(Reuters) – About six years ago, an army of agents hired by energy companies started desperately courting landowners across the United States whose farms and ranches happened to sit atop some of the richest oil and gas deposits in the world. And so began one of the biggest land grabs in recent memory.
Those days are over.
U.S. energy titan Chesapeake Energy is quickly cutting back on an aggressive land-leasing program that in recent years has made it one of America’s largest leaseholders, putting an end to half a decade of frenzied energy wildcatting.
Beset by growing governance and financial problems, and a sharp slump in natural gas prices, the No. 2 U.S. gas driller is reducing by half the ranks of its agents, known in the industry as landmen.
With little evidence that its competitors are taking on the role of leading industry lease-buyer, Chesapeake’s new found frugality is expected to usher in a more sedate period of U.S. land buying, and a sizeable cultural shift for an industry that has been acquiring new acreage at almost any cost.
A surge in drilling into rich shale-gas seams from Pennsylvania to Texas has pushed natural gas prices to 10-year lows, forcing producers, including Chesapeake, to cut output and put the brakes on new wells.
Drilling simply to hold on to leases represents about half of U.S. natural gas output, analysts say, which has helped keep production at record highs despite plummeting prices. Leases held by energy companies tend to last about three years, but will typically remain valid indefinitely if an energy company drills wells and produces fuel on the leased acreage.
It should be fairly easy for drillers to re-hire agents and secure more land when prices recover, according to landmen sources, and production is not expected to be affected immediately. But a lull in leasing could briefly affect production longer term, given that it takes up to six months to secure large tracts of land.
“Chesapeake has always been a bellwether for where the next big play is. It would come, lease large blocks and send a signal to the market,” said Adam Bedard, senior director at Bentek Energy in Colorado. “Without them, the pace of land acquisition might slow.”
In a move to mollify disgruntled shareholders, Chesapeake plans to reduce its use of contracted landmen from 1,300 now to 650 by the end of the year, said Chief Executive Aubrey McClendon, who was stripped of his chairmanship last month after Reuters reported a series of governance missteps.
The reduction, which is expected to help reduce towering debt levels, marks an 80 percent decrease from its peak of 3,400 landmen, McClendon said.
The cull has begun. Over the past month, 225 contracted landmen were cut from Chesapeake jobs, said one Ohio-based landman, who, like most in the close-knit industry, would only speak off the record.
“Chesapeake’s activity level in the Appalachian region is minimal now. It has devastated the (landman) industry,” the source said. “The Chesapeake debacle is one thing, but the rest of the industry shortfall is because a lot of the projects are intertwined with Chesapeake,” he added.
The Oklahoma-based company has become one of the largest leaseholders in the United States, amassing more than 15 million acres of land for drilling or an area about the size of West Virginia.
One mid-sized U.S. brokerage that does lease work for Chesapeake has experienced a 15 percent to 20 percent fall in business over the last 90 days due to a slowdown not just in Chesapeake activity but across the board, a manager for operations at its eastern division told Reuters. About 15 percent of that company’s business comes from Chesapeake, he said.
“We are getting to the point where companies are becoming more cautious – that is what we are seeing,” he said, asking that he not be named.
Other major producers, including Encana Corp, Royal Dutch Shell and Chevron, said they are not planning to materially change their strategy of land acquisition or staffing numbers, suggesting a gap might be left as Chesapeake, long the pioneer in drill leasing, retreats.
“We have not reduced our land staff nor have we made any changes in the way we conduct land operations,” said a spokesman for Encana, one of Chesapeake’s main land-leasing rivals. Encana employs an in-house staff of about 170 workers in its land department. Shell also said it was “not planning any major staffing level changes in our land function for leasing activity.”
Landmen in the field reckon companies are now well-placed to increase leasing again when they need to, but it could take up to six months between a decision to lease the land and the drilling, potentially creating a lull in activity, sources said.
While a fall in leasing will affect the landmen, it is unlikely to affect gas output for quite some time given the amount of land already leased and the hundreds of wells drilled that have yet to begin producing.
“The huge land grabs in the gas plays are coming to an end,” said one energy hedge fund manager. “Even without more leasing, however, these companies have backlogged a huge inventory of drilling locations.”
The backlog of 3,500 oil and gas wells in the United States is about 1,000 more than usual, according to Randall Collum, a natural gas analyst at Genscape in Houston.
It could take more than a year to exhaust the natural gas portion of that supply as pipelines come online to connect new producing regions, such as in Ohio, to areas of higher demand, he said. Moreover, the reserves accumulated over the last decade are expected to take longer to dwindle away.
That scenario is likely to put a cap on prices in the near term, with or without Chesapeake.
AFTER THE BOOM
When U.S. drillers employed new technologies during the last decade to economically tap oil and gas from shale rock, results showed the potential for a massive revival in waning domestic production.
In 2006 and 2007, companies began rushing to acquire new leases. Geologists pored over maps, in search of the sweetest acreage. Landmen were hired like never before, court houses in energy-rich regions filled with workers quickly securing leases. Rural and depressed areas in Pennsylvania, North Dakota, and Ohio became, by geological coincidence, new target areas for energy companies.
Teams of between 50 and 100 landmen were charged with securing hundreds of thousands of acres in a matter of weeks. Some would knock on landowners’ doors, while others specializing in title work would make the lease legally secure and determine, among other things, who receives royalties on the production.
