Commodities – Buyer Engagement

From a seller or a seller mandates point of view, the biggest time waster is the illusion that we are actually talking with a buyer, an authorised buyer mandate or agent.

Note all agents for publicly listed companies have to be lodged with the appropriate judiciary, the SCC for the USA or ASIC for Australia

However, normally we are taking to someone who says they are one of these, the end buyer, the authorised mandate or agent, but isn’t.

To combat this we have instituted a simple change, when asked we simply follow the process below.

1         Yes we can supply Crude and refined Oil products.

2         Yes we supply products CIF delivery at a discount (usually quantity dependant) below a local  benchmark (Except for Mazut which is generally sold at a fixed price)

3         But No, we won’t send an offer until the buyer has approved (in principle) our Conditions of contract

4         We then send out a file which includes our conditions of contract, upon which on agreement in principle to, we generate a fully authorised offer.

Silence usually follows, and Yes I would rather have silence than a full inbox and many deals, none of which are real.

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Clear evidence of the end of the USD$ as dominant International Trading currency

This caught my attention recently …. an interesting read

http://www.sovereignman.com/finance/another-kick-in-the-groin-more-european-allies-join-china-led-bank-despite-us-frustration-16618/

After the UK announced that it will join the new China-led Asian Infrastructure Investment Bank (AIIB) as a founding member late last week, Germany, France and Italy decided yesterday to follow Britain’s lead and join as well….

This is part of an important transition from the old domination of the USD$ in Internal Trade, particularly in commodities, where up to now, the USD$ has been dominant. Recently there has been an increasing trend to trade commodities in the buyers or sellers currency – for instance in the case of transactions in the Chinese Yuan and the Russian Ruble.

These changes may well be detrimental to the United States in how it pays for overseas debt, that isn’t held in US Dollars. In that case it can no longer just print the necessary currency, it would have to buy the overseas currency at the prevailing exchange rate …. and with the liquidity of the United States already in question, with a estimated net solvency of approximately minus USD$60 trillion – the long term view is not positive, especially when the financial speculators start selling the USD aggressively.

The USA has no way of paying out its current deficit of in excess of USD$18 trillion dollars, accumulated by putting wars on credit card so to speak.  The United States, financially speaking is like a dead man walking …. I am not a financial specialist, but I cannot see a way out for them, unless they seriously cut their spending and increase income currently avoided through taxation loopholes. Surely if corporations are people then like the normal citizens of the USA, they should be taxed on the world wide income, regardless of the tax evasion strategies which they have in place.

A personal strategy would be not to leave funds in USD$ … to ruthlessly minimize your debt, and to put what funds you do have into “safe” (if there is such a thing) currencies, but preferably into hard assets like real estate or gold / silver, the actual metal not the paper equivalent. My personal strategy will be primarily real estate and keeping a minimum amount in liquid assets – and in setting up a simpler life style, whatever that means for you.

One thing that has had a marked effect on the value of the USD$ has been the confidence, Yes confidence that the world has in the currency, everything changes, that perception has changed in no small way due to the war that the American Republican party has been waging against President Obama, holding the USD economy as hostage … this in my view has been a major reason for the loss of face which has led to the loss of faith in this currency.

Good Luck .. just know everything changes and we are always in transition from what was, to what will be.

The end of business as usual …

Life is good for many of us, so that it’s hard to confront the change that is here, and with that the inevitable end of the quality of life that we see around us.

So it strikes me as obvious that the world is going down a road, in some ways where civilizations have gone before, but not for the same reasons, we are in fact going down a one way road, to the destruction of what is, that we have come to consider as normal.

The reasons are self evident, they come back to greed and the need for ever more growth, leveraged growth, more .. more …  all are unsustainable flawed strategies –  I ask you how can one achieve continual growth in a finite world … this insatiable need for more … we have been all living in a fantasy land, especially the Politicians, who are convinced as they focus on statistics and spin, that they are doing a great job when all around, their citizens are paying the price for their inability to have a real original thought – their incompetence, their lack of leadership, their focus only on re-election, their terror at the inevitability of change – drives them to makes nice little touches around the edge of policy whilst the heart of the country decays and we lumber forward, down the wrong path.

This insatiable greed of a few, has brought us beyond the brink of a global financial meltdown, we are in fact toppling over the edge into oblivion as we speak … whole countries and regions are already suffering in the Euro zone, but the whole world will be within the inevitability of what is to come … our mindless pursuit of the status quo .. has indebted the majority of those in the present to virtual serfdom whilst those in control … known colloquially as the 1% .. but who are in reality probably more like just 10,000 people around the word, are so afraid of change that they have convinced our Politicians (who are only driven by the need to be re-elected) that they need to maintain the status quo, this flawed and failed financial structure – which has little benefit to the majority 99+%, except more of the same. 

It is time we allowed the system to fail, we no longer have the ability to prop it up –  we have to stop, mortgaging future generation to pay for our mistakes or steal their birthright … our beautiful home, this spaceship called earth.

