14
Aug

Friday Beach Post

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Just a fresh post to let you stick new comments under as that last one had 300+ comments and was getting a bit cumbersome.

Quick comments: The little energy names move in unison. KOG popped yesterday rising 23% but so did WRES (up 11%), GST (+9%). If they have enough volume behind them or the hint of a good piece of news on the way they can make like a telephone pole shaped chart for a few days, especially when people who thought 10% was a big gain, sell out on day one of the rally only to renter 20% higher on day 2 or 3. In the issues of single digit midgets, I"d much rather see a gradual increase in the shares which generally leaves you with a better class of neighboring investor and not the kind of guys that only know the ticker, that it produces oil, and where the sell button is on their trading system for the first sign of weakness in the chart. Happy to see KOG go back to that old high now and yesterday's close at the HOD augers well for that but if it fails there look for the chart based retrenchment.

Re HK restricted, reason is probably not a debt deal, could be an acquisition but also could be well news or the approaching sale of their Permian assets. Time will tell, probably next couple of weeks. I think the stock is doing well to hold up around the deal price with oil flat and natural gas  taking another breather and if you go back and look at the chart from February, when they did their last deal, it is going through exactly the same kind of post deal digestive phase.

 

Have a great day! I'll be around off and on, mostly off as beerthirty on Tuesday never really ended.

 

 

61 Responses to “Friday Beach Post”

  1. 1
    zman Says:

    By the way, WEST and BOP. Good job on keeping up with KOG. I’m not saying it because of the stock’s pop but it does make for a good time to add my kudos.

    The little fish are the hardest to follow because some things are news, some things are myth and others are BS and it is often difficult to sort out which is which. Given that the little ones don’t generally have financial statement larger than the richest guy on your block or gas reserves larger than what my 3 cattle dogs can produce in a year, the color you guys provide is an invaluable addition to the public record.

  2. 2
    BirdsofpreyRcool Says:

    Good morning. And thanks, z. But, when it comes to color on KOG, West has the crayon box there. Would hate it if he took himself up on his own offer not to post. It’s just too much fun to team up on KOG with him.

    West — you reading this?

  3. 3
    BirdsofpreyRcool Says:

    TechTrader says it’s a low odds day again today — 55/45… but, buy the moring pullback for a slow cash rally in the SPX

    HeadTrader is already yawning and thinking about his saturday golf game. He says today will be choppy because of LOW (his emphasis, not mine) volume. Yesterday we only traded 740mm shares… he can’t imagine being more than that today.

  4. 4
    zman Says:

    My mistake, it must have been some other bird chirping about KOG below $0.30 back in the day, lol.

  5. 5
    Nicky Says:

    Morning all. I have watched them wheel out analyst after analyst this morning on CNBC all who say the market is way ahead of itself. The latest being the Pimco guy who again reiterates that the market has priced in a much bigger recovery than we are likely to see. Ivanka Trump on saying the banks are not lending(at all!), commercial real estate is the next shoe to drop, and she sees risk absolutely everywhere! Maybe everyone is just too bearish which is why this market continues to trade up. I just cannot imagine who is buying up here in all honesty.

  6. 6
    zman Says:

    Morning Nicky – such light volumes, answer is not many buying. Those risks are the same ones from 3 months ago, specifically recall the commercial comment and it is very real from what friends in the biz tell me. Market scampering up a wall of worry in my book. My thought is it runs until it doesn’t then look out for a sharp retrenchmnent and digestion and then probably a move up on better volume at least back to current levels. With so many looking for the market to roll over I’m not at all surprised to see them disappointed by the move up. I figure the roll will come when you see the talking heads start to flip to the bull side without any data to support them.

    Ok, gotta run

  7. 7
    BirdsofpreyRcool Says:

    From a SMH moring energy note ===>>

    Tennessee Gas Pipeline Imbalance Warning yesterday –
    Tennessee requests that customers match physical flow with scheduled quantities to prevent imbalances from occurring that would threaten Tennessee’s operational integrity. With mild weather patterns continuing across much of the system and limited storage flexibility, Tennessee does not have the ability to absorb imbalances caused by over-deliveries by receipt point operators into the system and under-takes from the system by
    delivery point operators.

