• Sprott Money
    05/26/2016 - 05:58
    How many “emergency” “secret” meetings do the central planners around the world need to have before the citizens of the respective countries begin to fully understand and take notice that something...

For A Nation That Obsessed With What "Is" Is, We Can Now Wonder What "Net" Is

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Thu, 11/03/2011 - 11:12 | 1841524 whatsinaname
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I see LOTS of MSM articles these days harping on the shale NG boom in N Dakota, Eastern Ohio, Pennnsylvania and Texas. What is the potential impact of such a hypothetical boom on gasoline prices in the US, the USD and economy in general ? Is that the panacea for all our ills ? Wonder if some oil experts would care to comment..

Thu, 11/03/2011 - 11:18 | 1841560 Flakmeister
Flakmeister's picture

It is a last desperate play at fossil fuels.... Money to be made, but certainly no panacea.

Look at the decline rates for the wells....

Thu, 11/03/2011 - 11:25 | 1841579 DormRoom
DormRoom's picture

yes, there's been a lot of scientific obfuscation of decline rates.  UPenn shale gas studies are funded by big natural gas firms, so I'd be dubious about their long term conclusion.


Also, there's always the problem with fracking leeching into the water table.


Sadly, like all assets in these modern times, shale gas is a built to  flip play.  CEOs @ Shale gas junior explorers, and big NG firms, investment banks make money on the bubble. And when it pops we have further misallocation, and possibly the poisoning of our water supply.


But if you make enough money, I guess you can buy an island off New Zealand and not have to worry about the environmental degradation, or long term sustainability of shale gas being part of the nation energy mix.


Thu, 11/03/2011 - 11:26 | 1841605 Pladizow
Pladizow's picture

"Basically I would want the data that I would have on my own positions."

Dont hold your breath - Jeffries will be a memory before that happens!

Thu, 11/03/2011 - 11:45 | 1841692 Hard1
Hard1's picture

What the article describes that they would want to see is exactly what reasonable accounting standards should require financial firms to disclose.  Not being able to see the detail, it is crazy to risk your money on "black box" trading positions, be it in the form of debt equity or any deposit above the government protection threshold. (unless you are banking with a greek, spaniard, italian, portuguese, french or american institution (FU-PIIGS)), in which case you shouldn't even trust the government protection threshold. 

Thu, 11/03/2011 - 11:19 | 1841564 ViewfromUnderth...
ViewfromUndertheBridge's picture

OT much?...if you really want to know FullerMoney have been covering this extensively and see strong potential for US self-suffiency in energy within 10 years...ties in to re-set and US isolationism/recovery...but don't let's get ahead of ourselves...

Thu, 11/03/2011 - 11:27 | 1841621 Flakmeister
Flakmeister's picture

The US peaked in NG production in 1970, that peak maybe surpassed because of the shale production but the US still imports NG. Moreover, it is a taint's width from becoming a net coal importer. See the third figure here


Do some research on your own and don't rely on the Koch Bros. for an analysis of the domestic energy prospects.

Start here http://www.theoildrum.com/node/8538

Thu, 11/03/2011 - 11:47 | 1841744 ViewfromUnderth...
ViewfromUndertheBridge's picture

+1 for caring & sharing Flakkie but maybe time to pump the brakes on the aggression...David Fuller is his own man and I did use the word "potential" did I not, he sees many issues and is no spruiker, he punts his own money and has an interesting community of followers and contributors...and has a track record spanning decades.

Thu, 11/03/2011 - 11:21 | 1841576 gmrpeabody
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You should lead off with an OT when you're coming from left field like that!