When I walk around cities, I see the crumbling structures, both in stone and in systems that are struggling to maintain what we once were, I see lots of papering over the cracks, whilst the infrastructure rusts and crumbles away in silence.

Within the decade we are in, what is hidden now, will become visible to all, in the first instance with the failure of the Euro$, where whole governments are desperately trying to hang on by their finger nails … they will fail … the inevitable collapse will spark a world wide financial meltdown that has never been witnessed in history. In the United States, cities and states are even now technically bankrupt … what will happen when the Euro zone of some other key point in the chain fails .. the banks will fail … there can be no bailout .. change will be here –  this global correction will affect everyone in every country, those who think they are immune are living in fantasy land – this new reality will inflict misery and unrelenting hardship on everyone.

It will not be fun … in fact I cannot see an upside in the short term … it may take a couple of decades perhaps a generation before we can get back on our knees … maybe as long as a 50 years to a century before we can stand up and face the future with any sort optimism … the only way we have any chance of a future, is by changing what we value.

The OWS … the Occupy movement is a symptom, and a necessary one …. in American the Constitution has been and is being continually being walk into the mud, whilst those in power seek to silence those who would say … we have a problem .. sadly, the world economy is past the ability to be healed … change is here Ladies and Gentlemen, hang on, because we are in for the ride of our lives, the destination, the abyss … some of us will come out the other side … but very few … for us to survive, and have the capacity to we will have to have the ability to think outside of the box and really work together without agendas, and realise that economies are not about numbers … they are about fully utilizing all of us, for the benefit of all of us ….

I have spoken of this before back in between 2008 and now … then it was a warning .. now it is too late … money will be irrelevant to our future … the accumulation of wealth for its own sake, is now past its use by date … when it happens, from then on, and in the short to medium term, the only thing that will matter is being able to be sustainable in food, in shelter and energy …

Good Luck …

Greece and the Euro Zone

It hardly matters why Greece is in the mess they are in … they just are …

What is the future … whatever the way forward it is serious stuff … every which way you turn there are serious consequences.

What is sure is that the current situation cannot continue …

If Greece stays in the Union, the future for the people of Greece is dire … already there is severe unrest … and unless a political solution is found the only way that this will be resolved is on the streets. From the information I have been able to glean the average person, especially those who are on fixed income and pensions are in severe financial straits .. with no likely hood of a positive outcome in the foreseeable future …

Why is the Euro Zone trying so hard to keep Greece in the Union, aside from the obvious far from small crack it shows in the community, there is a benefit to the manufacturing countries within the Euro Zone because of the perceived financial problems of countries such a Greece, Portugal, Spain, Ireland and even Italy … on the world markets this keeps the overall value of the Euro$ itself depressed ….

This has benefits for countries such a Germany, Italy and France with significant manufacturing sectors … by the virtue of Greece being part of the Union, the lower exchange rate works for these manufacturing countries …. as it makes their products competitive on the world stage …

If Greece and others leave the Union, aside from the financial meltdown that will affect Greece … it will strengthen the Euro and make their products more expensive … and less competitive … how do you think that this will affect those manufacturing countries  .. it will take them into a financial slowdown …

Really the future financial health of those manufacturing countries within the Euro zone … is in the hands of the Greek people ..

This is the reason I think that the Euro Zone wants to keep Greece in the Union …

Why is it that countries are beholding to the banks … all the assets of Greece will be sold off in a fire sale to placate the numbers me … what did the people of Greece do to deserve this …

Frankly I do not see the Greek people voting to stay within the Union …

Political Reform – a great idea

I sometimes wonder if there any lights on upstairs in Canberra, it proves again how the politicians have no idea what the effect of their rants are in the real world or the effect of these pontificating of such impossible Taxes (Yes, let’s call it a tax, because if it looks like a tax, and sounds like a tax then ….).  This single proposal has the effect to take away our insulation from the effects of the global downturn, and the ongoing deficit problems not to mention deflation (which if it is by itself, may not be a bad thing in the long term).

As I have mentioned before, you cannot dictate to companies of the size of BHP Billiton etc… a true multi-nationals… without consequences – these companies have projects and investments globally. Adding this tax will have an immediate effect on their viability (of their Australian operations). Australian coal, and Iron Ore etc are already amongst the most expensive in the world… they cannot increase the price (especially after completing negotiations recently in China) – so they will focus their future focus outside of Australia which will mean less sales in the medium-long term, what is going to support the Australian dollar and the Australian economy then… Labour financial modeling? I don’t think so… but I am sure the Labour party will spin it so it is someone else fault… Politicians have a convenient short term memory, especially when it comes to their own mistakes.

Perhaps we should have some political reform;

(1) Ministers have to actually know something about their portfolios

(2) End.. political careers (State & Federal), there should be a limit of say 3 terms on any politician, Upper and Lower Houses

(3) Politicians have to spend “x” years in the business / commercial world before their stint in Canberra

(4) Stop this favoritism for the Super funds for Canberra… after all it’s a temp job… like any other.