    We appreciate your compliance with this notice.

    Tennessee Gas Pipeline (Tennessee) is one of the five interstate pipelines that make up El Paso Corporation’s Pipeline Group. Tennessee is comprised of approximately 14,200 miles and 1.4mm certificated horsepower. The pipeline stretches from the Mexican border to Canada. Tapping supply regions in the Gulf of Mexico, Texas, Appalachia, and Canada, the Tennessee system serves markets across the Midwest and mid-Atlantic regions, including major metropolitan centers such as Chicago, New York, and Boston.

    While perhaps not a surprise that this might be the case, first time we have seen a warning from a major pipe.

  8. 8
    BirdsofpreyRcool Says:

    I must say (and so I will say it…) I was really ready for KOG to drop back to 1.20 or so and stick there. Rather surprised to see new highs and fairly high volumes. As z said, hate to think this has attracted the mo-mo crowd. But, as West pointed out yesterday, that KOG chart break-out was (is) hard to ignore.

    Oh well… it’s still early.

  9. 9
    gaamblor Says:

    I’m no TA guru, but it seems logical for KOG to get back to the last spike top (on 5/12) to 1.49 and then see what happens

  10. 10
    BirdsofpreyRcool Says:

    gaamblor — i was thinking that too. so, 1.49 is kind of the new battleground. Get through that, and it could go higher. The 90-day lockup on those 75c shares expire about now. I know those shares were placed with long-term Friends of KOG… but still, they have almost doubled from the offering. Takes a lot of faith in the future, not to just peel a few off here, i would think.

    Still have all my shares. So, it’s probably headed back down. LOL.

  11. 11
    BirdsofpreyRcool Says:

    U of Mich Consumer Confidence index came in below expectations… 63.2 vs 69.0 expected.

  12. 12
    ram Says:

    It’s difficult to be confident when you are out of work and you can’t find work even if you are flexible to move. With the millions that have lost jobs in the first seven months of this year, how can any economist believe that we are on the road to recovery. Until jobs are created, their is no recovery.

  13. 13
    choices Says:

    DX up a tad to 78.68
    T-Bonds up another point, to 119’07

    Prob to state the obvious, it seems that just about all markets are now focusing on the DX, maybe with China thrown in, to see which way the markets will move-it is August, but the mini S&P trading pit now seems to be the private playground of the big boyz vs the locals, sometimes as yesterday big boys vs bigger boyz…..

  14. 14
    BirdsofpreyRcool Says:

    Markets turn around 6-9months before jobs start picking up. So, not unusual to see continued loss of jobs coupled with a rising stock market. But if jobs don’t start coming back soon, Mr. Mrkt is going to question his assumptions and rethink his direction, agreed!

  15. 15
    choices Says:

    for those on the beach who are vacation-challenged (heh),
    CL weaker today, now 68.35, off 2.13
    NG 3.31, off 0.02

    Copper slammed this morning, to 2.84, off 0.068.

  16. 16
    BirdsofpreyRcool Says:

    JPMorgan out today with a very bullish call on what they see as a V-shaped recovery. None of this “New Normal” crap that Pimco is calling for with low, low growth and permanent job losses… a full-blown V, baby!

    On top of that, they see the recovery being driven by the “smoke stack” sector… the industrials and metals and chemicals and companies that actually MAKE stuff. That would be HUGE. It would also be just about the best thing to happen to the U.S. at this point … to have a smoke-stack recovery.

    I want some of the stuff JPMo is smoking… it makes you feel sooooo good!

  17. 17
    choices Says:

    Germany and France announced that they are just barely out of recession for Q2 with positive growth, many in these countries find it difficult to believe.

    Shanghai mkt off 3% last eve, BDI up a tad yesterday after many days down

    Recovery may be coming but it is difficult to see a V.

