Monday, March 24, 2014

Financial Sarcasm Roundup for 03/24/14

I'm typing this roundup while listening to a web conference on some opportunity.  Further analysis will tell whether that opportunity is worth my time.  Sarcasm is always worth my time.

Exporting US energy is becoming a hot issue once again.  The oil shocks of the 1970s scared America into keeping its dwindling petroleum supplies onshore.  Now technology lets us tap huge shale deposits and America has plenty of hydrocarbons.  Everyone ignores the steep decline rates of shale oil and gas wells.  The push for exports will probably succeed just in time to see shale production flatten out.  Shale wells will produce tiny amounts of product for decades after their decline cliffs.  That means we can expect to sell a couple of barrels per day to Europe just after these multi-billion dollar LNG terminals on the Gulf Coast are ready.

China doesn't want the Fed to raise interest rates.  Beijing's rationale is simple.  Rising US interest rates would cause the value of the US Treasuries in China's foreign reserves to fall.  China needs that financial reserve to backstop the wealth management products that are starting to blow up its shadow banking system.  I don't think the Fed is geopolitically savvy enough to use its interest rate power as a bargaining chip.  They're supposed to be politically independent while the Treasury Department handles the heavy lifting with other countries.

Mme. Lagarde wants the US to show more support for the IMF's reforms.  I interpret this as a veiled request for the US to stay engaged with the IMF's efforts in Europe while Ukraine is in play.  The IMF's funding of the European troika's bailouts would mean little without US backing (and presumably the Fed's extension of dollar swap lines to the ECB).  The troika cannot afford any distractions while its shock therapy for the PIIGS is under attack from civil unrest and its rescue of Ukraine has just begun.  BTW, I'll bet Mme. Lagarde was really hot when she was younger.

The web conference is over and so is this blog article.