(5) Run the country like a company for the benefit of its shareholders / citizens, because you are dealing in people’s and their children’s lives as well as their future here – not to mention the countries future.

I always thought that the Labour dream team, financially were away with the pixies, and I think except for the pragmatism of Julia Gillard (she has to lose the “them and us mentality”, after all, she is a representative, not only of the Labour party but of ALL Australians…but I have hopes), they really are. I have never had a lot of economic respect for the ability of Swan who does have few innovative thoughts about the economy, but now Rudd has showed the flaws in his leadership style.

However, I am not prepared to swap the financial irresponsibility of the Labour party yet … because that would mean we would need to give the keys of the country to Abbott, and I see no upside there… but if the opposition actually do get a credible leader then all bets are off.

A view of the USA, today

Currently with all the necessary hype, the compromises and the deal making, the senate looks as though they will pass the unemployment support and Health assistance as per the following link from USA today… but again we come back to the essential problem that we have with the USA, if they were a person they would be accused of a felony as they are writing unfunded cheques.

Who owes the US debt ?  China, Saudi, Japan..!  I guess I have said enough.

With the disclosed long term liability of the USA sitting at in excess of Ten(10) Trillion dollars and the Un-disclosed amount , probably ten times this. The USA is in all sorts of a mess.

Currently instead of an lessening of the unemployment rate, we have the USA getting worse, see the figures below (an extract) and the link to the Wikipedia information here

European Union European Union 9.3
Burma Burma 9.40
India India 9.50
Croatia Croatia 9.60
Hungary Hungary 9.7
United Kingdom United Kingdom 7.80
United States United States 9.70
Russia Russia 9.9
France France 10.0


So much for the USA doing something constructive to resolve their problems, instead of concentrating of the income issue and increasing the amount of money coming into the coffers by putting people back to work – they have spent untold billions writing cheques for programs they have no way of funding without going further into debt… and making the strategic policy of the USA subject to influences from Beijing, Tokyo and Riyadh.  Meanwhile, those people that have traditionally supported free enterprise (I am not talking about the Republicans here) and are working all the hours that are possible to create a income, find themselves being taxed into oblivion..

Not only now, has main street paid the money to support the generosity to banks and corporate America (without it seems, any conditions) – now the disposable income, increasing the likely hood of unemployment becomes real to millions of Americans – but what are the consequences on the children… do they get the vocational or scholastic education they need to drive the USA back to a semblance of their former self, or will the USA make the mistake (if they haven’t already) of becoming a third word country, full of uneducated people – with no prospects of employment. However at least it may stop the movement of jobs overseas to China and India… don;t really believe that myself. Because the real issue in USA corporate culture is that they only think in 3 month chunks, they have no long terms view, therefore they are not investing in the future, by investing now.

More to come soon… or why there will be in another financial crisis…

Financial Crisis – an update

Before, during and now, after the initial developments in this financial crisis – business has gone on as it has in the past… a crucial element seems to have been overlooked… and that is necessary Change Management within these organisations… we need to change the way they think, otherwise we are just marking time until it all happens again in the USA or somewhere else in the Global community.

The Commercial World as always is being driven by improved margins, from the incredible daily profits experienced on Platforms, to productive companies dealing in providing end-user products and services – they are at least creating something that is tangible – down to Mr.& Mrs America being paid less than 5-10% per year (which is taxable) on their hard earned dollars… the difference between the rich and the poor is widening exponentially.

To me it seems that the basic premise of how these organisations function has not been seen as important… since the Glass-Steagall Act was revoked… we have been heading for this. The basic way these organisations operate has not changed… (although controls have and are being introduced) we still see organisations basically owned and controlled by various Governments around the world, still paying bonuses… outside of normal guidelines.. and these Governments seems to have no control, they are willing to use.

Meanwhile main street in the USA has to pay for all of this… it is something they do not understand… and like the stages of grief…. sure denial is one of them, however the other stages of grief need to be considered, one of them being anger… so I am not sure we have got to denial as yet, in the stages of grief; for their less than enviable debt burden, not of their making, why they are in debt, and most likely some generations to come will be…..

The reaction from Governments world wide has been lets run around and put out fires… this can be related to a Doctor treating the symptoms and not the cause… we are not out of the woods yet… it will take whole generations to change attitudes… if it is even possible, I do not see it as even possible until the basic premise of focus on short term reporting cycles, and the payment of unrealistic bonuses, changes within organisations – when we were in the middle of the crash we saw CEO’s and Senior people being given Golden parachutes basically being paid for their lack of focus, as they were obviously not concentrating on minding their businesses.

To date for the American people the only recourse for severe disappointment has been by the ballot box… I am not sure this will be their only recourse in the future.This is a significant system failure, and the underlying root cause has still not been addressed.

Change the way that the people that run these organisations, and then we are on a path to stable financial infrastructure… don’t and it is going to happen all over again.