  18. 18
    ram Says:

    What smoke stack stuff?? Unless every municipality tears down buildings and bridges to build new, where is the demand going to come from – autos?? If you look at the basic capital goods that is used in mines, residential and commercial buildings, there is thousands of idle units waiting to be used. Therefore, no requirements to make equipment which would drive steel, etc. I believe the only real recovery for the U.S. that would not be a flash in the pan(like short term green stuff that apparently will save us) is going to be from military hardware. An excellent case would be the early 80’s build up – Reagan years. The SEC should fine JPM many millions for printing that B.S. without some half ass justtification behind the statement.

  19. 19
    BirdsofpreyRcool Says:

    The JPMo economic call

    http://www.bloomberg.com/apps/news?pid=20601068&sid=aF9XXH40s4ys

  20. 20
    BirdsofpreyRcool Says:

    And the other side of the argument

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=avmwu6UfHB4o

  21. 21
    Wyoming Says:

    Somebody asked the other day about different proppant performance. This is a comparison slide from Saint-Gobain on their products versus others. Basically, the higher the closure the more the grains crush, the higher the conductivity the better the flow path to the wellbore.

    You can expand the slide by clicking on the graph and should be able to further expand once the graph opens up.

    http://screencast.com/t/Mr3V6l8JN20

  22. 22
    PackMan Says:

    JPM, that’s funny … did Timmy write that and fax it over to Dimon ?

  23. 23
    choices Says:

    It would be interesting to know where goldman makes it real bets, ignoring calls from Abby, et al. My guess is that they are in distribution phase.

  24. 24
    Dman Says:

    JPM is saying this is no different to previous bumps in the road. What a joke.

    But it depends whether they are talking about real growth or imaginary growth (inflation).

    Growth & inflation figures have been grossly distorted for years, so if the coming inflation is undercounted (as per usual), it could make nominal growth look good, since this will not be correctly adjusted for inflation.

    But JPM seem to be short-circuiting that confusion by just flat out confusing the Fed’s money printing with job creation!

  25. 25
    zman Says:

    Re 7 – they should have said first time this season for a major pipe to issue a contingent operational flow order. We see OFOs every year. As storage approaches full levels in various parts of the country we will see more. Usually they are worded more strongly with mention of penalties for non-compliance. Expect to see more of these with stronger wording as we move through August and especially into later September unless we see extended above normal heat or storms in the Gulf that actually cause disruptions to supply. Last year storms saved our storage bacon so to speak as we would have been in lower gas price land long before we were were it not for the multiple weeks of disruptions of 7 Bcfgpd out of the normal high 50s Bcfgpd produced in the lower 48 states. When the OFOs become orders to “curtail volumes or pay the fine” you will see E&Ps report forced curtailments. This will lead to a couple of things happening. As you would expect, natural gas prices will fall off as the “holy crap” of the moment sinks in. Then they will rally as curtailments lead to smaller injections.

  26. 26
    BirdsofpreyRcool Says:

    Just can’t see how we can return to what we had, what we were, how things were valued. That foundation has cracked and shifted and downsized. We will rebuild our house, but it will look different.

    How can it not? Yes… don’t quite get the JPMo piece…

  27. 27
    zman Says:

    Wyoming – thanks for following up with 21.

  28. 28
    john11 Says:

    From ECRI..

    (Reuters) – A U.S. future economic growth gauge rose in the latest week, as its yearly growth rate surged to a 26-year high, suggesting that recovery will commence at the briskest pace in decades, a research group said on Friday.

    The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to a 47-week high of 123.9 in the week to Aug. 7 from a downwardly revised 121.7 the prior week, which was originally reported at 121.8.

    Meanwhile, the index’s annualized growth rate leapt to a 26-year high of 13.4 percent from last week’s five-year high of 10.4 percent, which ECRI originally reported at 10.5 percent.

    It was the index’s highest yearly growth rate reading since the week to Aug. 26, 1983, when it stood at 13.9 percent.