Chesapeake led the charge, spending billions of dollars a year on speculative leasing, helping to push land prices higher in energy-rich regions. In 2011, it became the lead acreage holder in the Utica formation shale in Ohio with 1.5 million acres, and was the first to publish production figures from new wells there.
After Chesapeake arrived, other majors such as Anadarko and Exxon Mobil quickly followed. Much of the best drilling areas have already been swept up in what is now thought – though not fully proven – to be one of the most promising oil and gas plays in the country.
Now, five years after the boom began, natural gas output is at an all time high. The success has, in many ways, backfired. Prices have dropped so far that companies can barely afford to drill in pure natural gas plays. Chesapeake, the self-proclaimed ‘champion’ of U.S. natural gas, is facing a $10 billion cash-flow shortfall this year, forcing it to rein in spending.
“It will slow down the overall aggressiveness if Chesapeake isn’t out there leading the charge,” said Genscape’s Collum. “But it is all about prices. If prices rise then companies will come back in.”
- Chespeake Energy Seeks to Void Order to Buy Energy Rights – Bloomberg (bloomberg.com)
- Land owner caught between energy giants (business.financialpost.com)
- Report: Chesapeake engaged in price fixing on land (bizjournals.com)
Having finished his “damage control” PR campaign (for now) Ben Bernanke decided to discuss… Europe, urging the Big Banks to help prop up the system over there.
Exclusive: Bernanke breaks bread with top bankers
After completing a series of public lectures in Washington, D.C. last week, Federal Reserve Chairman Ben Bernanke quietly slipped into New York City for a private luncheon on Friday with Wall Street executives.
Fortune has learned that attendees included Jamie Dimon (J.P. Morgan), Bob Diamond (Barclays), Brady Dougan (Credit Suisse), Larry Fink (Blackrock), Gerald Hassell (Bank of New York Mellon), Glenn Hutchins (Silver Lake), Colm Kelleher (Morgan Stanley), Brian Moynihan (Bank of America), Steve Schwarzman (Blackstone Group) and David Vinar (Goldman Sachs).
Sources say Bernanke spoke at length about monetary policy, in an apparent effort to persuade attendees that they needed to take a more active role in helping to deal with the European debt crisis. He spent virtually no time discussing regulation, although that mantle got taken up by both Dimon (domestic regulation) and Schwarzman (global regulation).
The lunch was held at the New York Fed, and hosted by NY Fed president William Dudley. Before leaving New York, Bernanke separately addressed NY Fed staffers.
This is an interesting progression from the last time Fed officials went to New York:
Fed met with major financial firms to discuss Volcker Rule impact
Documents released by the Federal Reserve on Monday show that its officials met with some of Wall Street’s major financial firms earlier this month to discuss Volcker Rule implications.
The Fed met with representatives from Goldman Sachs, JPMorgan Chase and Morgan Stanley on Nov. 8, according to Bloomberg.com. Bank lawyers H. Rodgin Cohen and Michael Wiseman from Sullivan & Cromwell were also present during the meeting.
According to the documents, the meeting entailed a discussion on “possible unintended consequences of the rule.”
Notice that during discussions of regulations, it was “Fed officials” who attended these meetings, NOT Bernanke himself (at least he’s not mentioned anywhere). So why is Bernanke, the head of the Fed wanting to meet with bankers to discuss Europe instead of Regulation?
You guessed it: Bernanke realizes Europe is totally and completely bust… and that the coming fall-out will be disastrous for the global banking system.
After all, the ECB spent over $1 trillion trying to prop up the system over there. And already the effects of LTRO 2 (which was worth $712 billion) have been wiped out. If you don’t think this sent a chill up Bernanke’s spine, you’re not thinking clearly.
Consider the following facts which I guarantee you Bernanke is well aware of:
- 1) According to the IMF, European banks as a whole are leveraged at 26 to 1 (this data point is based on reported loans… the real leverage levels are likely much, much higher.) These are a Lehman Brothers leverage levels.
- 2) The European Banking system is over $46 trillion in size (nearly 3X total EU GDP).
- 3) The European Central Bank’s (ECB) balance sheet is now nearly $4 trillion in size (larger than Germany’s economy and roughly 1/3 the size of the ENTIRE EU’s GDP). Aside from the inflationary and systemic risks this poses (the ECB is now leveraged at over 36 to 1).
- 4) Over a quarter of the ECB’s balance sheet is PIIGS debt which the ECB will dump any and all losses from onto national Central Banks (read: Germany)
So we’re talking about a banking system that is nearly four times that of the US ($46 trillion vs. $12 trillion) with at least twice the amount of leverage (26 to 1 for the EU vs. 13 to 1 for the US), and a Central Bank (the ECB) that has stuffed its balance sheet with loads of garbage debts, giving it a leverage level of 36 to 1.
I guarantee you Bernanke knows about all of the above. He also knows the ECB’s used up all of its ammunition fighting the Crisis over there. And lastly, he knows that the Fed cannot move to help Europe without risking his job. After all, even the Dollar swap move the Fed made in November 2011 saw severe public outrage and that didn’t even include actual money printing or more QE!
Moreover, Bernanke knows that the IMF can’t step up to help Europe. The IMF is, after all, a US-backed entity. How many times has it requested more money to help Europe? Maybe a dozen? And the answer from the US has always been the same: “No.”
