Where finance and media intersect with reality

In the Blind Spot on Tuesday (Commodity fallout edition)

TBS Blog

Commodity power:

  • The FT (reporting out of its FT Commodities Global Summit in Lausanne) warns of potential diesel rationing in Europe due to a “systemic” shortage of diesel.
    [The UK went through a mini drill on the consequences of this sort of stuff last Autumn, but suffice to say, if hauliers can’t get their diesel there are a shit load of consequences. The big picture here is that Europe and LatAm are the only diesel short regions in the world. The US/ME/Asia are all long diesel, while China is an exporter. Europe gets half its imports from Russia, so it will have to outbid Brazil for replacement barrels, which it will. But this will send Brazil into a mess instead. None of this is fixable without resorting to mental shipping scenarios like sailing Russian diesel from the Baltic to China to then export Chinese diesel to Rotterdam. Definitely not good for climate change.]
  • North Sea investment may be back.
  • Vitol is urging regulators to maintain “integrity” of financial markets.
    [See my commodity credit story for my take on why this is potentially paradigm shifting stuff. Also, if Vitol is warning of these issues, it implies there’s really something big to it. A key consequence is that the cost of doing business is exploding, and this in turn is opening the door to a terrible negative feedback loop. In my piece I talk about how it may become impossible to close out what would usually be no-brainer arbitrages. I also suspect it’s a problem that is unfixable without a reevaluation of Basel III and Dodd Frank derivative related risk rulings. And even then it’s going to be tricky. As the FT notes, hedging activity is already falling back. Combined open interest in crude and product markets is at a seven year low. I doubt very much that this is a function of traders not hedging physical cargoes on the water. More likely, a lot of trade just isn’t cost effective to be done in the first place.]
  • The nickel market has finally found a price after several days of limit down.
  • China is buying Russian crude that would normally have been sold to other buyers at steep discounts, Bloomberg says (on the wire).
  • Cutting nuclear links with Russia may be harder than cutting fossil fuel imports. Includes this pie chart:

    [Those in the know will already be aware that Russia is the second-biggest source of uranium. ]
  • Gazprom’s UK supply division is facing nationalisation.
    [One of the unintended consequences I worried about with respect to net zero policy was that the strategic bankrupting of our own energy assets would open the door to geopolitical asset grabbing. What I overlooked was that we could also grab the UK-based entities of foreign providers if they went bankrupt as a result of our own policies too. Though, of course, picking up the retail divisions of foreign producers — that now come with unmanageable energy supply liabilities that we probably can’t meet — is hardly as useful as Russian or Chinese companies potentially being able to pick up the fossil-producing assets of UK companies abroad. Which is where net zero policy would have eventually led to anyway. Either way, the policy will have led to gross national energy security negligence.]

Mutually assured economic destruction:

The entire economy is Fyre Festival:

  • A BMJ article on the illusion of evidence based medicine.
    [What can I say. About bloody time. I don’t work in academia or science but when scientists you reach out to for comment are scared to tell you what they really think because of the reputational repercussions, you know there’s a problem. One very senior scientist I reached out to while investigating gain of function even said to me that the only way they could think of getting the truth out was by writing a work of fiction. The assertion in the article is that “Evidence based medicine has been corrupted by corporate interests, failed regulation, and commercialisation of academia.” I think this is a problem that reaches way beyond academia. The premise behind my Alphaville series “The entire economy is Fyre Festival” is that most sectors of the economy have been corrupted without us even realising it. Why? Because corruption itself has to a large degree been normalised.]
  • Relatedly here is a Twitter thread I once did about how academia was corrupted in communist Poland.
  • The Hunter Biden laptop story was real. [Who knew? Everybody. But at least now the NYT admits it. Though the fallout is not as big as one would have expected. ]
  • Covid deaths were possibly impossible to calculate.

WW3 Watch:

  • Mercenaries are being bid up.
  • The Holy War dimension steps up a notch.
  • The UK has criticised a meeting involving Man City owner and the Syrian president.
  • An interesting evaluation of Russia by a Finnish intelligence colonel connected to the use of strategic culture.
    [Very Yuri Bezmenov, and touches on Third Rome thinking — notably that Russia is trying to “save” Europe. Notes that one of Putin’s would be successors is Aleksei Djumin, who earned the title of Russian hero for rescuing Yanukovych from the clutches of fascists in Kyiv.]

From the “Fake News” zone:

  • Ukrainians are ‘taping looters to lamp posts as they try to capitalise on Russian invasion’
  • Russia responds to that Arnold Schwarzenegger video. And the counter-attack continues on here.
  • Medvedev has opinions about Poland.
  • Chief of Russia’s Roscosmos says bioweapon developed in Ukraine affects fertility (a Sputnik story reproduced courtesy of China’s Global Times).
  • More issues with the vaccines.
  • Nadal is having breathing problems.
  • Why are Ukrainians so vaccine hesitant?
    [Somebody pointed out to me that not a lot of people know about the 2009 Ukrainian swine flu pandemic outbreak, which instigated pandemic-style closures in many public sectors. Or that Radio Netherlands at the time propagated stories that the outbreak may have been linked to biological warfare and the warnings of a rogue microbiologist in the United States. Or that the same network reported that rumours were circling about a plane having flown over the city releasing powder containing a mutated variety of the virus. Me included. I guess we were all distracted by the financial crisis. BTW Tamiflu was widely distributed at the time, which in the end was claimed to be no more effective than paracetamol or aspirin.]

From the Truth Zone:

In case you missed it:

  • Former FTer Jonathan Ford (one of the few voices to critique renewable policy in light of energy security factors) writes in Bloomberg that Putin’s invasion will challenge the Green lobby’s aversion to nuclear power.
    [Germany closed three of its last six reactors last year and the rest will follow in 2022, says Ford. While Belgium has promised to close all of its seven units, which generate half its electricity by 2025. But now the green-dominated economic and energy minstry is perversely opting to burn dirty coal instead of operating zero-carbon atomic reactors. The biggest challenge to doing the logical thing, he says, is dogma because the European green movement seems to have a pathological aversion to nuclear power.]
  • How Biden lost Saudi Arabia.
  • PM and Chancellor signal a fuel duty cut as they pledge to tackle cost of living crisis in Spring Statement.
  • Alphaville is hiring.
  • And other journos, with complex backgrounds, are starting their own outfits.
  • I did a thing on Real Vision.

 

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