BLAVATNIK'S WALL STREET HISTORY - SHALE REVOLUTION - UKRAINE, RUSSIA & US GRAB FOR SUPPLY OF EUROPE'S ENERGY NEEDS

Forbes

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7/30/2014 @ 6:00AM |672 views

How One Billionaire's Bet On LyondellBasell Turned Into The Greatest Deal In Wall St. History
This story appears in the August 18, 2014 issue of Forbes.

Billionaire financier Len Blavatnik’s bet on LyondellBasell has netted him a personal profit of nearly $8 billion. He says there’s more to come.


http://www.forbes.com/sites/nathanvardi/2014/07/30/the-greatest-deal-of-all-time/?utm_campaign=forbestwittersf&utm_source=twitter&utm_medium=social

Confused Len Blavatnik (Warner Music guy) for the Black Wednesday guy that 'Broke the Bank of England' (George Soros) and I thought, no way, how could he have done it again.

If I've got this straight, some guys were selling stock in LyondellBasell; Blavatnik bought stock in LyondellBasell when everyone thought he shouldn't have and shares rose by over 50% since his last batch bought.

Since its bankruptcy - 4 years ago - shares in LyondellBasell have risen to return 500%.

Forbes says Blavatnik's investment ... of $10 billion [SORRY, I'M NOT GOOD AT FINANCIALS ... READ ARTICLE ... LOL] ... generated $8 billion in "mostly unrealized personal profits".

By 'mostly unrealised', I'm guessing they mean he hasn't cashed up what's due to him.

The transaction's described as 'historic'.

Here's some info about Blavatnik from Forbes:

A Ukrainian-born American citizen who grew up in Russia and immigrated to the U.S. in 1978 at the age of 21, he later got his M.B.A. at Harvard.

Blavatnik made his first fortune with a former classmate in Russia, Viktor Vekselberg, in oil and aluminum deals during the anything-goes post-Soviet days. 

Blavatnik’s biggest scores in Russia were oil company TNK-BP, a joint venture with British Petroleum that was eventually bought by Rosneft for $55 billion, and Sual, an aluminum producer that merged with the larger Rusal.

Chemical companies that had nothing to do with Russia would be his next big thing. He paid full price, putting down $1.1 billion to purchase Basell in a $5 billion leveraged buyout in 2005. Then he tried, and failed, to buy other chemical companies, including Huntsman International.

Just as my brain was about to go into snooze mode, I spotted this:

The revolution that changed everything for Blavatnik ... and LyondellBasell originated in the thin fissures of shale rock filled with oil and natural gas reserves throughout the United States. Throughout the last decade drillers pioneered new techniques of exploiting rock formations with hydraulic fracturing and horizontal drilling to draw out the petrochemicals trapped within. As a result, the U.S. became one of the world’s largest sources of cheap natural gas almost overnight, with prices falling from highs of $13 per million British thermal units to a $3 to $4 range today. This dramatic drop in prices proved a huge boon to dozens of industries, none more so than the chemical business–and few more than LyondellBasell.

LyondellBasell is a top producer of ethylene, which it upgrades into the plastic known as polyethylene, used in everything from food packaging to trash bags and hard hats. The company operates six facilities (known as “crackers”) to produce ethylene in the U.S. and four in Europe. Profits from ethylene and its derivative chemicals and coproducts are the core of LyondellBasell’s earnings.

Ethane, refined from natural gas, and naphtha, a crude oil derivative, are the prime raw materials used to produce ethylene. Starting in 2007, U.S. drillers were finding natural gas everywhere. By 2012 the price of ethane had fallen from 90 cents per gallon to 30 cents, giving U.S. chemical producers a huge advantage over foreign competitors in Europe and Asia that are dependent on pricey oil-based naphtha as a feedstock. The gap between the two supercharged LyondellBasell’s profitability.

LyondellBasell’s decades-old crackers in Clinton, Iowa and Morris, Ill., for example, are the only ones in the Midwest–and are situated near natural gas liquid pipelines and a hub in Kansas, home of some of the cheapest ethane in America. Almost overnight they were transformed, churning out profit margins of 32 cents per pound compared to European naphtha-based ethylene, which is barely even profitable. “It’s improbable that anyone could have foreseen the full impact of the shale revolution,” says Blavatnik. “But Jim had some experience and insight through his work at ConocoPhillips that I think helped.”

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So the US presence in Ukraine isn't just about Ukraine.  It's about supplying Europe with gas.

Although this was said in this or that blog or whatever I'd come across, it hadn't really sunk in properly.

Reading this, I got a really sick feeling in my stomach because the US need for a market is tangible -- it's not just someone speculating about US motives.  It's real.

OMG!  I feel like I've just discovered another planet!

TRADING ECONOMICS

Found a really cool site 'Trading Economics' - here.

Love how the information is arranged.  Even though I'm not especially organised, I really love organised information.

It seems a good site for sticky-beaking into GDP and debt to GDP particulars of countries, as well as a host of other related information (I've yet to check out).

US debt-GDP is over 100%.  But the US economy is on top of the heap in terms of GDP.

The EU collective is next.  Followed by China, Japan, Germany, France, UK, Brazil and Russia.

Russia's debt-GDP looks to be the lowest of the pack.  

Japan, US, France and UK have the highest debt-GDP rankings.

This is embarrassing:  I've only a vague idea what inflation actually is.   

Venezuela's is off the planet. 

So what is it?  The following is info sourced from an 'Inflation Tutorial' - here.

It's the annual percentage increase in the cost of goods and services.  As inflation rises, the currency buys you less in goods and services.  

Two theories re rising inflation:

1. too few goods to meet buyer demand; or
2. rising costs of production.

