Sunday, 19 October 2014

The Saudis are clearly at war, but with who, and why

( on my phone watching masterchef so this is all just head work )
Oil prices are cratering
The Saudis traditional control the oil price, by virtue of having lots of low cost oil and limited spending needs.
They can shut down half their fields and not collapse in to bankruptcy.

They aren't cutting production, they appear to be pumping hell for leather.
There's no obvious reason for the Saudis to sell 200 barrels at $50 instead of 100 at $100

So who are they trying to fuck and what effect does this price war have.
Iran is an obvious target.  A regional power with pretensions of being a regional hegemon.
Iran needs $130 a barrel for oil to balance the books.  $120 it can fudge the numbers with a bit of below replacement cap ex and inflation.
Below $80 its entire state budget just becomes a joke.  It won't be scheming to topple the Arabs, it'll be panicking trying to keep food on the table.

Russia is the next obvious target.
Reagan might get the credit for bringing down the USSR, and he was a big part, but the reality is the soviets empire was bankrolled by oil throughout its lifetime. The closure of the tech gap with missiles like vympel were funded by the Arab oil embargo.

The US is the third
Shale gas is game changing on a black swan level of game changing.
Europe might have lost its marbles but the US hasn't.
Iran needs 130 a barrel to fund the state.
The US needs 70 a barrel to fund the drill site.
Very shortly, the oil boom could pop.

Fourth, Solar
The Saudis have long been of the opinion that the stone age didn't end because the world ran out of stones (technically incorrect) and the oil age won't end because we run out of oil.
$1 a watt is probably out of reach, but I wonder how the barrels per watt ratio staccks up now?

I think anyone looking for an economic case for the oil price is barking up the wrong tree.

Tuesday, 14 October 2014

Economic growth in other currencies

Figures from wikipedia, so bucket of salt time, but

Since 2007, the year of crisis that wont end, we have seen some winners, and some losers, but who is where?
If we look at GDP changes in dollars rather than domestic currency, obviously it is domestic for the US 

China is claiming a stonking victory, an unbelieveable 187% increase, which I dont believe, so will exclude but hey ho.

Brazil is in second place, with a 60% increase in GDP
The US third, with a 21% increase in GDP
Germany 4th, 16%
France and Japan tied for 5th on 11%
Italy 6th, with a 1% increase in the 7 years since "the big one"

Whos missing on that list?
The UK
Whos economy, in dollar terms, is only 99% of the size it was in 2007

And yet Brazil, France and Italy all have serious issues

Of our 6, the three in trouble are those whose growth has come through currency appreciation.

The UK is in such poor form (on this scale) because of a 20% devaluation in 2008

Thursday, 9 October 2014

Currency fluctuations on GDP growth


I cant be bothered to extract the data in to excel and work out dollar gdp to native gdp

Wednesday, 8 October 2014

Fighting ISIS and fighting to win - The Technical Army

The Western Effort against the Levant Army is doomed to failure.
Ive not seen anyone, even those who proposed the actions and who voted for them, who expects the action to accomplish anything more than make it clear that we are angry and must do something.

Now, the costs being thrown around are frankly ludicrous, primarily being sunk costs (shit we've already bought and aren't replacing)(Yes Sven, thats not quite right, but its close enough for the rest of the readers), baseline costs (shit we'd have to pay anyway) (and yes Sven I know thats the wrong word, I am searching my tiny mind for the correct one and its just gone), but the marginal costs, shit we have to buy and or replace specifically because of the action in Levant are still noticeable.

The UKs "million pound bombs", Storm Shadows, do cost over a £million, but wont be replaced.
(Most Kit is just aged out, the USN has a huge stockpile of harpoons that are past MTBF)
However the (have I worked this out right?) ten thousand litres of jet fuel WILL need replacing, even at 50p a litre, thats £5,000.
The Paveway kits on the GBUs will need to be replaced, about £30,000 a pop?

The £200,000 airframe usage cost for 5 hours airframe life of the Tornado, not so much.

Ive suddenly clocked a huge advantage of ships, tanks and planes all having a common weapon, ships never pissing fire theirs!

A new Toyota Hilux, double cab, with a 3 litre diesel engine, costs £21,760 "on the road"

Its not an "off road" in the military sense, but its certainly a rough road vehicle.
Double cab gives you, in the military sense, plenty of room for a crew of four inside in bad weather.

Stick a Hammer of God on top, £10k ish? and for the cost of a single Paveway, you've created a persistant (open) ground holder
Or a Mk 19 GMG?
Or an 81mm mortar?
Or a Carl Gustav?

For a tiny cost, compared with whats being thrown around, in some cases to, bomb holes in the ground (unoccupied firing positions), we could arm a light cavalry force that could smash ISIS

Monday, 29 September 2014

Private Armies, not all bad?

Is there place in the world for private armies?

Yes, a small niche, filled most ably by Executive Outcomes.
Those of you who dont know who they are, have a good read.

There is an understandable reluctance to commit ground forces to fight ISIS
There is a wide acceptance that the war cannot be won without ground forces.