Finally, the G20 countries have made it clear they don’t want to spend more money on Europe either. They keep dangling a bailout carrot in front of the EU claiming they’ll cough up more dough if the EU can get its monetary house in order… knowing full well that they actually cannot provide more funds (otherwise they’d have already done it).
This leaves the private banks as Bernanke’s last resort for a “backdoor” prop for Europe. If private meeting with the TBTFs that focuses on Europe doesn’t scream of desperation, I don’t know what does.
And do you think the big banks, which have all depleted their capital to make their earnings look better, actually have the money to help Europe? No chance.
Which means that Europe is going to collapse. Literally no one has the firepower or the political support to stop it.
Remember, we’re talking about banking system that’s a $46 trillion sewer of toxic PIIGS debt that is leveraged at more than 26 to 1 (Lehman was leveraged at 30 to 1 when it went under).
Again, NO ONE has the capital to prop the EU up much longer. And the collapse is coming.
If you’re not already taking steps to prepare for the coming collapse, you need to do so now.
- Bernanke Just Admitted the Fed Failed… Not That More QE Is Coming (zerohedge.com)
- Exclusive: Bernanke breaks bread with top bankers (finance.fortune.cnn.com)
- Revisited: Three Data Points That Prove Europe Cannot Be Saved (zerohedge.com)
- We Are Nearing the End Game For Central Bank Intervention (zerohedge.com)
March 08, 2012 09:00 AM Eastern Time
NEW YORK–(BUSINESS WIRE)–Exxon Mobil Corporation (NYSE:XOM) plans to invest approximately $185 billion over the next five years to develop new supplies of energy to meet expected growth in demand, Chairman and CEO Rex W. Tillerson said today in a presentation at the New York Stock Exchange.
“During challenging times for the global economy, ExxonMobil continues to invest to deliver the energy needed to underpin economic recovery and growth,” Tillerson said in a presentation to investment analysts.
Tillerson said that even with significant efficiency gains, ExxonMobil expects global energy demand to increase by 30 percent by 2040, compared to 2010 levels. Demand for electricity will make natural gas the fastest growing major energy source and oil and natural gas are expected to meet 60 percent of energy needs over the next three decades.
To help meet that demand, ExxonMobil is anticipating an investment profile of approximately $37 billion per year through the year 2016.
“An unprecedented level of investment will be needed to develop new energy technologies to expand supply of traditional fuels and advance new energy sources,” said Tillerson. “We are developing a diverse portfolio of high-quality opportunities across all resource types and geographies.”
A total of 21 major oil and gas projects will begin production between 2012 and 2014. In 2012 and 2013, the company expects to start up nine major projects and anticipates adding over 1 million net oil-equivalent barrels per day by 2016.
At the meeting the company outlined its major achievements in 2011 and plans for the future. Highlights include:
- ExxonMobil replaced 107 percent of its 2011 production (116 percent excluding asset sales), increasing proved reserves to 24.9 billion oil equivalent barrels. It was the 18th consecutive year the company replaced more than 100 percent of its production, with proved reserve additions of 1.8 billion oil-equivalent barrels.
- Nine major upstream projects are expected to start-up in the next two years including four in West Africa, Kashagan Phase 1 in Kazakhstan and the Kearl Oil Sands project in Canada.
- In the downstream, the company completed a large project at the Thailand refinery, which is expected to increase the supply of lower sulfur motor fuels by more than 50 thousand barrels per day. Additional projects are under way, including new facilities at ExxonMobil’s Singapore refinery and at a joint-venture refinery in Saudi Arabia.
- A major expansion at the Singapore chemicals facilities is nearing completion. Commissioning and startup activities are expected to continue through 2012 and will provide a world-scale integrated platform with unparalleled feedstock flexibility. The expansion will add 2.6 million tonnes per year of additional capacity and will help meet demand growth in Asia Pacific.
This is the 10th year that ExxonMobil has made an annual presentation to analysts at the New York Stock Exchange.
CAUTIONARY STATEMENT: Projections, expectations, business plans, and other statements of future events or conditions in this release are forward-looking statements. Actual future results, including demand growth and mix; capital expenditures; resource recoveries; production rates and growth; and project plans, schedules, and outcomes could differ materially due to changes in market conditions affecting the oil and gas industry, including long-term oil and gas price levels; the occurrence and duration of economic recessions; future technological developments; political or regulatory developments; reservoir performance; timely completion of development projects; the outcome of commercial negotiations; unexpected technical or operating events; and other factors discussed in Item 1A of ExxonMobil’s most recent Form 10-K and posted in the Investors section of our website. (www.exxonmobil.com)
Proved reserves in this release, for 2009 and later years, are based on current SEC definitions, but for prior years the referenced proved reserve volumes are determined on bases that differ from SEC definitions in effect at the time. Specifically, for years prior to 2009 included in our statement of 18 straight years of at least 100 percent replacement, reserves are determined using the price and cost assumptions we use in managing the business, not the historic prices used in SEC definitions. Reserves determined on ExxonMobil’s pricing basis also include oil sands and equity company reserves for all periods. Prior to 2009, these volumes were excluded from SEC reserves.
“Resources” and “resource base” include quantities of discovered oil and gas that are not yet classified as proved reserves, but that are expected ultimately to be recovered in the future. The term “resource base” is not intended to correspond to SEC definitions such as “probable” or “possible” reserves.
See the “Frequently Used Terms” posted in the Investors section of our website for more information on proved reserves and resources.
