I am noting several stories about liquidity drying up in the financial markets. All the Greedspinning in the world won't stop the big institutional investors from moving their chips to the sidelines for the end of the year. In a word, it's gonna get ugly. Husseins little gambit is only the beginning of the type of geopolitical shenanigans likely to take place in the comming weeks. If you're a little guy it's time to get off the streets of dodge. If you're a medium guy likewise. These will be interesting times. Here's some current but somewhat droll and hackneyed Y2K oil articles. It's all over but the shoutin here soon. I stopped responding to retards who espouse the no big deal theories a while ago. When your friends are asked to man state EOC's, when friends you know on local SWAT teams tell you they'll be "at the armory on standby with a team of Blackhawks" for New Years, when every pipe, ship and refinery you can imagine is gonna scale back ops for a risky time period, when crude oil futures go bonkers, gasoline goes bonkers, distillates...well you get the picture. It ain't normal, the risks are real. There will be no smoking gun. We haven't fixed it all. Things will be missed that will cause harm to people in foreign lands and here due to hubris. Get to your preps. You don't have much time. The herd has chosen to move into the slaughterhouse quietly. To bad for them. They believe the kind of crap that's written below for educational and perspective purposes only:

FEATURE-Gulf oil giants brace for Y2K showdown By Michael Georgy DUBAI, Nov 22 (Reuters) - Giant Gulf oil producers are scrambling to exterminate the Year 2000 millennium bug with no guarantees that they will be able to thwart the potential computer glitch from sabotaging millions of dollars in exports. From Saudi Arabia -- the world's biggest exporter -- to smaller Gulf oil countries like Oman, state firms seem confident they will keep the oil flowing. But experts say Gulf states, which sit on nearly half of the world's oil reserves, cannot afford to let their guard down in the countdown to 2000. Industries around the globe are bracing for a potential coding glitch that could cause computers and embedded chips to misread 2000 for 1900, threatening economic chaos. The Y2K frenzy has spread to the Gulf, where a disruption in exports would hit oil-dependent economies and leave customers in key consuming markets without crucial fuel supplies. SAUDI ARABIA BEST PREPARED A U.S. Senate report on the Y2K status of oil imports based on data from information technology research firm Gartner Group put Saudi Arabia and Kuwait in the "high risk of disruption" category. It left a question mark over Iraq. But experts say OPEC kingpin Saudi Arabia appears to be in the strongest position to combat the bug in the region. The kingdom has turned to the Internet to highlight efforts to keep its crude moving, detailing everything from contingency plans to external and third party interface strategy. "Saudi Aramco acknowledges that there remains a risk of Year 2000 associated business interruptions. To meet this challenge, the company must be prepared to manage the risk," the state oil firm said on its regularly updated Y2K website. Oil experts said Saudi Arabia could always draw on its vast worldwide oil resources to cope with any Y2K problems. "The Saudis have got so much excess capacity that even if there were some problems I can't see anything but a temporary problem," said Mehdi Varzi of Dresdner Kleinwort Benson. "They have got tens of millions of barrels stored outside Saudi Arabia. This tends to minimise fears," he added. IRAQI OIL INDUSTRY EXPOSED Kuwait has said it conducted successful tests for the smooth running of oil exports but diplomats have said its Y2K compliance programme appeared to face delays earlier this year. The picture is not so reassuring elsewhere in the Gulf. Iraq, currently the Organisation of the Petroleum Exporting Countries' (OPEC) third largest producer, may be forced to shut down production because it is not prepared to deal with Y2K. An industry source in Baghdad has said Iraqi oil officials wanted to avoid the heavy cost of tackling the Y2K problem. That could mean fresh pressure on Iraq's oil industry, which is cranking up output despite eight years of crippling U.N. sanctions imposed after Iraqi troops invaded Kuwait in 1990. Major importers like the United States, dependent on Gulf oil, are not taking any chances. They are expected to stock up on supplies ahead of the New Year. U.S. oil companies that have made fortunes in the Gulf have spent years and millions of dollars preparing for Y2K. "We conducted tests in our operations in Saudi Arabia, Bahrain and Qatar and we are in good shape," said a Chevron Corp official based in the Gulf. SMALL PRODUCERS HIT Y2K BATTLEFIELD The region's smaller oil producers have also enlisted in the fight against the millennium bug. OPEC's smallest producer Qatar, which sits on the world's third largest gas reserves, said it is Y2K ready. "All systems and equipment have been made Y2K compliant and now the certification process is on," said a Qatar General Petroleum Corp official. Non-OPEC medium producer Oman has turned to Royal Dutch/Shell to spearhead its Y2K programme. "We are faced by the challenge of interrupted production and exports of Oman's crude oil in the face of the millennium bug. The whole economy of the country could be in a shamble if we don't get it right," said Lot Bouma, Petroleum Development Oman's Computing and Communications Director. Hard facts on exactly what preparations have been made and how much money has been spent on Y2K compliance efforts in the Gulf is difficult to obtain. Iran is one of the world's biggest producers but its computer systems are old, raising questions about how vulnerable OPEC's second largest producer will be to the millennium bug. The head of the country's Y2K compliance programme has said Iran's two newest refineries at Bandar Abbas and Arak face possible disruptions but other complexes are not vulnerable because they do not have date-embedded computer systems. "It's so difficult to know the honest answer. My only view on the Iranian side is that not all the industry has been fully computerised, only in the past year or two," said Dresdner Kleinwort Benson's Varzi. "Until now a lot of the oil well logging is done by hand. I don't think Iran has too much to worry about also because it has 30 million odd barrels stored in Gulf tankers ready to go." Some Middle East oil veterans are playing down the computer glitch issue. "These countries have an amazing ability to fix things when they go wrong. It could cause some hiccups but I am sure they will take care of it," said a U.S. oil executive. ((Gulf newsroom, +971 4 627918, fax +971 4 626982, dubai.newsroom@reuters.com)) [C] [D] [E] [M] [O] [T] [U] [MTL] [GRO] [SOF] [OIL] [CGO] [MD] [MEAST] [SHP] [SA] [IR] [KW] [IQ] [AE] [QA] [OM] [DPR] [CRU] [PROD] [ENQ] [ENR] [Y2K] [US] [LEN] [RTRS]

