World Hostility & YOUR Assets
Chris Laird
In Russia and Indonesia, two ongoing disputes involving force by governments are making businesses uneasy... One, involving the oil giant YUKOS, has Russia expropriating YUKOS assets and even Yukos executives. This is making the Russian private sector very nervous. Russia has a HISTORY of subjugation, they are reverting...The other story involving Newmont
mines in Indonesia; It started with accusations of mercury poisoning, and rapidly resulted in the arrest and pending trial of 5 Newmont employees...and all this in relatively benign times...
Does this suggest that in these times businesses are subject to shakedowns? Yes I think so... but even more importantly, is the implied threat to the economic world that we live in so dependent upon oil
from YUKOS, or gold from Newmont....or any essential and valuable commodity overseas.
We have all grown up in a time where there was more or less basic predictability of the overall economic environment of our world, we think we can hedge our futures by our up to date knowledge, up to date planning for the future, investments etc...and most of that thinking is based on PAST KNOWLEDGE, past PARADIGMS.
We think we can ensure our destiny...but we are THINKING in terms of the past, when the US was more respected, when we could invest in a company and be sure if the assets were attacked, we'd be somewhat protected... no longer... the times have changed...are changing right now.
No longer can we have the leave it to beaver mindset. IE Our world will just RUN along more or less with the cooperation of the world Nations... things will be protected, worked out etc. BUT, Now a-times, the only thing that will work is big bribes to the latest thug in charge., And when he is killed then the bribes to the next thug.
Do you really think that the world will spend its time and political capital protecting YOUR investments when they have 10 million screaming Zulus at their doorstep? Or 10 million screaming Moslems?
But, I believe we are entering a time where, when there is an economic catastrophe of large scale (like a worldwide depression), all fine assets, oil or gold will be nationalized by the nations they PHYSICALLY ABIDE in...You can kiss your foreign assets goodbye in such scenarios... at the very least they will be subject to horrendous fines, taxes levied, lawsuits,
expropriation....
We all will be wondering then, and we should be now, about the viability of assets that are in foreign hands.... My friends, we have to start thinking
differently now.
Ok this is the deal... since the world is headed for a financial crisis,(I believe this and if you don't then don't bother reading on) one that will envelope
the world not just a part of the world... what chances do you give to premier assets in dire times that could be nationalized, confiscated, burned, attacked, attached and taxed out of existence...? It reminds me of my refrain in Subsistence Crisis, where I asked this question: "If the world financial landscape collapsed right now, where would you be, would you be ready?"
I think this question applies not only to a person, but to his portfolio, his investments -- his life's work. I will wager right here that when the crisis we
are all expecting that is talked about by all of us here at GOLD-EAGLE.com, and in our readership's minds... that crisis will just shut down any viability of overseas investments... China, Africa, Indonesia, wherever. They will all be nationalized, attacked by Zulus, whatever, sued... tied up... u wont get a friggin dime out of it...
We have to start thinking right now about assets and what they are depending on. Are you THERE, where your assets are? Does YOUR GOVERNMENT have say over those lands, do YOUR COURTS have jurisdiction? Does YOUR ARMY protect you? Or does THEIR ARMY? We need to start thinking along these lines, the sooner the better.
Let us get to the two cases Yukos vs the Russian government and Newmont vs Indonesia.
In Russia, Khodorkovsky bought most of Yukos oil assets when Russia liberalized after Reagan's time. He is considered a pirate by the Russian authorities, true or not, they have taken his assets away... and locked him up in prison, when he broke a verbal agreement not to run for the Russian presidency...
Now YUKOS is being sold off as we speak, after being taxed for oh 10 billion bucks or thereabout, as a result they went through various cash crises, making deals with CHINA, a major customer, for oil deliveries, with the Chinese paying the rail freight... etc IE YUKOS cannot be out of operation for long.
One of Yukos' finance people is out of sight, fleeing Russia into the free world.
Yukos is attempting to block its sale in a Western court.. a lot of good that is going to do... you see the OIL IS IN RUSSIA. The Chinese are buying it with prepaid shipping... so what is the West going to do eh? Send an army? I don't think so.
So then, this is a story of premier oil assets being locked up and expropriated. A big part of the world production too. In a coming economic crisis, how many such assets are going to go this route? What about the
Saudis with about 30 percent of all known world oil reserves? Who is next? I wouldn't invest a dime in the middle east, it doesn't matter how much oil they have; they have a lot of pissed off poor Moslems. And so on.
Now to Indonesia
There is a recent story out of Newmont's mine in Indonesia located at Buyat Bay. It seems that, while Newmont has been doing its thing, some people came along and claimed there is mercury poisoning in the bay. So, Indonesia arrested 5 Newmont employees and is going to try them. But it turns our that independent water tests have verified there are just normal levels
of mercury. That doesn't matter. The Newmont guys are going to be tried....Who knows what the people over there want, maybe only 10 million in shakedown money?
Heres the article:
BBC
http://news.bbc.co.uk/1/hi/world/asia-pacific/3755116.stm
"Newmont cleared in Indonesia
Indonesian authorities say they have found no traces of mercury pollution in Buyat Bay, the site of a mine operated by US mining giant Newmont.
Local people had protested that the firm was polluting the bay causing a health risk, and five company employees have been detained by police...
A Newmont lawyer said the company would now request the release of the five employees.
...A government fact-finding team concluded that the local Newmont firm, Minahasa Raya, had not polluted the water in Buyat Bay with excess mercury.
It said that "all the parameters of water quality are well within standard...
But five employees, including an Australian and a American, have been in police custody since September."
There's more to this story, but basically these guys are going to be tried. Now I ask you, in a real crisis, when the world is literally shutting down, not
like today when things are relatively calm, but is a real crisis world wide, how much would you give for foreign assets, in Russia, Indonesia, wherever?
In a true global financial crisis lasting ten years, all valuable foreign assets will be nationalized and expropriated by their host nations. It will be done in the name of a true legit emergency. They will use the assets for their own purposes, foreign investors will be stiffed. The signs of world hostility to foreign investors, particularly western investors are increasing, and are only beginning. When we have the economic crisis we expect I wouldn't
count on money invested in large foreign assets. You need your money here. You wont have it over there anyway, when its needed. You wont be able to go to court and get any redress, or if you do it will be lucky to be resolved in maybe 5 or 10 years.
World hostility to foreign investors needs to be considered when putting your precious money into assets out of country. This is more true today than
ever.
Newsletter update: The newsletter is going to come up very soon, when I'm happy that a good first issue is ready, and the site has all its basic functions up and is clean and ready... the hamster spins the wheel, progress occurs, soon it will be a reality... let me know what you think...
PS, I've gotten all kinds of fascinating emails about the proposed site and the articles I've posted at GOLD-EAGLE.com, to be included here and there in editorials, with permission of course : ) Hey this site is going to be sexy! I'm planning on making it a great newsletter; tho maybe simple at first, but the content will be to date, and insightful.
And get that Bleeping speculation mentality out of your head NOW. The speculation article was focused on real estate, but the themes apply to all our investing now. Make that your new year's resolution. The times we
live in are about capital protection not capital investment....that will be an editorial theme of the news letter...
Best in 2005,
December 27, 2004
Chris Laird
tec_10000@yahoo.com
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