ExxonMobil, the largest publicly traded international oil and gas company, uses technology and innovation to help meet the world’s growing energy needs. ExxonMobil holds an industry-leading inventory of resources, is the largest refiner and marketer of petroleum products, and its chemical company is one of the largest in the world. For more information, visit www.exxonmobil.com.
Media Relations, 972-444-1107
- ExxonMobil, OMV Petrom Strike Gas Offshore Romania (mb50.wordpress.com)
- ExxonMobil Awards Technip GoM Subsea Contract (mb50.wordpress.com)
- Statoil, ExxonMobil Strike Gas Off Tanzania (mb50.wordpress.com)
- ExxonMobil, Petrom Strike Gas in Black Sea (mb50.wordpress.com)
- Alaska Governor, BP, Conoco and Exxon Discuss LNG Export (mb50.wordpress.com)
- Go Big or Go Home…ExxonMobil Announces Massive Spending Plan (gcaptain.com)
By Kate Dailey BBC News Magazine
Tucked inside the Swiss Embassy, the cocktail area celebrates the writer who made his home in CubaCuban and American politicians have celebrated together at the opening of Hemingway’s, an invitation-only bar located in a Washington, DC embassy.
It started like a typical Washington DC function. Men and women in dark suits milled around a formal room in the Swiss Embassy, crystal chandeliers sparkling overhead. Waiters carried around glasses of red and white wine while guests made polite small-talk.
But after a series of speeches, guests were led to the back of the room, and into an entirely different experience.
They had entered Hemingway’s, a bar celebrating the American writer who made his home in Cuba. There, the floors were covered in terracotta tile, while wooden fans whirred above. Bartenders poured cocktails under a brass replica of Hemingway’s signature.
Aside from the fact that it serves liquor, Hemingway’s isn’t a bar in the traditional sense. Tucked inside the embassy, where the Cuban Interests Section resides, the bar has a strict invitation-only list.
It will be used for entertaining guests of the Interest Section, so tourists hoping to catch happy hour are out of luck.
The bar’s brass sign replicates Hemingway’s signature
It’s illegal for the bar to conduct any commerce, but the embassy is free from the trade embargo that forbids importing products from the communist country. So drinks were on the house, made with Cuban rum that’s normally impossible to find in the US.
Terry McAullife, the former head of the Democratic National Committee, ordered the first drink – Havana Club Rum, straight.
Mr McAullife, who travelled to Cuba last year as part of a trade mission, thinks that doing more business with Cuba could be a key to creating American jobs.
“It’s a huge market, and every other country in the world is already there,” he says. “And Cubans love American products.”
From Versailles to Havana
But the opening of the bar wasn’t simply about facilitating Cuban-American commerce.
Instead, the night was more about celebrating Ernest Hemingway, described as a “cultural bridge” by Jennifer Phillips, the grand-daughter of Hemingway’s editor. Ms Phillips is co-founder of the Finca Vigia foundation, devoted to preserving Hemingway’s Cuban home.
She spoke before the opening of the bar, reminding the audience that Hemingway is treasured by both nations.
The chief of the Cuban Interests Section told of a fishing contest between Castro and Hemingway
Neither the US nor Cuba have official embassies in the other’s country; instead both have Interests Sections located in the Swiss embassies.
Neither group has a history of being particularly friendly towards the host nation, though Cuba-watchers hope that Hemingway’s signals a positive change.
When the Interest Section in DC was due for a renovation, the Cuban diplomats decided to reclaim a bit of the space as their own.
“The room was like the palace of Versailles,” says Juan Leon Lamigueiro, deputy chief of the diplomatic mission. “There was very little Cuban.”
“So we decided to convert the warehouse annex into a bar dedicated to Hemingway.”
While mojitos and Cuba Libras were being poured in the small back room that houses the bar, a 12-piece band played Latin music in the front of the hall.
A mural promoting Fidel Castro displayed prominently at the entrance of the embassy.
Sandra Levinson, resplendent in a sparkling black and blue blouse, spun and twirled with her partner. MS Levinson, executive director of the Center for Cuban Studies in New York City and director of the centre’s Cuban Art Space, learned to dance during her many trips to Cuba, and had travelled down to Washington specifically to attend the opening.
As the crowd subsided, the hosts brought out cigars – the famous commodity that is forbidden in the US.
Reporters, bureaucrats, and Cuban emigrants happily puffed away – but more than one skittish politico declined to have their pictures taken enjoying Cuban contraband.
“You can write this,” one conceded. “An anonymous Hill staffer said the mojitos were fantastic.”
- U.S. & Cuba work together to preserve Hemingway’s Havana home (repeatingislands.com)
- Hemingway’s Bar: Propaganda Genius? (toinformistoinfluence.com)
Radicals foment agitation in New York, while hinting at American ‘Arab Spring’
By Aaron Klein
As the news media struggles to find a unifying theme behind the “Occupy Wall Street” protesters, a closer look at the activists behind the agitation reveals a transformative agenda aimed at assaulting U.S. capitalism.
The New York Times on Friday featured a video depicting the motivation of the Wall Street protesters without disclosing the radical background of some of those featured in the newspaper’s piece.
The video was entitled, “The young and old on what they hope to accomplish by joining the Occupy Wall Street demonstration in Zuccotti Park.”
One activist interviewed was Bev Rice, who has been sending online updates of the protests to the War Resisters League, where she has been an activist.
