The Weekly Wrap -- Dec. 3, 2011

Posted By Steve LeVine Saturday, December 3, 2011 - 11:17 PM Share

A tail risk called Iran: Back in September, New York oil analyst Edward Morse wrote a paper called "Tail Risks and the Oil Market: Expecting the Unexpected." The paper (if anyone finds an open-sourced on-line link for all to avail, please let me know) describes the outsized impact of big surprises on oil prices -- "hurricanes, floods, refinery fires, tanker spills, accidents, terrorism, unpredictable geopolitical strife within OPEC," Morse writes, could drive oil prices through the roof, or just as easily cause them to collapse. That quality, he suggests, makes oil a great investment vehicle -- for those prepared to accept the risks, of course. I write about the role of tail risks this month in Alberta Oil magazine. Others have noted this general law of physics -- Nassim Taleb named it the "black swan" affect; coming from another angle, Stephen Greenblatt calls it "the swerve." For the rest of us, there is a focus on the pure impact on our lives, which at the moment includes what will happen with Iran. Will it develop nuclear weapons? If stymied by sanctions, imposed this week by the U.S. and Europe, will it send Hezbullah against Israel? Will it block the Strait of Hormuz?  Will it elect to withdraw its 2.2 million barrels a day of oil exports off the market, as the Financial Times' Javier Blas asks? The FT published a column by two British writers who suggest that we might be "sleepwalking into a war with Iran."

The Obama administration is attempting to navigate the shoals by shaking the stick of death-strike sanctions, but not actually imposing them. As this blog has suggested, tough sanctions can bite, but companies and countries eventually figure out how to bypass them through the good offices of smugglers and assorted other wily middlemen. Yet the tail risks remain. This is especially so with a nation like Iran, whose essence of power lies in its menacing hint of roguish mischief.

 

In Russia, Putin always wins: If you believe the polls, Russians are going to convey unambiguous dissatisfaction with their rulers in tomorrow's elections. Revenue from $110-a-barrel oil is pouring in to Russian coffers, yet many of the country's citizens think that is not enough, these polls say. The pro-Vladimir Putin United Russia party can no longer rely even on the support of ultra-right groups, reports Reuters' Thomas Grove. One problem with these analyses is the suggestion that Putin stands to be the big loser. The bigger victim by far would be President Dmitry Medvedev, who in a gentleman's agreement with Putin is stepping down to run for prime minister; should the election result in the foreseen lukewarm support for United Russia, it is Medvedev who might be sidelined from political power. As for Putin, he will go on to fight another day in March presidential elections.

Regardless of the election outcome, another fatality of the campaign is the warm-and-fuzzy aspect of the U.S.-Russia "reset" of relations. In Putin's mind, it does not seem possible that scrutiny of his political plans can be home-grown; it instead is a western-funded conspiracy.  As part of the new brinksmanship, Washington and Moscow have unveiled dueling missile-defense plans. In Moscow, Medvedev says the U.S. proposal is a threat to Russia's nuclear strategy. In the U.S., a senator accuses the Obama Administration of falling for a Russian intelligence trap, and is blocking confirmation of Obama's nominee for ambassador to Russia -- Michael McFaul, the coiner of the term reset -- until he has written assurance that no classified missile defense data will go to Moscow. What is going unstated in the back-and-forth is that there is no proven U.S. anti-missile technology a quarter-century after then-President Ronald Reagan set the country on a course of creating a missile shield.

Recommended reading: an investigative dive into the accumulation of wealth by Putin's close circle, by the Financial Times' Catherine Belton.

 

U.S. energy independence, bananas and hucksterism: The world appreciates enthusiasm, which has been in short supply the last three or so years, and so it is not surprising that purveyors of the latest fervor -- an apparition of energy independence in the world's most gluttonous oil-consuming nation -- are getting real mileage. Is the U.S. truly on the brink of accounting for its entire energy requirements, as experts keep telling reporters? A month ago, this blog attempted to drown this infatuation in cold water -- no, the U.S. is nowhere close to meeting its own oil demand -- but to no avail; it reappeared this week on page one of Wall Street Journal. The newspaper reports that, for the first time since 1949, the U.S. is exporting more diesel, gasoline and other fuels than it imports. That is a neat conflation of definitions -- when most people think fuel, they think oil. So if you say exports are suddenly exceeding imports, you can turn a lot of heads; people might start running down the street shouting hallelujah and other exhortations (this in fact happened in terms of matching stories by Reuters, Bloomberg and the Financial Times).