    “With WLI growth surging, the odds are rising that the early stage of this economic recovery will be stronger than any since the early 1980s,” said Lakshman Achuthan, Managing Director at ECRI.

    Achuthan recently told Reuters that the national recovery would be stronger than many expect, though signs of such strong growth will not be apparent until sometime next year.

    “Next year, looking back you’ll see that GDP, industrial production, sales, and even non-manufacturing jobs growth — where 91 percent of Americans work — began rising as recovery took hold,” Achuthan said.

  29. 29
    Nicky Says:

    Can anyone tell me where the low was for natural gas – i know it was around 3.10 = by that I mean the low of a month or so ago

  30. 30
    zman Says:

    Nicky – low for Sept gas was 3.36 about a month ago. August was around $3.10. Gotta hop.

  31. 31
    cargocult Says:

    Ram, where is the military threat to justify such a huge buildup as in the Reagan years? The Cold War is over and today’s military threat is terrorism and insurgent actions. Big ticket items like ships, tanks, and planes are marginal against this enemy. Even in Iraq these weapons are inappropriate. Not to mention that $ for $ they don’t create many jobs.

    I agree that it is hard to make a case for smokestack industry at this time. And it will be some time before we need new residential construction.

  32. 32
    Nicky Says:

    Thanks Z. However…. its no good trying to hop out of the way when there is a hat that may need eating shortly.

    If it can undercut that low then we are in business for a big low in place.

  33. 33
    BirdsofpreyRcool Says:

    Don’t worry… Your Congress will fund nuts-and-bolts spending… just like the $800k in stimulus money that was sent to this airport. Good return on capital! Or, shall i say “Capital”… as in D.C…

  34. 34
    apbd Says:

    Is he hiding the BB under a beach towel?
    apbd

  35. 35
    Dman Says:

    Re ECRI leading indicators: comparing the present hollowed-out US economy to 1983 seems bizarre. Back then, if consumers started spending, that created good jobs in US manufacturing. Right now it will just absorb spare manufacturing capacity in China.

    The stock market has clearly anticipated a sharp recovery from the worst phase of the slump, which was of the “falling off a cliff” variety. I would surmise that this is what ECRI is seeing, but the stock market got there first! The question is how far this sharp recovery can go.

    The structural situation is so different to 1983 or to 1991, I just don’t see the point of pretending that their indicator time-series have the same meaning now as then.

  36. 36
    BirdsofpreyRcool Says:

    apbd — apparently, the BB went for a swim and didn’t dry out very well.

    So, z must be having a good time.

  37. 37
    BirdsofpreyRcool Says:

    Dman — i tried to say that in #26… but you said it better. Thanks.

  38. 38
    isleworth Says:

    He needs an iPhone anyway…….better…. 🙂

  39. 39
    BirdsofpreyRcool Says:

    isle — can you take an iPhone for a swim?

  40. 40
    jiveyjr Says:

    the JPM economist behind that note co-authored “Dow 36,000” with Kevin Hassett….maybe we should consider the Todd Harrison note Nicky posted yesterday before putting too many $$$’s behind Glassman’s work

  41. 41
    PackMan Says:

    cargo; it could come from China / Russia and Islamists …

    But I wouldn’t count on anything remotely resembling a military build up while Obama is in office, no matter what threats may develop.

  42. 42
    PackMan Says:

    40 – I still say Timmy wrote it !

  43. 43
    AAA Says:

    Kass has an article on RM taking issue with the apparently widespread conclusion that the recession is over and blue skies are ahead.

  44. 44
    jiveyjr Says:

    I do think, based on what I see and read, that they are going to expand the Afghan conflict which may take longer and be more costly than Iraq…so there should be winners from the suppliers for that effort

  45. 45
    apbd Says:

    No movie quotes?
    apbd

  46. 46
    cargocult Says:

    PacMan, surprisingly Obama has not been soft militarily, at least so far. He is expanding our role in Afghanistan and has not shown any haste in withdrawing from Iraq, even though he promised to do so in the campaign. It is hard to imagine Russia wants to retake Eastern Europe and their military efforts in the Chechen conflict were dismal. As to China, short of invasion of Japan or India, that gorilla can sit anywhere it chooses. Of course it would mean an end to their exports which are most of their economy. China and the US are economically joined at the hip. Who would have thunk it.