Thu, 11/03/2011 - 11:24 | 1841599 stirners_ghost
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Or affix "bitchez"--that fixes everything

Thu, 11/03/2011 - 11:29 | 1841631 gmrpeabody
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Bitch bitchez....,


Thu, 11/03/2011 - 11:24 | 1841601 Darth Sidious
Darth Sidious's picture

like everything else on wall street, shale gas is a sham. returns will not be nearly what is advertised both because decline rates are higher than advertised, but more important, the best areas and wells are being drilled now.  The inventory of wells to drill is not near what is advertised. Look at the results from the Barnett Shale which has the longest history. Also, return profiles are half cycle, not full cycle.  Full cycle includes lease costs and the time value between lease purchase and when the wells are drilled.  Marginal cost of natural gas is probably $6-7.  Today's bloomberg article on CHK was a joke.  How can you take seriously anything said by a ceo of company that has existed for 15+ years, has 12billion of paid in capital and only $400 million of retained earnings.  I'd bet that retained earnings gets written off just like the last time they had any.    hope that helps.

Thu, 11/03/2011 - 11:29 | 1841634 Flakmeister
Flakmeister's picture

Shale Gas is "booming" because it is the only game in town....


Thu, 11/03/2011 - 11:26 | 1841611 topcallingtroll
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There is a chance we are energy independent by 2025, but for how long?

Certainly bullish if extraction rates keep increasing.

Thu, 11/03/2011 - 11:31 | 1841651 Flakmeister
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See my comments above on the historical C/P ratios for oil, NG and Coal.... There is no energy independence....

Thu, 11/03/2011 - 14:26 | 1842539 earleflorida
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2020 max!

Thu, 11/03/2011 - 11:37 | 1841680 the grateful un...
the grateful unemployed's picture

speculators (and all commodities) get a lift from Fed policy, ZIRP, which was crafted to save the banking industry and a few homeowners who had no skin in the game anyway. as the cost of commodities threatens inflation the USG has to intervene in the exchanges which trade these commodites, to manipulate prices lower. UNG is the NatGas ETF, but exchange rules prohibit them from buying contracts in size to offset the number of shareholders they have, (USG wants to keep UNG out of the hands of speculators - read rational investors who see NatGas as a good investment) so the fund managers had to go to SWAPS to gain exposure.

you can currently fill up your Natgas car for about half of what gasoline costs. yes there are Natgas cars, and yes there are public fueling stations, but the powers in Washington are behind solar and electric cars.

many trucking companies (such as my waste management service) are already converting. within a year you will probably see Natgas at all major service stations.

as far as oil is concerned the POTUS is very much more interested in keeping oil prices high (he gets money to run the country from oil companies) he said Drill Baby Drill, before BP said Spill Baby Spill.

the reason for this is also that asset classes move together, crude oil goes to $50 and mortgage prices will follow. see first para.

there is no economic growth because of extend and pretend, and POTUS has to convince us he is really trying, when we know, he is really lying. now what this has to do with a chain of commodities and futures traders going belly up is that it makes their job easier, (manipulating the market, but remember they do this so inflation doesn't wreck everyones party)

and in full tinfoil hat mode, what I want to know is if MF global was holding all this Euro debt, who were they holding it for? initials BB ring a bell??

as far a political fallout lookout, Corzine is a highlevel Democrat and if it looks as though he is being given a get out of jail free card the Republicans might take POTUS to trash. in the past some of them have shown aversion to bailout and TBTF. but mostly they just want to win next fall, whatever that takes.



Thu, 11/03/2011 - 12:00 | 1841815 azusgm
azusgm's picture

Compressed natural gas school buses are already available. They cost $50-60k more than diesel, but have advantages.


Thu, 11/03/2011 - 12:19 | 1841911 the grateful un...
the grateful unemployed's picture

no way my trash co is paying that to retrofit, i just priced a conversion kit for my car, $599 plus the tank. maybe the WH has your figures

Thu, 11/03/2011 - 17:58 | 1843333 azusgm
azusgm's picture

Got that number from the school bus dealer.

Thu, 11/03/2011 - 14:27 | 1842549 earleflorida
earleflorida's picture


Thu, 11/03/2011 - 18:01 | 1843340 azusgm
azusgm's picture

Call a dealer and ask.