The League was one of the first radical groups to blame America for the 9-11 attacks.
On the very day of the 9-11 attacks, the League released a statement alleging, “The policies of militarism pursued by the United States have resulted in millions of deaths. … [M]ay these profound tragedies [of 9/11] remind us of the impact U.S. policies have had on other civilians in other lands.”
Another activist interviewed by the Times was holding a placard that quoted John F. Kennedy stating, “Those who make peaceful revolution impossible make violent revolution inevitable.”
Yet another was donning a red Kafiya, or Arabic headscarf with a specific pattern that has come to symbolize so-called Palestinian “resistance” against Israel. That style of Kafiya was popularized by Yasser Arafat.
The Occupy Wall Street movement launched two weeks ago and has been escalating ever since.
Earlier, police closed the Brooklyn Bridge and arrested more than 700 anti-Wall Street protesters for blocking traffic lanes and attempting an unauthorized march across the span.
The protests reportedly spread across the U.S., including to Boston, Seattle and Los Angeles. The organizers’ exact motivation has until now been sketchy.
The Twitter feed of a group calling itself Take the Square, one of the social media planners behind the Wall Street protests, has been blasting a multitude of messages, including:
- “Fight market dictatorship.”
- “People of the world rise up!”
- “We are legion.”
- “Take to the streets.”
Organizers have also been calling for rewriting the U.S. Constitution, imposing a “Robin Hood Tax” on most financial transactions worldwide with the goal of taking from the “rich” to give to the “poor” and giving the Federal Reserve permission to regulate interest rates on savings accounts.
The scheme seeks to bring to American streets the “same indignation that has prompted the people of Greece and Spain to occupy streets and squares on a permanent basis, the people of Egypt and Tunisia to overthrow their governments, the people of Iceland to nationalize their bank system and rewrite the constitution.”
So reads a call to arms by a group calling itself the General Assembly of New York City.
The group has been asking supporters to participate in a “Day of Rage” that started last month and seeks to escalate into protests across the nation.
The General Assembly of New York City has listed some of the possible goals of the current protests:
- The imposition of a Robin Hood Tax on all financial transactions: The tax is the brainchild of nongovernmental organizations largely based in the United Kingdom. It calls for a new tax on most goods and services to be implemented globally, regionally or unilaterally by individual nations.
The name of the tax originated in 2008, when Italian treasury minister Giulio Tremonti introduced a windfall tax on the profits of energy companies. Tremonti called the tax a “Robin Hood Tax,” stating it was aimed at the “wealthy” with revenue to be used for the benefit of poorer citizens.
A prominent supporter of the Robin Hood Tax is Jeffrey Sachs, a Columbia University economist who crafted a controversial economic “shock therapy.” Sachs is a key member of the Institute for New Economic Thinking, or INET.
Billionaire George Soros is INET’s founding sponsor, with the billionaire having provided a reported $25 million over five years to support INET activities.
This past April, Sachs keynoted INET’s annual meeting, which took place in the mountains of Bretton Woods, N.H. The gathering took place at Mount Washington Hotel, famous for hosting the original Bretton Woods economic agreements drafted in 1944. That conference’s goal was to rebuild a post-World War II international monetary system. The April gathering had a similar stated goal – a global economic restructuring.
- Rebooting the system and rewriting the Constitution: The concept seems to be a reference to a plan to push for a new, “progressive” U.S. Constitution by the year 2020.
WND previously reported at least three White House advisers and officials, including President Obama’s regulatory czar, Cass Sunstein, have ties to the Constitution rewrite effort, which is funded by Soros.
Sunstein has also been pushing for a new socialist-style U.S. bill of rights that, among other things, would constitutionally require the government to offer each citizen a “useful” job in the farms or industries of the nation.
According to Sunstein’s new bill of rights, the U.S. government can also intercede to ensure every farmer can sell his product for a good return while the government is granted power to act against “unfair competition” and monopolies in business.
- Reinstatement of the Glass-Steagall Act, which sought to enforce more government regulation of the banking industry. Some provisions of the act allowed the Federal Reserve to regulate interest rates in savings accounts.
Wall Street protests to turn violent?
Meanwhile, there are indications the Wall Street protesters are training to incite violence, resist arrest and disrupt the legal system.
Activists advertised on social network sites such as Facebook and Twitter for a “Day of Rage” on Sept. 17 to begin the “occupation” of Wall Street and continue with protests across the nation.
Planners have their own website – USDayofRage.org – which is not specific about the purpose of the “Day of Rage” other than calling for “integrity” to be “restored to our elections.”
The site accuses corporations of using “money to act as the voices of millions, while individual citizens, the legitimate voters, are silenced and demoralized by the farce.”
Advertisements claimed the protests at Wall Street and nationwide will be “non-violent.”
However, the official website provides resources, including videos and detailed written instructions, for protesters to engage in “civil disobedience.” The resources provided include instructions on how to resist police arrest and disrupt court hearings.
Similar instructions are provided on the website of an affiliated organization, which calls itself “Occupy Wall Street” and was also involved in planning the Sept. 17 protests.
The use of the term “Day of Rage” recalls the “Days of Rage” organized in the 1960s by the Weather Underground domestic terrorist organization co-founded by Bill Ayers and Bernardine Dohrn, close associates for years of President Obama.