In high inflation cases, domestic export products become 'less competitive' -- meaning what?  Guessing they're not as saleable as goods from countries with lower inflation rates.

So the goal must be to keep (a) production costs low and (b) production high?

So is this a never-ending loop of economic infinity to Infinity? 

Production will never be enough and profit will never be enough.  

It's a process of churning things out of the soil and out of factories so that we buy and have 'things', while those that control production have profits.

An endless loop of churning out and selling things for profits sounds pointless and probably unsustainable.  But there's no alternative. 

Gradually rising, or controlled, inflation isn't supposed to be a big deal (I think) ... as long as the wages rise corresponding to inflation.  

I'm guessing that workers then have to constantly battle for an increase in wages to keep in step with inflation.  

Where there's a strong union, that's probably easy.  But not everyone has a strong union -- or any union -- representation.  

A lack of inflation can signify a weakening economy, according to the 'Inflation Tutorial'.

Interest rates are closely associated with inflation figures.  

Reserve banks take inflation calculation data into account when calculating the figures that set interest rates.  Tutorial on that is here if anyone's real keen.

RUPERT MURDOCH - on redtape & stifled economic growth

uk.news.yahoo.com

Murdoch tells G20 governments to take a back seat for growth
By Jane Wardell | Reuters – 15 minutes ago

By Jane Wardell

SYDNEY (Reuters) - Media mogul Rupert Murdoch ... criticised excessive financial regulation as stymieing free markets and urged Group of 20 governments to "take a back seat" to allow businesses to drive economic growth.

Murdoch also said U.S. President Barack Obama was penalising businesses by cracking down on so-called "profit shifting" by major corporations to countries with lighter tax regimes, a technique that is also in the sights of the G20.

"My blood pressure goes up when I think of the number of local, state and federal regulations we have in our lives today," Murdoch told a meeting of the Business 20 leaders in Sydney...

"That is just in America. Don't even get me started on the European Union."

The B20 was set up in 2010 to give policy recommendations on behalf of the international business community to the G20. Business leaders meeting here are looking to influence the outcome of the G20 Leaders Summit in Brisbane in November.

"I believe that business does have a role in shaping public policy, mainly in helping limit the size and scope of government," Murdoch said.

"... too much red tape, too many subservient politicians stifling economic growth and entrepreneurism."

...G20 is tackling corporate "profit shifting", which has allowed multinationals such as Starbucks Corp, Google Inc, Apple Inc and Amazon.com Inc to avoid paying taxes.

G20 finance ministers ... endorsed a set of common standards for sharing bank account information across borders, with automatic exchange of information among G20 members to take effect by the end of 2015. [WORLDWIDE POLICE STATE???]

Obama ...  proposed tightening restrictions on U.S. multinationals that shift their tax domiciles abroad ... Obama wants to raise the minimum level of foreign ownership in a newly inverted holding company to 50 percent from about 20 percent, making the deals more difficult to carry out.

"Do we really expect overseas companies to voluntarily bring profits back to be taxed at 35 to 40 percent in the United States, when the corporate tax rate in Ireland is 12.5 percent?" Murdoch said. "This is not the way to achieve economic growth."
...

SOURCE - uk.news.yahoo.com - here.

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COMMENT

So US is a corporate free-for-all.  BUT with a proviso -- keep it in the US?

The 'international' bank account sharing is getting a bit much.

 [WIKIPEDIA]

Wider concerns

The G-20's transparency and accountability have been questioned by critics, who call attention to the absence of a formal charter and the fact that the most important G-20 meetings are closed-door.

The cost and extent of summit-related security is often a contentious issue in the hosting country... 2010, the Toronto G-20 summit sparked mass protests and rioting, leading to the largest mass arrest in Canadian history.

He's right about the red-tape.

Also, all these extra-national gangs are just another step to world totalitarianism -- or something like that.  LOL.  

It just doesn't seem right - all this global ganging up, bullying, controlling, prying etc. 

Sovereignty, Democracy & IMF - Finance Today is War By Non-military Means

ARTICLE - Sri Lankan Guardian - here.

Published On:Thursday, July 10, 2014

Posted by Sri Lanka Guardian

At Issue Is Who Shall Rule The World

Interview With Michael Hudson

 

( July 10, 2014, Moscow, Sri Lanka Guardian) RT: Could you summarize for us the tried and tested steps that will lead from IMF loans, to Ukraine's best assets ending up in private Western hands - the IMF's 'knee-breaker' role as you memorably described it as?

 

Michael Hudson: The basic principle to bear in mind is that finance today is war by non-military means. The aim of getting a country in debt is to obtain its economic surplus, ending up with its property. The main property to obtain is that which can produce exports and generate foreign exchange. For Ukraine, this means mainly the Eastern manufacturing and mining companies, which presently are held in the hands of the oligarchs. For foreign investors, the problem is how to transfer these assets and their revenue into foreign hands – in an economy whose international payments are in chronic deficit as a result of the failed post-1991 restructuring. That is where the IMF comes in.

The IMF was not set up to finance domestic government budget deficits. Its loans are earmarked to pay foreign creditors, mainly to maintain a country’s exchange rate. The effect usually is to subsidize flight capital out of the country ..

...

RT: Anything else you would like to add?

MH: What is at issue is whether economies throughout the world will let financial leverage dismantle the power of elected governments, and hence of democracy. Governments are sovereign. No government actually needs to pay foreign debts or submit to policies that negate the three definitions of a state: to create its own money, to levy taxes, and to declare war.

At issue is who shall rule the world: the emerging 1% as a financial oligarchy, or elected governments. The two sets of aims are antithetical: rising living standards and national independence, or a renting economy, austerity and international dependency.

PART only -- FULL article here.
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COMMENT

Full article well worth a read ... too long to post here & poster's too ditzy to summarise.  :)