    The Islamist are the real threat because they are in it for ideological reasons and their weapons are small, socially disruptive, and assembled on an as needed basis. Not the stuff that can be taken out by a bombing run on a military installation. So no easy big ticket solutions there. Even if we wanted to take out some future Iranian nuclear option we have sufficient weapons to do the job many times over. Patience might be the best Iranian strategy as the locals are getting fed up with the government on their own.

  47. 47
    Dman Says:

    My idea for defeating the Islamists: get them to sit in front of a screen & watch the market today. Pretty soon they’ll go crazy (well, crazier) and will experience an urgent desire to go to the beach. At the beach, they’ll discover that maybe some Western ideas aren’t so bad after all & pretty soon they won’t be taking Osama’s calls …

  48. 48
    choices Says:

    This economy would really reflect what a hollow shell it is IF we went down the road of increased military spending to jump start growth. I agree with cargo-we do not have a threat which would justify spending on the big ticket items. I am fairly impressed with Gates as to trying to rein in the spending on systems we do not need, e.g the F-22. The missile defense system, which does not work, the laser beam weapon system are other good examples-another exapmple, how many aircraft carriers do we really need-I think we have something like 12-14 at many billions per copy. However, we have the porkchops in Congress who continually push this spending fo jobs with their allies in the services.

    If and when they succeed in sufficiently hyping the Chinese threat, then the spending will crank up again. The threat is almost always over-hyped as it was with the Soviet Union.

  49. 49
    choices Says:

    west, I hope you are out there. I left a message at the end of Thursday which said that an apology is abolutely not necessary FWIW.

  50. 50
    PackMan Says:

    cargo … not soft militarily ?

    not succeeding in afghan;
    walking away from Iraq
    playing footsie w/ Iran, N Korea, Syria
    playing wussie to the Russian

  51. 51
    Dman Says:

    west, I also want to say there is *no problem* with you telling us what you are doing. I’d much rather you *did* say what you are doing, since you are well informed.

    Nobody thinks you were pumping & dumping.

    A pump & dump merchant doesn’t tell you when he is selling!

    Also, I agree with your interpretation of the big move: it was just pent up demand, for a tiny stock that hadn’t moved yet when it should have already. Just market dynamics and a very small float.

  52. 52
    Dman Says:

    Pack,

    the Iraq disaster cost the US at least $3 trillion in cash and in future medical obligations. I wonder if that money might have come in handy now if it hadn’t been poured into the sand?

    Afghanistan was already “not succeeding” and now Obama is ramping it up, which will result in even more “not succeeding”, culminating in a “not success”. This is the way all invasions of Afghanistan end and this one is the same. How many $trillions (borrowed of course) should be wasted there before the inevitable withdrawal?

    No previous president got very far with Iran/N Korea/Syria. Don’t you remember all the tough-guy talk from Bush? What did achieve? Nothing, unless you count the “laughing stock” effect when the “tough guy” talks but doesn’t act.

    So you want Obama to talk tough but then still not be able to solve N Korea? What would that achieve? Another president becoming a global laughing stock? I don’t think that would help. Tough talk about insoluble problems just erodes credibility, because everyone knows that if there was a simple military option, it would have been taken years ago.

    As for the Russians, do you think they care about “tough talk”? They *only* care about actions & they will be much more impressed with a president if his actions are in sync with his words.

  53. 53
    cargocult Says:

    PackMan…I think you are referring to diplomatic stuff with N Korea and Iran. Syria is not a major player. You are not proposing we engage N Korea militarily, are you?

    He kept Gates as Defense Secretary, has not walked away from Iraq(last I heard we are still there), maybe not succeeding in Afghanistan but not from lack of trying, and how so “wussie” to the Russians?