Purple shirt power
In March, ACORN founder Wade Rathke announced what he called “days of rage in 10 cities around JP Morgan Chase.” Rathke was president of an Service Employees International Union, or SEIU, local in New Orleans.
Those efforts are being organized by Stephen Lerner, an SEIU board member who reportedly visited the Obama White House at least four times. Lerner is considered one of the most capable organizers of the radical left. He recently organized the SEIU’s so-called Justice for Janitors campaign.
As part of his planned protests, Lerner called for “a week of civil disobedience, direct action all over the city.”
His stated aim is to “destabilize the folks that are in power and start to rebuild a movement.”
In an interview about the protests, Lerner outlined his goals: “How do we bring down the stock market? How do we bring down their bonuses? How do we interfere with their ability to, to be rich?”
Forecast for American cities: Confrontation, intimidation?
There are other indications radicals and unions are planning chaos using the current economic crisis.
Last month, WND reported that a slew of extremist organizations, some tied to Obama, are preparing protests to coincide with major NATO and G-8 summits in Chicago next May.
Foreshadowing possible violent confrontations, some of the same radical trainers behind the infamous 1999 Seattle riots against the World Trade Organization have been mobilizing new protest efforts geared toward world summits as well as the current economic crisis.
The NATO and G-8 summits are not the only focus of radical groups. WND reported Heather Booth, director of a Saul Alinsky-style community organizing group, the Midwest Academy, was among the main speakers at the “2011 State Battles Summit” in June at the Hyatt Regency Capitol Hill Hotel in Washington, D.C.
Booth’s husband, Paul, also was a speaker at the union summit. Paul Booth co-founded Midwest Academy in the 1970s.
The four-day summit was organized by the American Federation of State, County and Municipal Employees, or AFSCME, with participation from the AFL-CIO, the nation’s largest union.
An official schedule for the event, obtained by WND, declared: “Our union is under unprecedented attack in every state. Extremist politicians want to weaken us as we head into 2012. Their tactics include budget cuts, layoffs, privatization and the denial of our very collective bargaining rights.”
Continued the flyer: “New challenges require new energy and new thinking. We encourage union activists to attend this conference and bring their creative ideas on how to overcome the challenges ahead.”
Heather Booth participated in a panel entitled, “Our Message, Alliances and Best Practices.”
Another speaker at the union event was John Podesta, who co-chaired President Obama’s transition team.
Podesta is president of the Center for American Progress, which is heavily influential in advising the White House. The center is funded by philanthropist George Soros.
Mideast revolutions coming to U.S.?
Citizen Action of Wisconsin, an arm of Booth’s Midwest Academy, is part of the Moving Wisconsin Forward movement, one of the main organizers of the major Wisconsin protests in February, as WND first reported.
The protests were in opposition to Gov. Scott Walker’s proposal for most state workers to pay 12 percent of their health care premiums and 5.8 percent of their salary toward their own pensions.
WND reported at the time speakers at the rallies likened the Wisconsin protests to the ongoing revolutions in the Middle East and North Africa while calling for similar uprisings in the U.S.
And just this past week, former Obama czar Van Jones told MSNBC’s Lawrence O’Donnell that “October is going to be the turning point for the progressive fight back” and referred to the Occupy Wall Street protests as part of a “progressive counterbalance to the tea party.”
“You’re going to see an ‘American Autumn,'” Jones said, “just like we saw the Arab Spring.”
‘Redistribution of wealth and power’
Obama himself once funded Midwest Academy and has been closely tied to Heather Booth.
Booth has stated building a ”progressive majority” would help for ”a fair distribution of wealth and power and opportunity.”
Her husband Paul is a founder and the former national secretary of Students for a Democratic Society, the radical 1960s anti-war movement from which Ayers’ Weather Underground splintered.
In 1999, the Booths’ Midwest Academy received $75,000 from the Woods Fund with Obama on its board alongside Ayers, In 2002, with Obama still serving on the Woods Fund, Midwest received another $23,500 for its Young Organizers Development Program.
Midwest describes itself as “one of the nation’s oldest and best-known schools for community organizations, citizen organizations and individuals committed to progressive social change.”
It later morphed into a national organizing institute for an emerging network of organizations known as Citizen Action.
Discover the Networks describes Midwest as “teach[ing] tactics of direct action, confrontation and intimidation.”
WND first reported the executive director of an activist organization that taught Alinsky’s tactics of direct action, confrontation and intimidation was part of the team that developed volunteers for President Obama’s 2008 campaign.
Jackie Kendall, executive director of the Midwest Academy, was on the team that developed and delivered the first Camp Obama training for volunteers aiding Obama’s campaign through the 2008 Iowa Caucuses. Camp Obama was a two-to-four day intensive course run in conjunction with Obama’s campaign aimed at training volunteers to become activists to help Obama win the presidential election.
Also, in 1998, Obama participated on a panel discussion praising Alinsky alongside Heather Booth, herself a dedicated disciple of Alinsky. The panel discussion followed the opening performance in Chicago of the play “The Love Song of Saul Alinsky,” a work described by the Chicago Sun-Times as “bringing to life one of America’s greatest community organizers.”
Obama participated in the discussion alongside other Alinskyites, including political analyst Aaron Freeman, Don Turner of the Chicago Federation of Labor and Northwestern University history professor Charles Paine.
“Alinsky had so much fire burning within,” stated local actor Gary Houston, who portrayed Alinsky in the play. “There was a lot of complexity to him. Yet he was a really cool character.”