But should we be excited? Imagine the humble banana. Suppose that the United States imports 9 million of this elongated fruit a day, and consumes 7 million of them. What would you say if enterprising Americans turned around and exported 2 million banana splits? Would you say that Americans are on the brink of banana independence? Of course not. As the WSJ writes further down in the piece, the development reflects a weak U.S. economy as compared with Argentina, Brazil, Mexico, Peru and Singapore, which are the main booming economies snapping up the oil products turned out by U.S. refineries.

 

Renewable trouble in China: Is China inexorably swallowing up the nascent global renewable energy industry? In a long take, the Financial Times' Leslie Hook and Ed Crooks examine why Chinas's solar and wind industries are looking decidedly mortal of late. Starting with the decade-long history, Chinese Communist Party leaders noticed and determined to respond to their colliding calculus -- booming energy demand and catastrophic pollution. The answer was a colossal bet on renewable energy technologies -- $54.4 billion in public and private spending last year alone, plus $47 billion in credit lines from state-controlled banks.  As a result, two Chinese companies -- Sinovel and Xinjiang Goldwind -- are in the world's top three wind-turbine makers, and "seven of the world's 10 top manufacturers [of solar voltaic panels] are Chinese." Yet these makers are buffeted by the same pressures facing all: The world's biggest solar and wind markets -- Spain, Italy, Germany and the U.K. -- are scaling back. In China, too, a quarter of standing wind turbines are idle. It does not help that these industries have been built not on mere state ambition to dominate, but on political connections. The two wind-makers cited above -- Sinovel and Goldwind -- are recipients of large investments by a fund co-founded by Wen Yunsong, the only son of Premier Wen Jiabao. One suggestion is that such investments are not necessarily in quality companies. Another is that these companies may be less formidable than they might seem.

Getty Images

EXPLORE:CHINA SOLAR, IRAN, OIL INDEPENDENCE, PUTIN, RUSSIAN ELECTIONS, SANCTIONS
 

GRANT

6:16 AM ET

December 5, 2011

So Putin was unable to

So Putin was unable to control the nationalists, hardly surprising. There's a reason smart leaders are cautious around nationalists, they can be unpredictable, violent and they assume too much.

 

WALEAD

3:08 PM ET

December 20, 2011

good

Welcome, one and all, to the Weekend Holyland Wrap. No, you cannot take your haz-mat suits off. There’s still Schalit Fever in the air. And smoke. And keep those helmets on. They’ll be needed too. This here is the extreme tour version. | Raging Rechavia “Rick” Berman gives you the week’s top stories as they ought to be told. A weekly feature on +972

By Rechavia “Rick” Berman

So “the boy*” is back in town. By now, if you read this most excellent and informative website I have the privilege to share space on, you have heard all about Bibi adding a new facet to his legend: Photo-Bomb Bibi! To those who rely only on these demented and bemused dispatches to keep abreast of the goings-on in this lil’ piece of heaven (and woe are you if you do exist) – Bibi couldn’t conquer the urge to shove himself into the frame of the father and son reunion. At least he could truthfully claim that he didn’t give false hope…

One of many examples of Bibi's new impact on the world

The major media outlets all signed a pact to leave the boy alone for ten days – and then promptly ignored it and breathlessly reported his every move: First walk, first bike ride, he’s eating spaghetti, it’s a bird, it’s a plane…. sheesh. I mean no one could produce this as a spoof cause it would be killed as too overdone. Not just the first day, either, but throughout the long holiday weekend.

I hope that as soon as the noise dies down, the young man will find his way down to Tel Aviv and sow some pent-up wild oats till he’s had his fill. Maybe France (where he’s a citizen) would be an even better choice. What’s French for “I’ve been saving the lovin’ of 1900 days for you, baby”?

I’m not gonna burden you with the new songs hastily churned out for the festive occasion, and the old ones that got an updated final stanza… just thank me that you were spared. Gaza is reported to have made its contribution to the outpour of instant culture with a sudden fad of “Gilad Schalit Shirts” – this (um, no offense but fugly) shirt Hamas had Schalit wear when he was released. I KNOW those Geneva Conventions have something to say about that…

The emotional orgy extended its tentacles into the schools as well, and my son’s class was supposed to write something about how his release makes them feel. I told him he could do it if he wanted, but didn’t have to.

As for the deal itself, in addition to what I already had to say last week (and which was seriously misconstrued, sadly), I will say that Israel erred seriously in releasing people already released in previous prisoner swaps. That should be a rule. Seriously. Makes the whole thing look utterly ridiculous. Of course if Israel really wanted peace, its occupied Palestinian prisoner population would be down to maybe a thousand, if that. That’s a whole other discussion.