Kuwait reassures citizens on Y2K compliance KUWAIT, Nov 22 (Reuters) - Kuwait on Monday assured citizens of a high Y2K compliance level of all essential services and urged them to ignore rumours and "exaggerated" statements. The government said in an advertisement in local dailies, "we can state that what has been accomplished so far is very satisfactory. Most government organisations...have already declared the completion of all necessary solutions. "...the Y2k compliance and readiness of vital governmental organisations, such as Ministries of Electricity and Water, Interior, Health and Communications, are very high," it added in an English-language statement. The Oil Ministry of the OPEC member has already said it had conducted successful tests and did not expect any major millennium bug-related disruptions. Earlier this month, the Central Bank said all local banks ran successful tests. The latest statement by the country's Y2K National Central Team told the 2.2 million population "to pay no attention to pessimistic or exaggerated unofficial statements....Some organisations are currently in the final stages of completing their solutions before the end of this year." [G] [E] [D] [T] [MD] [O] [RNP] [MEAST] [OPEC] [EMRG] [KW] [Y2K] [TEL] [CRU] [NEWS] [BNK] [LEN] [RTRS]

354--Iran oil ministry outlines Y2K preparations Iran (BBC)--21Nov1999/1006 pm EST/306 GMT Year 2000 Crisis Committee at the Ministry of Oil, Mohammad Sa'adatvand, said that there will be no major breakdowns in the transfer and supply of oil and gasoline, "the National Iranian Oil Production and Distribution Company has prepared contingency plans for transporting oil products." "The only problem which may arise with respect to distribution of gasoline, kerosene and diesel is a decline in the production of the refineries across the nation," he said. Sa'adatvand noted that out of the nine refineries which are in operation, seven will not be affected by the Y2K bug as they are not using computerized technology. The two remaining refining units (in Arak and Bandar Abbas), but might face discrepancies in their computer systems, "Bandar Abbas refinery have managed to change the date," he noted. --Platt's Global Alert-- [0354] [PG] [P] [GE] [PJ] [N] [QQ]

-- Gordon (g_gecko_69@hotmail.com), November 22, 1999

Answers

Gordon, good to see you again.

Keep your back covered, things have been pretty wild here lately.

-- mushroom (mushroom_bs_too_long@yahoo.com), November 22, 1999.

GORDON:

Good to see a post from you today! Was beginning to think the gubmint gotcha.