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NEW YORK | Mon May 9, 2011 7:45am BST
(Reuters) – When oil prices fell below $120 a barrel in early New York trade last Thursday, a few big companies that are major oil consumers started buying around $117.
It looked like a bargain. Brent crude had been trading above $120 for a month. But the buying proved ill-timed. Crude kept on falling.
“They were down millions by the end of the day, trying to catch a falling piano,” an executive at a major New York investment bank said.
Never before had crude oil plummeted so deeply during the course of a day. At one point, prices were off by nearly $13 a barrel, dipping below $110 a barrel for the first time since March.
Oil’s descent followed the biggest one-day price drop in silver since 1980 on Wednesday, after hedge fund titan George Soros was reported to be selling. Exchange operators raised silver’s margin requirements, making it more costly to trade the metal and sending investors out of the market. Silver plunged by 20 percent, more by week’s end. The rout unnerved some commodity investors.
Oil just doesn’t fall by 10 percent in the course of a normal day, though. In commodities markets, oil is king, and its daily contract turnover, typically around $200 billion (122 billion pounds), is usually able to absorb even large inflows or outflows of investment.
Of course, there was major news last week. But the daring Pakistan raid that killed Osama Bin Laden had done little to shift the balance of oil markets on Monday.
In interviews with more than two dozen fund managers, bankers and traders, no clear cause emerged for the plunge in price. Market players were unable to identify any single bank or fund orchestrating a massive sale to liquidate positions, not even an errant trade that triggered panic selling, as seen in the equities flash crash last May.
Rather, the picture pieced together from interviews on Thursday and Friday is one of a richly priced commodities market — raw goods have been on a five-month winning tear over all other major investment classes — hit by a flurry of negative factors that individually could be absorbed but cumulatively triggered a maelstrom.
Computerized trading kicked in when key price levels were reached, accelerating the fall.
“It was a domino effect,” said Dominic Cagliotti, a New York-based oil options broker.
The negative factors — prominent cheerleaders turning bearish, some weak economic data, cheap money from the U.S. Federal Reserve ending by July, a lessening of political risk — merely provide a backdrop for the waves of selling. What stands out is the way computers turned readjustment of positions in a huge and deep market into a rout.
Stunningly large jolts from so-called stop-loss trading amazed market traders. The automated sell orders were generated as oil crashed through price points that traders had programmed in advance into their supercomputers. In many cases, computer algorithms sold for technical reasons, as oil dropped through levels that, once breached, could trigger ever larger waves of selling yet to come.
The machine trading, based on subtly different but fundamentally similar, algorithmic models, eliminates the white-knuckles and potential human error involved in actively trading a volatile market, and increases anonymity. Instead of breeding hesitation, abrupt price drops can quickly prompt these machines to unload a bullish long position in oil, and build up a bearish short one instead.
Machine-led trading is one plausible thesis for another apparent market anomaly that occurred on Thursday. Exchange data shows that the total number of open positions in the oil market — a number that would typically fall in a selloff — instead rose. Normally, panicky funds selling oil en masse would cause total “open interest” numbers to shrink, as exiting investors closed out contracts. But some machines, following the market trend, may have gone further, by dumping long positions and quickly amassing sizable short positions instead.
“Computers don’t care. Momentum just increases until nobody wants to stand in front of it,” said Peter Donovan, a floor trader for Vantage on the New York Mercantile Exchange.
Some big Wall Street traders watched their own systems sell into the down trend but couldn’t know for sure who had initiated the selling spree. They only knew that similar machines at other firms, from New York, to London, Geneva and Sao Paulo, would be automatically selling in much the same manner.
During Thursday’s crash, such selling locked in profits that high-flying commodities traders have been accumulating for months. Some of Thursday’s rout appears to have been more a product of the wisdom of crowd computing than of widespread human panic.
“We believe the magnitude of the correction appears in large part to have been exacerbated by algorithmic traders unwinding positions,” Credit Suisse analysts wrote in a report.
High frequency trading and algorithmic trading accounts for about half of all the volume in oil markets.
BIG NAMES TURNED BEARISH
Some of the seeds for the rout were sown earlier. In April. Goldman Sachs’ bullish team of commodities analysts, led by Jeff Currie in London, issued two notes to clients in rapid succession recommending they pare back positions. In one, the bank called for a nearly $20 dollar near-term correction in Brent oil, while maintaining a bullish longer-term outlook.
The closely watched money king, George Soros, who runs a macroeconomic hedge fund, had said for months that gold was pricey. Even online advisors to mom-and-pop investors such as The ETF Strategist had warned of a bubble in precious metals that could be ready to pop.
On Wednesday, the Wall Street Journal had reported the Soros Fund was selling commodities including silver, and four sources from other hedge funds told Reuters they believed Soros was busy selling commodities positions again on Thursday.
Silver markets already had suffered four days of carnage and ended the week down nearly 30 percent. But silver is a tiny market, much more susceptible to sharp price moves. Some traders suspect that big holders were cashing out of the least liquid commodity market first, before moving onto the big one – oil.
As crude crashed on Thursday, it dragged down every other major commodity. The Reuters Jefferies CRB index, which follows 19 major commodities, was on its way to a 9 percent weekly drop, the biggest since 2008.
Oil’s selloff began in London, and accelerated as New York traders piled in.