Finally, this just in: Bibi trying to milk one last bit of juju from it all, formally announcing the end of “two weeks of elation and unity”, saying “We’re going back to work!” Um, no, wait, we like it when you “work” less…

Political mastermind Tzipi Livni decided she’d play the only card she could claim as her own, and said that “out of respect to Daddy Schalit, I didn’t speak out till after, but it was a horrible deal and I wouldn’t do it.” (Glancing…) And Tzipi’s hold on first-place in the “worst opposition leader” is as firm as ever.

This, by the way, represents the absolute extension of my rule about the whole affair. Once this goes up, anyone running the words “Gilad Schalit” for like a month at least I’m gonna stuxnet their ass. Anthrax too. Whatever it takes. We shall overcome.

* Whaddaya mean which boy? “Our Boy! Everybody’s Boy!”

On to other issues:

There was a pretty big forest fire in the Galilee. I’d write it off to an accident, due the dryness and all, but it was only the largest of like five that popped up, “accidental”-like. Burned down some lovely natural old-growth woodland too. I understand people wanting to lash out violently at the state, the establishment, whatever. I don’t understand people who do that.

Throwin’ down on lefties is a budding sport here in the land of bilk your money. In addition to violent treatment of the remaining social justice protesters, after the milder beat-down at Anatot, there was this brutal attack against activists helping Palestinian villagers pick their olives. This unfortunately does not capture the blunt force trauma to the head sustained by one of the protesters. Google translate should give you an amusingly skewed idea of the gist of it.

A bunch of female soldiers left a holiday party on base after being ordered to take their skank sinful ewwwwitsagirl selves to a sealed-off, partitioned area some 55 yards away, so “people” (“Anashim”, as opposed to women, or “nashim”) would be able to party with a pure heart and not see them. What they were doing prior to being dismissed from paradise was dancing (it was the “Torah Festival”, which as close as Judaism comes to a good rave) – in a women’s only circle, separated by the length of a long bench from where the men’s circle was stompin’ in pure devotion. This wasn’t enough for the fundies. The battalion rabbi pulled rank and ordered the offended female soldiers away to the quarantine, so a hundred of them simply left the party altogether.

And we’ll end with two exemplars of social inequity, one blatant and one more subtle. The Labor Relations Court ruled that if you didn’t know you were eligible for some of your social security for a few years – tough. You can’t collect it retroactively. Not even without interest. The Social Security Administration can simply neglect to inform you of your rights, set a one year period of limitations, and stiff anyone who wakes up a year and a day after the fact. This was not an aberrant decision by some rogue judge. This was a panel with the Labor Court Chief and her #2 presiding. State to Working Stiffs: Drop Dead.

Meanwhile, a criminal district court sentenced a dude named Tal Mor to 12 years in prison. Now Mor was convicted of a very bad thing – running over a cyclist and fleeing the scene while the guy died. Definitely deserves prison (if he did it; there’s some controversy). However, when seriously connected star attorney Dori Klegsblad killed a mother and a child (true, he didn’t try to run, but he did ram a stationary car waiting for a green light so hard that both occupants died. His Yupmobile urban tank, of course, sheltered him from any physical consequence) – he only got convicted of “negligent recklessness,” was sentenced to 15 months and served eight. Months. Anyway, while in the Klegsblad case the perp was the celebrity, in the Tal Mor case it was the victim – Shneyor Cheshin, son of former Supreme Court Justice Mishael Cheshin (quite a nutcase, but by far the most fun to translate on the bench. Maybe ever).

Anyway, Shneyor, may his soul rest in peace, was apparently a hell of a guy, and many others, beyond bitter-and-conspiracy-liking me, have commented upon the impact of the victim’s identity on the prosecution and sentencing. Hotshot lawyer kills poor immigrant woman and her son? Easy does it. Stoner kills a prince of the Elite? Gimme that book to throw at him!

And so it goes. If Gilad Schalit were the son of a single-parent immigrant from a former Soviet republic now living in Dimona…

Oh, damn. I did it, didn’t I? Oops… How does one go about stuxnetting one’s own ass?

That’ll do it for this week. The Weekly Holyland Wrap is not responsible for any illusions, sympathies or misconceptions that may have been misplaced on our tours. Please collect your senses and check your comments where appropriate. Thank you for flying the crazy skies

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Steve LeVine is the author of The Oil and the Glory and a longtime foreign correspondent.

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