Perfect October Oil And Cash

(Conspiracy Nation, 10/17/07) -- “Market crashes always happen in October,” stated the late Sherman H. Skolnick to this editor one hot summer day. So if we make it through October, we can breathe a sigh of relief.

Crises never happen on Saturday. On Saturday it is sports-o-plenty. Just try to find a crisis on Saturday. “Crisis? What crisis? Saturday has no crises.”

Friday is the compartment where they put the crises, generally speaking. It is all part of the compartmentalization scheme: 21st Century Schizoid Man.

An unusual inter-compartment border crossing occurred on Saturday, September 15th. On that day, Alan Greenspan invaded sports-o-plenty Saturday with news of a serious book. (“Greenspan Enters Saturday Box,” http://www.shout.net/~bigred/SaturdayBox.html)

The point is, if you are getting frazzled by all the crises, wait until Saturday. If it is really a crisis, then it will be all over the news then. Otherwise, it must not be too serious since it did not enter the Saturday box.

Under the compartmentalization theme is a Robert Redford vignette from the latest issue of The Week magazine. These days the famous actor is cynical about politicians of both parties. This crystalized for Mr. Redford at a Kennedy Center gathering in 2005. He was amazed at what he saw while hobnobbing with Washington's elite: “Here were sworn enemies, the leaders who beat the sh** out of each other all day in public, but the minute those doors closed for the state dinner, the daggers went away and it was one big happy family... Everybody was crossing the aisles and chuckling, and I said, 'Oh, I get it! It really is just a game.'”

“Only A Game,” incidentally, is a Saturday sports-o-plenty program broadcast on NPR.

But reality can break down the compartment walls. In “The Panic Of 1907”, authors Robert Bruner and Sean Carr investigate how a “perfect storm” -- a confluence of boxes – shattered the financial world in October 1907, exactly 100 years ago. (“Contagion Of 1907,” http://www.shout.net/~bigred/Contagion1907.html). Now, in October 2007, a confluence of crashed housing boom and escalating oil prices might repeat the past “perfect storm.” Bruner and Carr include a quote from Mark Twain in their book (op. cit.): “History may not repeat itself, but it rhymes.”

In “M-LEC For Dummies” (http://www.shout.net/~bigred/M-LEC.html), Conspiracy Nation reported how a tentative “Master Liquidity Enhancement Conduit” (M-LEC), a Super SIV on top of various other SIVs (Structured Investment Vehicles), would be a buyer of last resort for commercial paper. Bankers had been swimming with the tide when “surf's up” and house prices were booming. But when the tide reversed, a song, “Wipe Out,” began to be heard. Dribs and drabs of the tentative M-LEC scheme are being cautiously fronted in the press, but its detailed mechanics have yet to be exposed. The best explanation found thus far is by Nouriel Roubini, apparently a professor. (“Super-Conduit or Super-Bailout Shell Game?”, http://www.rgemonitor.com/blog/roubini/220816)

Reality, like a Waikiki wave, might hit the pleasant beach of banker pipe dreams. One aspect of reality is the true, undoctored, inflation rate. Conspiracy Nation has several times wondered how on earth can oil prices and food prices not be included in inflation statistics. Alan Greenspan, former “Federal” Reserve chief, has cautiously come around to a similar view. “Greenspan suggested that monetary policy-makers may need to give greater weight to the rising costs of energy and food products when looking at inflation.” In an interview on CNBC, Greenspan reportedly stated, “The notion of looking at a core [inflation] price requires that energy and food have no long-term trend and that their fluctuations are essentially random. That is now becoming an increasingly questioned premise.” (“Credit crunch will weigh on U.S. growth: Greenspan,” Reuters, October 15, 2007)

A separate wave, confluencing with the Waikiki wave of what Professor Roubini calls a “smoke and mirrors con game,” is rising oil prices. Some say it is just momentum traders and speculators driving the oil price inflation. Others say it is growing global demand amid tightening supplies. While this is being debated, higher crude will translate into more costly gasoline, according to AAA, the automobile club. (“Record Price of Oil Raises New Fears,” by Jad Mouawad. New York Times, October 17, 2007). According to Mr. Mouawad, gas prices have not yet reflected higher oil prices due to a decline in demand after the “summer driving season” ended. “But that is likely to change as refiners begin passing on higher oil costs to consumers, according to AAA’s spokesman, Geoff Sundstrom.”

It is all confluencing: 700 years after the arrest of international bankers the Knights Templar; 100 years after the Panic Of 1907; 20 years after the 1987 stock market crash. All of these events happened in October. Two waves, from separate directions – the housing bubble bust wave and the oil price surfers wave – are combining to hit the pleasant bankers' beach. And from the East, an ill wind of war is blowing. It is a “perfect storm” in an October box.

But come November, portents may have come to naught. The Conspiracy Nation editor will relax. “We are safe. We are in the November box.” Unless compartment walls get invaded, of which look for signs such as “Greenspan enters Saturday box.”

Conspiracy Nation

http://www.shout.net/~bigred/cn.html