In March of 2005, Goldman Sachs kicked off the oil speculation boom by releasing a report that "Oil Could Spike to $105."
At the time oil was around $55 a barrel, already up considerably from $25 a barrel before the Iraq war (the second one) surprisingly caused oil prices to spike.
[Interesting note: The first Iraq war is what made our current President his first millions as he sold his stock the same month his dad invaded Iraq and spiked oil from $18 a barrel in July 1990 to $27 in August. After bankrupting his first company (aptly called Arbusto Energy), in which he was partners with Salem Bin Laden (Osama’s Father) through James Bath (who also worked with BCCI who conducted the largest bank fraud in US history while laundering gun money for George I in the 80s), Junior merged Arbusto with Spectrum 7, became the CEO and bankrupted them. Spectrum 7 was then sold to Harken with the financial help of BCCI’s Kalid bin Mahfouz, who took over for Bin Laden on his death and bought 17% of Harken in exchange for the Bush bail-out which ended up giving him 400,000 shares of Harken stock (Bush was investigated by the SEC but was cleared - how would he know his dad was going to invade Iraq?!?)...]
Anyway, so there was no way our President could have foreseen the impact that invading Iraq (again) would have on the American economy (or his family’s extensive oil holdings) but Goldman Sachs was on top of the situation as they were the largest trader of energy derivatives. Goldman’s 2005 report cited " Thin spare capacity in the energy supply chain, and long response times for bringing on supply additions, as well as robust demand in the United States and in developing heavyweights China and India, despite the recent rapid increase in energy costs."
Now that the mission has been accomplished at $105, Goldman (who has made record income on the massive increase in energy prices and energy trading even while losing their shirts on the other bubble, housing) has now upped the anti and is boosting their low-end range to $80 and says: "$200 a barrel could be a reality in the not-too-distant future in the case of a "major disruption"."
This report, released Monday morning by the same guy who was right about $105 (even though he said that would be a super-spike, not the norm), drove oil to $108 a barrel in Monday’s trading and knocked the markets right off their early morning recovery and sent them back towards the 1/22 lows.
What Goldman doesn’t explain though, is who is going to pay for this $200 a barrel oil? I pointed out to members of my site Monday afternoon that today’s $2 rise in oil prices will cost US consumers $280M next week. At 20M barrels a day of consumption, $200 a barrel oil would be $4Bn a day spent just on oil! That’s about $1Bn a day more than we’re paying now, $365Bn a year or double what Bush is dumping into the economy in order to shut us all up while oil goes over $105 a barrel while the dollar "super spikes" below 73.
SO you gonna ask me what does this have to do with Freddie Bush... Well here is the take for those of u that donot get the analogy.
In May 2007 Freddy authorized a $50 million share buy back out of which $9 million were spent on buying back shares at $7.00 a ADS. While share buyback is temporary boost like the Fed pumping $200 billion in liquidity yesterday, the fundamentals must hold.
The stock has been in a free fall and some very valuable funds like Tiger have exited. Now the one good thing Freddie did was bring in Yucaipa. Same as getting Bernanke to the job.
Now here is the silver lining. No one is calling a bottom on the $ nor a top on Oil, yet take it from me that Saudi will increase production in 2-weeks followed by other OPEC countries and Oil will begin a slow spiral down. The dollar will move up.
The same silver lining applies to XFML. As short interest hits a wall and the stock begins a return to the $4 level, it will then begin a slow and certain return to $8, then to $12 and onwards.
A change in political management is in the Offing with an end to the Bush era. Whether republicans or democrats win the policies will shift.
XFML needs a change in management. The China market is primed for capital. Advertising and new media is hot, just look at BIDU, FMCN, VISN trading at p/e of 107, 40 104 respectively.
The dollar is not going to zero nor is XFML. But neither is the dollar getting reverting with a 33% gain in 3 days. Neither is XFML. But 1 year from now you will all be glad you bought XFML and held. This is a 10 bagger provided Freddie does not - @#I$&& the ride.
SIMPLE MATHS at 60 PE you are looking and 0.46 cents for 2009 you are looking at a $ 28 stock. That is a 10 bagger and you would wish you had bought it at $2.50.
Dont let the bashers get to ya, they are well aware of this and every short is a long in wolf's clothing.