Gangocracy, Oil and Pericles

Gangocracy
Newspaper reports say Russia is using its rescue fund to rescue some billionaires who margined their stock in big Russian companies. Whether Russia "saves" the billionaires or just uses the opportunity to re-take the valuable holdings looted by those same billionaires in the 1990s, time will tell. Does the Boss of the gang save the Capo when he gets into trouble, or does he liquidate him and take his territory back ? The Russia = Gangocracy model suggests the billionaires will soon be outcasts and economic power in Russia will become even more centralized.

Oil
From FT: "Output from the world’s oilfields is declining faster than previously thought, the first authoritative public study of the biggest fields shows. Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent, the International Energy Agency says in its annual report, the World Energy Outlook, a draft of which has been obtained by the Financial Times.

"The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and meet long-term demand. The effort will become even more acute as prices fall and investment decisions are delayed."

This is why I like the oil stocks with major exploration and production opportunities in good deep water sites like the US Gulf of Mexico. CVX and DVN have major finds there. RIG supplies equipment to them and to other majors like Petrobras.

Pericles
The panicking rich are cutting back spending on luxury good, per FT story. Hmmm ... let's see. They are so dumb they invest trillions in hedge funds and also spend idiotic amounts on simple items like purses. Perhaps the quote from Pericles should be required reading:

"We cultivate refinement without extravagance and knowledge without effeminacy; wealth we employ more for use than for show ..."

Perhaps a change in behavior is in order: from endless striving to become richer than Croesus and showy spending to doing something to improve humanity, such as providing a young scientist or mathematician or artist with a stipend to create something enduring for the human race would be a better use of such wealth.

Other News

GM and Cerberus seem to be working on deals together to merge GM and Chrysler and separately to restructure GMAC into a bank. Government help to come. I support this, as said yesterday, as the auto industry with its myriad parts suppliers and dealers really is an important part of the real economy. Management change is a necessary condition, however.

Porsche smartly offers to sell some VW shares to help reduce the short squeeze it created ... at a huge profit. Smart move, as it helps stave off government intervention. Still, the short beefers are doomed.

Actions

Nothing. Holding Alpha Fund stocks with modest margin: CVX, DVN, RIG, FCX, BHP are largest; DRYS, EXM, GNK, JOYG and MBI are smaller. The shippers particularly stink now. Obviously my chronic "buyearlyitis" hurt me. I really have to learn more patience. Mrs. B has a lot, I should follow her style more.

Word of the Day

"Agnate" - adjective & noun [$10]

Agnate means (adjective) 1. descended esp. by male line to another male ancestor; 2. descended from the same forefather, of a clan or nation; 3. of the same nature, akin; (noun) a person who is descended esp. by male line from the same male ancestor.

Sentence: As the line of the Bush-Cheney Republican ruling class seems soon to be extinguished, the practice of the Republican party to select leaders from its agnate line must be changed. Big John McCain could be a fine regent for his sidekick from the distaff side*, Sarah Palin, to breathe some fresh ideas into that moribund party.

["distaff side" means the maternal branch or female side of a family]

Did you notice the subliminal message in the title to this post ?