    I’m saying that there is no real justification for a big Reagan style military buildup given the geo-political state we are now in. I am suggesting that the enemy today is not vulnerable to the big ticket items that create jobs… tanks, ships. planes etc. Maybe we should go to Mars.

  54. 54
    isleworth Says:

    BOP – gone all afternoon…….no iPhone isn’t a good swimmer either – it can drown easily unless equipped with lifejacket! Have a great weekend!

  55. 55
    PackMan Says:

    Dman, respectfully, you do not seem to be following events in either Iraq or Afghanistan too closely at this time.

    Read Ralph Peters today on Afghanistan …

    Obama is paying little to no attention to Iraq and will turn a hard fought win (in Iraq (by which I mean Petreaus fixing all that was wrong before) into a disaster for Iraq and an embarrassment for him and for us.

    As for the Reagan style buildup, which is where we started on this, I agreed with your premise; and only pointed out some possibilities as to where future threats might arise.

    Dman; the issue isn’t talking tough or not talking tough; its the idea that evil can be persuaded by happy talk because we are reasonable folks; and therefore isn’t everyone else ? Well, no, they aren’t, and the Iranians, N Koreans, Russians, etc. see the weakness projected from this administration and act accordingly (how is that engagement with Iran working out for example ?).

    But lets not pollute Z’s board w/ this; I don’t want him to get mad.

    Have a good weekend all.

  56. 56
    RMD Says:

    TransAtlantic TAPFF: listened to conf call this AM, great long term story though I have seen moe than my share of very successful people in their prior cos crap out this time when I am involved! At heart the story is their 3 contries have had very expensive services (drilling, completion, etc) because of limited supply, and no fracing at all. Taking USA technology to apply to virgin territory. Production is just from natural flow sp far. TAPFF is importing their own equipment, rigs, seismic to DIY. No fracs until sometime in ’10 as they want to do verticals and learn he geology on the cheap, develop some scale, etc. Did mention one area with geology comparable to OKLA where they would automatically frac the well, but in Turkey we will walk before we run (my phrase). Many more wells coming in 2H09,’10 and ’11, will probably divest Calif. Hard to value as a straight-up growth story at 7X capx, though Cannacord and SMH have the old plan as bankers to their most recent 75mm share offering. Did not buy any as I am more bearish than most short term, but will definitely stay tuned: how many co.s do I know in that part of the world?

  57. 57
    West Says:

    http://www.kodiakog.com/pdf/KOG-August2009.pdf… Here is a link to the updated KOG presentation. Since they show that their 5th well is flowing TSB #14-33-28H
    50 /41 31 8,313’ 8/3/2009 15 — — Flowing well….so I don’t guess its a secret. This long lateral will be financially better for KOG as they have 50% wi/41%nri. I do not know what the #s are and I will not guess. It should be one of their better wells to date, based on lateral length, # of fracs and thickness of lower bakken shale (source rock)in this area. I do not think that they will release results until they complete their 6th well TSB #14-33-6H
    50 /41 26 4,163’ 8/24/2009 6 — — Completing, at the end of this month. It may not mean anything but XTO has applied for 1280 units in all of the northeast portion of their acreage with KOG. The stock never got any credit for the last 2 wells that they completed, which made no sense at all. I also think the initial move Thursday was fundmental and then became a momentum trade. I agree with Z that caution must be be used here because the momo players don’t get married. Unforunately I don’t think that the stock has enough liquidity to trade smoothly for lack of a better term.

  58. 58
    BirdsofpreyRcool Says:

    RMD — excellent summary of TAPFF (TNP CN). You make valid points and observations. I want to keep this one on the radar screen too… but not chasing the stock at this price and at this time. Maybe sometime in October, it might look more interesting. We shall see.

    Perhaps z can cut and paste your summary into the research tab? That would be very helpful. Would be useful to keep a database of observations going there.

    Thanks again for your summary!