Thu, 11/03/2011 - 14:29 | 1842526 earleflorida
earleflorida's picture

fracking works great with the new lubricants, and technogies coming on line -

as far as leeching - high water table,  combined with shallow drilling and corrupt public officials with slack or  no gov't over-site -

note: fracking can be done anywhere and show positive results,...  but aquifers, and geological faults must be considered as we see in 'Appalachian- States' -     

lastly,... water treatment facilities should be constructed as a "Toxic Reclamation/Filtration Site" of waste water [solid & liquid] debris - accessible to all drilling platforms within designated area/parameters  throughout a defined network of hubs.

Important: Big Oil doesn't like the idea of someone budding in on their cash cow,... so they will do some corporate sabotage [physical malfeasance?] to poison the public's opinion - remember,... natural gas is being retrofitted to hundreds of thousand gov't/public municipalities/ etc., etc., vehicles today, at a cost of ~$3k-$4k/ each - saving on per vehicle using natural gas cuts fuel cost by ~ 60% 


Thu, 11/03/2011 - 11:15 | 1841543 Deadpool
Deadpool's picture

Silver analyst Ted Butler published his mid-week commentary yesterday...and here's a purloined paragraph for free...

"The first point about MF Global that I would like to make is that I believe the event was primarily responsible for the sudden take down in the price of silver and other commodities yesterday and Monday. Here’s my reasoning. MF Global was one of the largest clearing (guaranteeing) firms of all, including being the largest on the NYMEX/COMEX (according to MFG’s web site). Since we know that JPMorgan and other large commercial clearing firms on the COMEX are the big shorts in silver and therefore wouldn’t rely on MF Global for clearing purposes since they clear their own trades, it is most probable that MFG held a net long position for its customers in COMEX silver. Since the immediate fall-out of the race to bankruptcy was customer account freezing and then an order for liquidation only, it stands to reason that long silver contracts would be among the first to be liquidated, especially if prices started off lower just prior to the freeze (which they did). The resultant fall in the silver price fueled more silver long contract liquidation by MFG customers. As is the case in times of emergency and panic, more attention is given to those leveraged positions which continue to generate loss. Any short contracts held in liquidation-only accounts would tend not to get liquidated withy urgency, since they weren’t incurring losses on the downdraft in prices. This would explain why selling occurred even in commodities without a big speculative net long position, like copper."

Thu, 11/03/2011 - 11:20 | 1841569 the grateful un...
the grateful unemployed's picture

you don't need a conspiracy theory, but its nice. asset prices tend to fall as a class

Thu, 11/03/2011 - 11:16 | 1841545 jcaz
jcaz's picture

Of course it would make sense, if we could see a ledger book representation of postions;

But that would give away the whole scam, wouldn't it?

Music stop yet?

Thu, 11/03/2011 - 14:39 | 1842598 earleflorida
earleflorida's picture

reiteration ___ ex-anti [BS?] and Double-Entry Book-Keeping Accounts via "Trash Bin?"

current financial software is programmed  to loop around these red-flag integrity anomalous realities! 

Thu, 11/03/2011 - 11:16 | 1841546 Segestan
Segestan's picture

would you like a topping with that? ....that's extra.

Thu, 11/03/2011 - 11:16 | 1841549 Cone of Uncertainty
Cone of Uncertainty's picture

 Why is the market over-reacting when the entire fucking global fiat monetary system is based on nothing more than belief in the full faith and credit of dumb fuck politicians and central banking whores posing as stewards of the people's money?

Thu, 11/03/2011 - 11:18 | 1841558 the grateful un...
the grateful unemployed's picture

there's 1) the things you would like to know 2) the things you need to know and 3) the things they will tell you (which is one too many)

Thu, 11/03/2011 - 11:18 | 1841559 Chappy
Chappy's picture

I see this at work all the time.  People thrive on creating ambiguity and mystery around everything.  Asking relevant questions and uncovering the truth is frowned upon.  Issues are swept under the table.  This way all the people are fat, dumb, happy, in the dark ignorant.

