Minister of Japan recently stated that his nation was facing its worst crisis since World War II. While most of the world is focused on tragic images of floodwater and rubble, and fixated on radiation levels, there is a bigger picture to be examined – one that also includes  energy, coal and the Strait of Hormuz.

    Human nature draws our focus to the present. We look for immediate repercussions to a devastating world event. But the real advantage lies in understanding the broader perspective. In order to get this deeper understanding, you could choose to spend endless hours scouring global new sources day and night, constantly questioning their legitimacy and bias. Or you could take a better approach and hire a team of geopolitical experts and uber-intelligent analysts.

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  • The Complexity of Persian Gulf Unrest

    While the world's attention was (and still is) on the fighting in Libya, George Friedman—founder of a global intelligence company called STRATFOR—told his employees to watch the tiny island of Bahrain. Libya's protests are more violent, but the unrest in Bahrain, he said, will have much stronger strategic implications.

    It's easy to look at the news event that makes the most noise (and makes for good television). It's much more critical to pay attention to the event that, depending on its outcome, could disrupt the world economy. If unrest in Bahrain gets out of hand, Saudi Arabia's Shiite minority could follow suit with protests of their own, and the Iranian-Saudi balance in the Persian Gulf could teeter heavily toward Iran. Imagine if Iran fully controlled the area through which 40% of the world's seaborne oil must pass daily. Does Bahrain have your attention now?

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  • Iran: Using Oil as a Weapon, But Only Rhetorically

    The hottest media topic of the New Year is the Israeli-Palestinian conflict in Gaza. And as I was reading the New York Times on Tuesday, I came across this sentence in one of the articles that was staggeringly truthful and more than a little unsettling in its implications for me as an investor. 'There are other ways to construe the context of this conflict of course. But no matter what, Israel's diplomats know that if journalists are given a choice between covering death and covering context, death wins.' Now, I'm NOT trying to get into a debate about the rights and wrongs of either side, but if you're an investor, and you're trying to make decisions about where this conflict might drive oil prices, for example, then context is everything. And according to the New York Times, if you're relying on journalists for context, forget it. But you do have an alternative....
  • Eyeing Opportunities in the Global Financial Crisis

    As various companies go hat in hand to Washington for a bailout, a recurring topic is what guaranty do the taxpayers get that they're not just throwing more money down a hole. Good question. Who wants warrants or preferred shares if the company is doomed anyway? What you're seeing take place are negotiated backstops between the US Government and pools of capital. A couple of examples: The Big 3 may get a bailout. Financially the US taxpayer will get a stake - in what will surely be radically reshaped companies. Citibank just got a large infusion from Saudi Arabia's Prince al-Waleed bin Talal al-Saud - just days before a US government orchestrated rescue helped rocket the share price. Maybe these are just coincidental moves. Maybe not. What we're witnessing isn't finance or investment as usual. We're watching a shift to a managed economic structure, where government officials determine who will live and who will die. It's a shift from investments to agreements, where having access to large pools of ready cash is the ultimately persuasive argument. And lacking access means doing whatever you're told....
  • China and the Arabian Peninsula as Market Stabilizers

    This week in a Special Outside the Box good friend George Friedman of Stratfor, in an unconventional piece, addresses the conundrum that equates low interest rates with market illiquidity, postulating on what may be the underlying cause of such an event...