I made a directly-related point a few nights ago here--that the parabolic(exponential) rise in the Nasdaq indexes REQUIRES an exponentially increasing inflow to prop them up. If we see ANY "selling at the margins", a critical point first made to me in 1995 in market theory by Leo Hood, a newsletter writer,then this market will fall FASTER than it blew upward.

Since even on "good" DJIA days like today we are seeing HORRIBLE breadth and A/D lines, , and this has been going on all November except for 3 days, it will take only a small shift of fractions of 1% towards the sell side to collapse this market. It's actually happening in the BROADER market!

For what to expect, go to www.wavechart.com

I can't give out specifics, but suffice to say that an "inverted flat" has almost finished the second of its 3 legs, and guess where the 3rd leg points to?

My bottom line is that anytime I hear the government spouting nothing but good and great news, on EVERY topic, IT'S ALL LIES. The real world just does not operate that perfectly and in harmony, yet that is what the markets have priced into stocks--perpetual blue skies.

It's the little guy's way of playing "Who wants to be a Millionaire?"

But, like 1929, when the dust settles, there will be FEWER , many fewer, than existed before the hysteria.

-- profit of doom (doom@helltopay.ca), November 22, 1999.

Gordon, thanks for all your heads ups. You OIL folks post really interesting important information. Frightening how deeply oil has permeated modern Way Of Life. Man has sucked the lubrication out of the joints of Earth and redistributed it in bits and bytes of trash and particulate in the atmosphere. Earthquakes and severe planetary arthritis result. And when the lubrication is yanked away -- Collapse. Nobody can help the Tin Man then.

-- Ashton & Leska in Cascadia (allaha@earthlink.net), November 22, 1999.

Glad to see you Gordon, I have a question.

OPEC is producing on a quota basis, which is pushing up the price of oil. With Iraq withholding oil for food deal, could not OPEC provide the differance. It has been noted here the fact that Iran has 30 million bls stored in ships ready to sail, her producing wells not capable of restricted production. It would seem these bls must be moved to market or additional storage found.

What gives?

-- Tommy Rogers (Been there@Just a Thought.com), November 22, 1999.

Reading a novel: THE BIG BUBBLE about the real estate boom in Florida in the 1920s. Exactly this market. They thought nothing could go wrong, until one group pulled the plug and ...swish! Overnight millionaires were paupers again. Fabulous description of the mania and the reality call.

-- Mara (MaraWayne@aol.com), November 22, 1999.

It lookslike they are consciously setting up for 1929 again as they have just cut the margin requirements not BY 25% but TO 25 % of before. MARGIN is what greases the skids of a crash.

Chuck

-- Chuck, a night driver (rienzoo@en.com), November 23, 1999.

Liquidity, we don't need no stinkin liquidity, do we boys...

And you have hit the crux of the matter. How do markets work without all those big money people shuffling things around for a percentage? At some point even the institutions (hell, especially the institutions) have to decide that ok music stopping I'm grabbing my chair (read exit stage left). What do we do then?

The little guy will get hammered. By the time the little guy attempts to respond to the panic it will be too late. Internet forget it, phone Beep... Beeep.... Beeep... you can watch the circuit breakers trip but the order imballances will be tremendous. There are "experts" advising to get in now before the January post y2k buying frenzy (Huh????). The assumption being that since the collective society has decided that its no big deal then by golly it must be no big deal.

The last suckers are being led in to take the paper off the big boys. All those 401k's with the (paranthetic) ballances. There are hundreds of thousands if not millions born every minute, P.T. Barnum knew this.

-- squid (Itsdark@down.here), November 23, 1999.

http://www.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=001nPd

Link

http://biz.yahoo.com/rf/991117/bco.html

Link

Wednesday November 17, 7:10 pm Eastern Time

Fed's Y2K liquidity measures keep markets calm

By Ross Finley

NEW YORK, Nov 17 (Reuters) - While the Federal Reserve has financial markets guessing whether Tuesday's interest-rate increase may be the last for several months, the central bank has taken great pains to quell fears about year-end liquidity.

The Fed has put in place a series of measures to make sure markets work smoothly when the clocks on the world's computers change over to 2000 and investors decide whether to hold their positions or convert to cash because of fears of technology-related disruptions on the financial markets.

New York Federal Reserve Bank President William McDonough affirmed on Wednesday that the Fed had ``gone a long way'' toward addressing year-end liquidity fears that peaked in August and September of this year.

Analysts, economists, market players and primary dealers -- the firms that conduct securities transactions with the New York Fed -- agreed.