PMCs cant seriously be expected to fight and win the war.
Could the Kurdistan Government Peshmerga, and Yazidi Governments Militia, armed at US/UN/Someones expense, backed up by PMC Trainers, Officers, NCOs, paid at the above benefactors expense, carve out viable states able to keep out ISIS and the like.

If the Arabs want to end Sykes Pycott, fine, lets end it.

Friday, 26 September 2014

Falklands best be on alert

sober look
Argentina is on its last legs.
It's threats of legal action are all just bluster, it can't borrow because no ones mad enough to lend, not because a judge in the US has slapped its wrist.

Forex reserves are sitting shitty at 28bn dollars.
Its time to roll the dice

Tuesday, 23 September 2014

Sometimes, work just sucks

TrT has, in a rare moment of good sense, taken a positive career step.
Normally I spend most of my time systematically destroying my own career.
But, I took a position with a lot of potential at a major oil and gas producer.

Or so was the plan....

By value, half the debt book has corresponding credit notes.
By volume, a third of the line items are those corresponding credit notes.
No one seems remotely concerned by this.

Indeed, when I said, "what the fuck* do you expect me to do with data this shit*" to a head office board member and two local board members, people took it poorly.

Its just madness, if your data is junk, NOTHING ELSE MATTERS.

I might as well do my reporting in paint!

As the above graph shows, I cant draw a straight line in paint, but something good happened, at some point, or at least the wavy line goes up and theres an arrow labeled good.

*Career Sabotage 101

Sunday, 21 September 2014

As predicted, Ukraine has been struck a mortal blow

H/t Sober look
Ukraine may have won the ground war, it may not have, which side is talking the talk and which is walking the walk is pretty unclear at the moment, but its lost the survival war.
It could have lost Sevestapol, it could have lost Crimea, it could have lost the East, but at every stage, it has raised the stakes hoping the next roll of the dice would deliver the king (read WoT you heathens)
Now it'll be lucky to maintain order in Kiev.

Exports down 19%
GDP down 5%*
Retail sales down 20%
Industrial production down 20%
Currency down 33%*
Inflation at 14%
Foreign Exchange Reserves down 25%

If the GDP is down 5% in dollars thats bad
If its down 5% in Hyrvnia, thats a 35% drop in GDP

And this no doubt assumes that Ukraine WINS the war and retakes the tax payers of the Crimea and the East
If the East is lost, it loses 30% of GDP before we account for the volunteers who died and wont be returning to their jobs in the west, not to mention those who come back injured and need caring for, bleeding money from productive investment, and the destroyed equipment that needs to replaced, with the same reduction in investment.

Western EUrope might be able to survive a cold winter by importing Qatari LNG, but Ukraine cant.  It doesnt have the money to buy it, it doesnt have the infrastructure to land it, and, are Gas Pipes one way?  Can it be pumped from Wales, through France, Germany, Poland, Romania and in to Ukraine?

Make no mistake this war is hurting Russia, but not at a fatal rate, they can afford this long enough to force Ukraine to a state of warlordism outside Kiev.

Friday, 12 September 2014

3:1 rule

I ****ing hate this "rule"

At most, it applies to a company being required to assault a dug in platoon, but thats probably pushing it further than it needed, its three fire teams needed to assault one.

According to this rule, the UK lost the Falklands War.
Deploying about 10,000 ground troops, against about 10,000 ground troops.

But not only did we lose the Falklands War,
We lost the Battle of Goose Green, Argentina had a 3:2 advantage
We lost Top Malo House, with only a 3:2 advantage
We lost Mt Harriet, with only a 3:2 advantage
We lost Two Sisters, with only a 3:2 advantage
We lost Mount Longdon, with only a 3:2 advantage
We lost Wireless Ridge, with only a 6:5 advantage.
We lost Mount Tumbledown, with a less than 2:1 advantage

Obviously, all of those battles were defeats for Argentina, not the UK.

But its not to say that the aggressor can get by with less than 3:1
The Battle of Wizna, 1939
Somewhere between 360 and 720 Polish Soldiers, armed with 6 72mm guns that had been developed before 1903, 42 various machine guns, and two anti material rifles.
Somewhere around 42,200 German soldiers, 350 tanks, 350 pieces of artillery, 300 mortars and 950 machine guns.
Despite having a numerical advantage of somewhere between 40:1 and 120:1, it took Germany three days to force the Poles to surrender.
With a 3:1 advantage the Germans would probably still be laying siege to the bunkers today.

But the amount of times its trotted out as fact is just mind numbing

UKIP have made a serious error

They should have very loudly backed neither side.
Saying something like they fully understand why Scotland is unhappy.
That UKIP and a localised federalised UK free of the EU was the right answer.
That they held no rancor over the freedom bid, and would hold no grudge whichever way the situation went.

Now, dont get me wrong, FUCK SCOTLAND, but, whichever way Scotland votes, UKIP win.

Come 2015, they can open up with both barrels on the LibLabCon in England and Wales, over the amount of English and Welsh money the big three were prepared to (or have) thrown at Scotland to keep them in the Union.
Within Scotland, theres going to Independence, in which case who cares, or bitterness, that UKIP would have been in place to capitalise on.

Instead, failure to differentiate, wasted opportunity