Thu, 11/03/2011 - 11:20 | 1841570 ZeroPower
ZeroPower's picture

Yup, we have daily PnL aggregated across desks and asset classes which are eod sent to MDs, as well as DV01 PV01 (and CR01 for the credit/IR products), but id be extremely surprised if our MD our head would ever divulge any of that info to the public outside of the firm.

Thu, 11/03/2011 - 11:20 | 1841572 Dr. Engali
Dr. Engali's picture

Based on the longer term chart the market has been sniffing out JEF and their problems.

Thu, 11/03/2011 - 11:20 | 1841573 Doubleguns
Doubleguns's picture

I am curious if any cigars were used and are there any soiled dresses lurking in the "net". Stockings of course are possible since we are dealing with the definition of "net".

Thu, 11/03/2011 - 11:21 | 1841577 Doubleguns
Doubleguns's picture

I am curious if any cigars were used and are there any soiled dresses lurking in the "net". Stockings of course are possible since we are dealing with the definition of "net".

Thu, 11/03/2011 - 11:28 | 1841581 Mercury
Mercury's picture

One would think that if this were mostly an apples on this side vs. apples on that side situation then the principals themselves would be trumpeting that message from their ramparts at this point.

Thu, 11/03/2011 - 11:21 | 1841582 EZT
EZT's picture

I wonder if jameslist.com has an index of how many luxury items they have for sale now comparison too last year..

Thu, 11/03/2011 - 11:23 | 1841591 SheepDog-One
SheepDog-One's picture

The people of Europe, or Greece at least, better get a big net and throw it over these lunatic govt clowns quick or else theyre toast.

Thu, 11/03/2011 - 11:34 | 1841662 Rainman
Rainman's picture

Peter wants to open the black box...how silly...like he's going to find something good in there. Ponzinomics is the game !

Thu, 11/03/2011 - 11:34 | 1841666 Smiddywesson
Smiddywesson's picture

My guess is the market is over reacting and that the positions make sense in the scope of their primary dealer status and the details would show minimal risk on all proper credit risk measures. 

There's a lot of talk everywhere about how fragile the system is because known risks: derivatives, bankrupt banks, sovereign debt, you name it).  Maybe this underscores that just as much risk exists in over reaction to unknown risks.  Yes, things are very, very, bad, and they are interconnected, but the real stampede can come from the fact that the market is not transparent and everyone knows it.  Anything can cause a stampede at this point.

Thu, 11/03/2011 - 11:40 | 1841694 I am a Man I am...
I am a Man I am Forty's picture

If I was Jeffries and knew WTF I was doing I would throw all the details out there.  Show them everything, if I knew what I was doing and there was absolutely nothing to worry about.

Thu, 11/03/2011 - 11:50 | 1841757 alpha60
alpha60's picture

Net? Da-nyet.

Thu, 11/03/2011 - 11:50 | 1841758 azusgm
azusgm's picture

The term "net" always reminds me of this MIT lecture by Eric Rosenfield. It is a post-mortem on LTCM. One point that sticks with me is that in a liquidation event, paired trades become unpaired. So netting does not always happen as envisioned.


Thu, 11/03/2011 - 12:02 | 1841822 Piranhanoia
Piranhanoia's picture

You wish to know what must be concealed from you. It isn't that we don't have that information, it is just that it is not palatable in it's raw form. The "net" is as it has always been.  It is very large,  and has 4" holes in it everywhere.  How could we tell you what fell through the holes?  Don't be absurd, that is why it is called a net,  to catch everything.  

Thu, 11/03/2011 - 12:22 | 1841922 JPM Hater001
JPM Hater001's picture

Gross-net-DVo1--- It's all Greek to me...

I made a funny.

Thu, 11/03/2011 - 12:40 | 1842006 alexwest
alexwest's picture

##I would like to see gross and net by instrument. So bonds as one line item. CDS as another. Futures as another.

well I'm too.

also I'd like to make contest 'BRAZILIAN MOST HOTTEST TWINS' then I'd like see them to be engaged in hot steamy lezbian act.. you know what i mean ..

that will be all my wishes for today..


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