An interesting newsletter - OTC Journal September 28, 2002 Volume V, Issue 73
Email : [email protected] URL : http://www.otcjournal.com To OTC Journal Members: Dear Mr. President:
The Honorable George W. Bush, President of the United States The White House 1600 Pennsylvania Avenue NW Washington, DC 20500
September 28, 2002
Dear Mr. President:
The editors of the OTC Journal are writing on behalf of stock market investors everywhere. Our newsletter is about the stock market, not politics. However, occasionally political agendas have a significant effect on the market, and now seems to be one of those times.
The possibility of war with Iraq is having three major negative effects on the market as follows:
Firstly, investors are frozen like a deer in the headlights, afraid to act with war on the horizon. Secondly, the possibility of war is artificially inflating the price of oil. High oil prices only benefit large oil companies and middle eastern producers. This hurts everyone else, and has a deflationary effect on the economy as activity slows due to higher costs. Thirdly, the climate of uncertainty and lack of available capital is hampering expansion. Companies are afraid to invest in new products and technologies, focused only on preservation of cash. This is not a climate which bodes well for the end of the recession. This past Thursday an informal poll conducted by CNBC indicated 66% of respondents believed your primary focus should be on the economy. Only 28% believed the Iraq situation should be your first priority. The editors of the OTC Journal are certain you believe you are acting entirely in the best interest of the American people. However, your critics are building a compelling case which suggests there could be conflicts of interest which diminishes your credibility.
Inflated oil prices hurt the American economy badly. In fact, the only winners are the large multi national companies. With oil at $32 per barrel, these companies are enjoying windfall profits from their North Sea and Gulf operations. Prices go up without a corresponding increase in cost creating windfall profits.
In the meantime, higher oil prices are hurting many other American industries which are desperately in need of help. Specifically, lower fuel prices would have the most significant positive effect on the airline industry, which just this past week was on Capitol Hill presenting its case for aid to avoid more bankruptcies. Costs in the airline industry have skyrocketed as they have borne the brunt of increased security measures at our airports. Air travel has decreased significantly since 911. Now their costs are skyrocketing again with increasing fuel costs brought about by the unrest in the Middle East.
Your critics are quick to point out how deep both your and the vice president's roots are in the oil industry. Recently we have read many scathing editorials about perceived favoritism to the oil industry community, especially in light of the windfall profits major oil is enjoying thanks to your aggressive rhetoric towards Iraq.
As you pointed out in Thursday's speech, a great deal of progress has made towards rooting out corporate fraud. Your special Justice Department Task force has to date brought 100 cases in 2 1/2 months. Charges have been brought against 150 defendants. The SEC has filed 156 actions claiming financial fraud. High profile arrests have occurred in WorldCom, Tyco, and Adelphia.
However, your critics are quick to point out that there has no been one single of indictment of any executives from former energy behemoth Enron. Several news organizations have been reporting the first indictment of the former CFO may come out next week. Former Chairman Ken Lay is still a free man, enjoying any one of his 18 homes he chooses to visit while former Enron employees have watched their life savings evaporate.
Particularly curious is the long standing relationship between Vice President Cheney and middle eastern oil producers. It is widely known a consortium of oil industry giants were negotiating with the Taliban in the late 1990's to install a pipeline through the heart of Afghanistan. Here is a quote directly from Mr. Cheney in 1998 when he was CEO of oil services giant Haliburton: "I can't think of a time when we've had a region emerge as suddenly to become as strategically significant as the Caspian. It's almost as if the opportunities have arisen overnight. The good Lord didn't see fit to put oil and gas only where there are democratically elected regimes friendly to the United States. Occasionally we have to operate in places where, all things considered, one would not normally choose to go. But we go where the business is."
On May 2, 1997, Dow Jones reported several oil giants, with Enron and Haliburton at the forefront, were looking at spending $22 billion for a pipeline through Afghanistan. Here is an excerpt from that report: For many years under Soviet control, the mineral-rich nations of central Asia have had little return for their wealth. Now two of the republics, Turkmenistan and Uzbekistan, are looking west for assistance in exploiting their resource, and major companies, including Unocal Corp. (UCL) and Enron Corp. (ENE), have moved swiftly to try to fill the void. Argentine oil firm Bridas, an early entrant in the fray, is trying hard to defend its ground against U.S corporate and government muscle. In an effort called the ''project of the century,'' by its creators, Mitsubishi Oil Co. (J.MBO), China's National Petroleum Corp. and an affiliate of Exxon Corp. (XON) plan to build a massive $22 billion gas pipeline from central Asia through China to Japan.
Asia's need for energy to power its growing economies is increasing rapidly. Japanese gas demand is expected to double by 2010 and China and Pakistan will soon face acute fuel gaps, some of which could be fulfilled with reliable, and possibly cheaper sources in central Asia.
Now the U.S. oil and gas companies face their sternest test - getting the oil out of central Asia while avoiding Russia, Iran and China. Their main option: Afghanistan . The latest Review details the power plays of the new Great Game, the intrigue and the betrayal as the West's executives, diplomats and other experts court both the dictators of central Asia and the radical Islamic fundamentalists of Afghanistan 's Taliban.
The Far Eastern Economic Review is published by Dow Jones & Co., publisher of The Wall Street Journal, Barron's and this newswire.
(END) DOW JONES NEWS 04-02-97
4:29 AM
There is clear evidence major oil companies were looking to do business in Afghanistan in the late 90's. The door is now open with the Taliban unseated. Furthermore, the current President of Afghanistan, Hamid Kharzai, is a former oil executive at Unocal. The Enron, Unocal, and Haliburton ties are all well documented, and unfairly erode your credibility in this arena.
After the technology bubble burst in March of 2000 investors felt the Bear market might be waning towards the end of last summer. Then 911 came.
Investors felt the bear market might be waning towards the end of 2001 as we recovered from 911, then Enronitis hit the market and triggered the unveiling of many other instances of corporate fraud.
Stock market investors have now suffered through the worst bear market in history, and the longest bear market since the Great Depression. We have all been praying for some relief.
The technology bubble, 911, and corporate fraud were out of your control. However, it is in your control to take steps to rein in the price of oil. Corporate expansion is at a standstill as capital in no where to be found. The consumer, the only group that has been keeping us out of deep recession, is running out of steam.
We ask you to carefully consider the effect of your actions on the American economy. High oil prices will kill any possibility of a return to growth. Therefore, we ask you to use your powers to bring stability to the Middle East as quickly as possible. The longer this drags out the worse it is for the market. Work with the oil producing countries to reduce the price of oil. The American economy would flourish and everyone would benefit from your efforts.
We realize our national security has to be priority one, and we certainly don't have all the answers. We just know stock market investors are sick of this never ending bear market, and would love to see an upside bias return. Our hopes and prayers are with you. We know you have the best interests of the American people at heart.
Regards,
The Editors of the OTC Journal
-------------------------------------------------------------------------------- Your comments are welcome. If scheduling allows, we may publish some responses next week for everyone to read. Email your thoughts to [email protected]. If you wish to forward this letter to President Bush, his email address is [email protected].
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