``It's certainly been useful -- it's a valuable backstop to have there. The mere fact that the Fed has been so aggressive has been helpful,'' said Lou Crandall, chief economist at R.H. Wrightson & Associates.

Economists also say market interest in the Fed's new liquidity insurance scheme means investors are approaching the issue calmly rather than with panic.

Until the Fed came to the rescue, many investors said they were content to park money in safe, liquid short-term U.S. Treasuries and keep their money away from riskier assets such as stocks or debt from corporations and government-sponsored agencies. If that occurred, it might have led to a liquidity squeeze similar to what was seen last year at this time.

Instead, stocks have rallied and so-called spread products have also performed rather well.

But many analysts added that the bond market's resilience running into the last quarter before the date changes to 2000 is only partly a result of the Fed's preemptive measures.

Crandall cited the concern several months ago in the corporate bond and mortgage-backed markets about widening of spreads -- which indicated a preference by investors for Treasuries, securities which are much easier to turn over in the event of a crisis.

``We've seen liquidity in lots of other markets hold up,'' Crandall said. ``The corporate bond market had this expectation spreads would widen dramatically and they haven't.''

One of the Fed's main tools in fighting Y2K fears is STRIPs options -- securities that allow dealers to cash in the value of the option on one of three maturity dates offered.

This ability to exchange STRIPs for cash readily if needed is the kind of safety net prudent dealers crave as insurance against a year- end liquidity crunch. The December 30 maturity date, two days before computer clocks change over, has met the highest demand. The other two maturities are December 23 and January 6.

The Fed has auctioned five separate offerings of STRIPs since October 20, all of which have generated widespread interest, according to the New York Fed.

``There has been a tremendous amount of interest in the options auctions that have taken place,'' the New York Fed's McDonough said on Wednesday.

Analysts say that with five of seven STRIPs options auctions already behind them -- totaling just over $370 billion -- many market players who were concerned about cash on hand at year-end have already taken out their respective millennium insurance policies and are now sitting comfortably.

Citing strong demand, the Fed on November 4 added two additional STRIPs auctions to the original total of five and said it could add more if there were a further strengthening in demand.

The Fed has twice increased the amount of securities offered in individual auctions, also citing increased demand. But the amounts offered in the November 17 auctions decreased slightly, indicating the market may be more confident about year-end cash flows.

``In terms of why they were recently cut back, I would say it could reflect a number of things -- perhaps some greater confidence in the market about Y2K itself and how it will go,'' said Spence Hilton, associate vice president at the Federal Reserve Bank of New York.

In addition to the STRIPs auctions, the New York Fed also announced in September that it would begin entering into repurchase transactions with maturities up to 90 days, up from the previous maximum period of 60 days.

The Fed has already tied up approximately $30 billion in long-term repurchase agreements, a further reinforcement against liquidity concerns in the repo market.

``The only risk at this point is customers -- and by that I mean mutual funds having large withdrawals at the end of the term,'' said Marc Wanshel, economist at J.P. Morgan & Co. ``But the dealers, I think, are very comfortable.''

Vincent Verterano, head government bond trader at Nomura Securities International, said the STRIPs options provide good insurance for dealers who need extra liquidity toward year-end. But he underlined that insurance doesn't come for free.

``The Fed's going to make a ton of money on this,'' Verterano said. ``Chances are they (the options) are not going to be exercised.''

The interest rate on options is 150 basis points (1-1/2 percentage points) above the Federal funds rate, now at 5.50 percent, but traders see the insurance as cheap.

Before Wednesday's auction, the total amount the Fed had received in premiums was ``just shy of $5 million -- a little bit more with today's sale,'' Hilton said.

Many traders say that the premium is a small price to pay for what amounts to peace of mind running up to the new year.

In addition to the options auctions, The Fed now accepts a broader range of collateral for its open market repurchase operations. And it introduced in September a special facility to ease pressure on smaller regional banks toward year-end.

Despite the fact few banks have stepped forward and used the facility, Crandall and other analysts acknowledged that the very fact the Fed made the liquidity facility available to small banks if they needed it was a positive step forward.



-- (M@rket.trends), November 23, 1999.

Great Brain Geeko,

Geez---Oil falling today!!! Wonder if Oil could do the same thing Gold did a month ago!! When do those $30bbl options expire??

Your buddy---Buttsomething-

-- d.Butts (dciinc@aol.com), November 23, 1999.