  59. 59
    BirdsofpreyRcool Says:

    West — THANK YOU for keeping on top of the KOG story. So, did that mean that the #5 was flowing on 8/3? Spoke to the company the day before the 8/7 conf call, they said they would not have full test results on #5 prior to the call…

    They have made the statement, numerous times, that they will not release well results on a well-by-well basis, so this is consistant… still wonder if they knew the full results on 8/7.

    KOG was not officially invited to Enercom… but they did host a breakfast and had a room full of data (maps, seismic) to show interested investors at the conference. Also, think some interested parties stopped by KOG’s Denver office during the week. Think the breakfast was on Monday… so, that doesn’t explain the big move on Thursday… but, it might have set it up. With that kind of volume, tough not to believe a new investor wasn’t involved — at least initially — before the mo-mos took it from there.

    The fact that the stock held $1.27 means it may have found a new floor at 1.20 or so, as we wait for results from wells 5 and 6.

    Good color, West.

  60. 60
    Dman Says:

    Pack, #55. When you say “a hard fought win” in Iraq, surely you mean “a hard bought win”. Because the key plank of Petreaus’ strategy was to buy the Sunni fighters by paying them salaries to become the “Sons of Iraq”. Now I’m not disparaging this strategy: in counter-insurgency warfare, buying them off is a very respectable strategy and the amounts involved were pitiful from a US perspective. Why wast valuable lives when a small amount of cash would do the job?

    The problem is that this could only be a short-term fix unless these Sunnis were somehow integrated into the Shia government. Fully aware of this, Petraeus constantly repeated that this integration must be implemented.

    But it was *never* going to be implemented. To imagine otherwise was a pipe dream & sure enough, the Shia govt has reneged, as it was always going to, on whatever assurances were made to Petraeus. They simply continued their practice of telling the US whatever they wanted to hear, so as to maintain their US-supported edge over the Sunnis for long enough to completely consolidate their power. Now that this process is finished (i.e. post-ethnic cleaning of Baghdad etc), the Shia have decided they don’t need the US anymore.

    The big winners so far: the Shia and their best buddies, Iran. Well that worked out great didn’t it? I’m sure that’s what W had in mind when he had his brilliant idea of invading a distant, primitive country for no apparent reason.

    So the US faces a choice: leave while the leaving isn’t so bad, thanks to the temporary lull bought (literally) by Petraeus, or stay and fully re-engage militarily.

    The latter option would cost $trillions that the US would have to borrow (from who?) and would achieve the spectacular return of zero on that borrowed capital. That’s without mentioning the cost in lives.

    Afghanistan: same story but an even more primitive country with even less chance of being converted into whatever it is that people think you can do by invading primitive countries. This story is less further along in its path to disaster, but Obama’s decision to up the ante there will probably destroy his presidency, as he is evidently unable to learn the most obvious lesson from the failure of his predecessor.

    I’m not aware of anybody seriously suggesting that “evil can be persuaded by happy talk”.

    I think Obama’s approach vis-vis Iran was one of the few smart things he has done. Prior to the election there, Obama’s approach had unsettled the government, because the “US-will-attack-Iran” card is their favourite way of distracting their population from the govt’s failings. Obama took that card away & the confusion in the govt was palpable, due in no small measure to the President’s middle name.

    The people in the streets of Tehran were fully aware that the US president was interested in talking to them instead of bombing them.

    The regime in Tehran is less secure now than any time since the revolution. So I would call that a success, with zero cost in dollars or lives & potentially great benefits if it is followed up. I’m confident that it will not be followed up & that this small success will be allowed to fail. But for the moment, it it what it is.

  61. 61
    Dman Says:

    Pack, seems to me that your man Ralph Peters agrees with me on Afghanistan, more or less. We differ on Iraq: he says that “Iraq’s the prize from which positive change might flow”.

    “Positive change”? You gotta be joking. That’s what Iraq was about? “Positive change” is the “prize” for $3trillion + future disasters?

    I’m thinking we should just call that “positive change we can believe in” and see how that sounds.

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