A routine report on U.S. weekly claims for unemployment benefits spooked investors, showing the labour market in worse shape than expected. That fed a growing pessimism about the resilience of the global economy after industrial orders slumped in Germany and the massive U.S. and European service sectors slowed. Then the European Central Bank surprised with a more dovish statement on interest rates than expected, signalling its wariness about the euro zone outlook. The dollar rose sharply.
Before noon New York time, Brent crude oil prices were already trading down a jaw-dropping $8 a barrel.
Fourteen hundred miles southwest of New York’s trading floors, on Texas refinery row, oil men were stunned by the drop, which played havoc with their pricing models.
“It was nuts. Our risk management guys were tearing up their spreadsheets,” said a major U.S. independent refiner, who asked not to be identified.
A range of factors, both economic and political, were also at play. The recent rise in raw goods has been fuelled in part by the U.S. Fed pumping cash into the markets by purchasing $600 billion in bonds. This program has pushed interest rates extraordinarily low, making borrowing essentially free once adjusted for inflation. Investors have been using the super-cheap money to buy into commodity markets. But the Fed’s program is slated to end on June 30.
“Funds were likely to take profits before June when the direct (Fed) bond purchases stop. All were eyeballing each other to see who would take profits first,” said a London-based oil trader.
China, the world’s fastest-growing consumer of commodities, also is tightening monetary policy to tamp growth rates and control inflation, raising the prospect of a slowdown in demand for oil.
The political risk premium built into oil prices also came under scrutiny last week. The unrest sweeping through the Arab world – home to over half of world oil reserves – has boosted oil this year. The only major supply disruption so far is from Libya, where war has cut off at least 1 million barrels a day.
“We’ve been in a world thinking there’s more risk, more risk, more risk,” said Sarah Emerson of Energy Security Analysis Inc. “People took this week, and the news of bin Laden’s death, to simply reflect. They stopped and said, maybe there’s less risk.”
Put all these factors together, and they amounted to a reason to sell. Traders and brokers who spoke with Reuters speculated that macro funds like Soros and others, which had been aggressively overweight commodities, were cutting the portion of their portfolio allocated to commodities. Because those positions had grown so large, even a small rebalancing would amount to billions and billions of dollars in contracts sold. After weeks of thin trading in Brent oil futures, Thursday’s trade volume hit a record.
Early Thursday, investment advisory firm Roubini Global Economics had also joined the fray, telling clients for the first time in years to cut commodities in their macro portfolios. Many funds were merely taking months of handsome profits off the table.
Yet Thursday’s rout certainly produced casualties.
By the afternoon New York time, some of the world’s biggest money managers thought they smelled blood. Several banks and funds seemed to be selling oil in an orderly fashion, even if the price drop was extraordinary. But could a hedge fund be struggling for survival?
They wondered whether any major commodities funds were on the losing end of bullish oil bets, and were getting forced by margin calls from brokers into dumping massive positions.
One trader at a major bank in New York called a colleague at one of the world’s largest hedge funds. During the conversation, they exchanged notes, suspicious that one or more commodities-focussed hedge funds might be facing a moment of reckoning, one of the participants said.
No fund could be pinpointed. By the end of the day, the person said, they were less suspicious — a view shared by week’s end by many market participants who spoke to Reuters. No one was naming a major hedge fund in dire trouble, or a computer trading algorithm that went haywire.
And unlike last May’s flash crash in equities markets — when stocks fell by a similar 9 percent margin in just minutes — Thursday’s decline came in rolling cascades, playing out over at least 12 hours.
Even after Brent fell to settle around $110 by the end of the day, crude prices were still up 38 percent from a year ago.
“Since prices have been advancing well beyond any reasonable measure of value, Thursday’s declines felt more like orderly corrections than chaotic panics. There was no sense that anyone was ready to jump from the window,” said oil analyst Peter Beutel of Cameron Hanover in Connecticut.
The day left some commodities-heavy funds nursing wounds – weekly losses of 10 to 20 percent, according to several fund managers who invest in other hedge funds.
Two of the sources said that London-based BlueGold, a fund known for taking aggressively bullish directional bets on oil in the past, had sizable losses. It was not immediately clear how much the fund dropped, and BlueGold declined comment.
One money manager said of BlueGold’s head trader Pierre Andurand: “He’s had tougher weeks so I don’t think it’s game over.”
Fund sources also cited losses at $20 billion Winton Capital, of around 2.2 percent, on Thursday. FTC Capital, a $300 million European commodities fund, lost 4 percent in one of its larger funds, the sources said. Neither fund was available for comment.
In the space of just hours, the drop in the price of crude oil had shaved nearly $1 billion off the cost of supplying the world’s daily oil needs. That could be good news for gasoline consumers. But Eric Holder, the U.S. Attorney General who has recently formed a government working group to investigate manipulation in oil markets, had a blunt warning for oil traders. He wants proof the savings are being passed on to end users.
“This working group was created to identify whether fraud or manipulation played any role in the wholesale and retail markets as prices increased. If wholesale prices continue to decrease, fraud or manipulation must not be allowed to prevent price decreases from being passed on to consumers at the pump,” Holder said on Friday. (Reporting by Matthew Goldstein, Svea Herbst, Jennifer Ablan, Emma Farge, David Sheppard, Claire Milhench, Zaida Espana, Robert Campbell and Josh Schneyer. Writing by Josh Schneyer. Editing by Stella Dawson)