US Occupation of Iraq

[KiLlEr]

for oil profit? They don't need a war for that. Oil prices were already on the rise in the mid 90s due to futures speculation. Terrorism and war didn't help, neither did the fact that the largest refineries in the US were damaged (one of them severely) by Katrina. Our off shore rigs were also damaged. The main cause of the raise of oil prices is due to the following:

- a mid 90's report that forecasted oil production to peak 2007-2010.
- Oil demand is rising 2% per year while oil production is constant.
- The standard of living in India and China is rising, use of oil by these countries is also rising.
- Fears that the rise in oil prices are a financial bubble that may burst, leading to another market crash equivalent to 1987.

Although the mid 90's report is controversial, oil speculators bought up futures when the report was made public. This caused the prices to rise, which caused more futures speculation, which again inflated oil prices, rinse, lather, repeat.

Side note:
Futures trading is simply is contractual agreement between a party and an oil producer. This agreement locks the purchase price of a oil, that will be purchased over time, into the future in order to lock in the price. This is necessary, as manufacturers estimate costs based on these figures. For example, Boeing agrees to sell 40 airplanes to Jet Blue. These planes aren't sitting in a lot. They are built to order. Likewise, the materials used to build these aircraft also do not site in a warehouse. In order to establish a sale price for the aircraft, Boeing needs to lock in the cost of aluminum, plastics, engines, hydrolic fluid, nuts, bolts, rivets, electronics etc. So it makes deals with its suppliers to lock in these prices. Thus, the aircraft purchase price set by Boeing (which is a futures agreement) is based on the futures agreements for the materials. Usually there is an option attached to the agreement which expires on a specific date. This date is the deadline at which the agreement is null and void, unless the option is exercised (i.e. the partial payment of the contract is remitted).

The problem with futures, is that it creates an artificial shortage in the future. For example, an oil production company (Mr O's oil company) can produce 10 million barrels of oil per month. The current price is say, 100USD a barrel. Exxon enters an agreement with the oil production company for 200 million barrels of oil over the next 6 years, delivered monthly. Assuming a fixed rate of inflation at 3% (unlikely), the dollar remains stable(unlikely), and oil prices remain fixed (HIGHLY unlikely) at the point the deal is made, (to make it simple I'll use the simple interest formula, but this is not what is used in practice, but it is sufficient for this step) the price would work out to:

(200 mil barrels * 100 usd/barrel) * 3%/100 inflation rate * 6 years = 3.6 billion usd of interest (to negate inflation)

Future cost of the oil:
3.6 billion usd + (200 mil barrels * 100 usd/barrel) = 23.6 bill usd

This makes the price per barrel: 23.6 bill usd / 200 million barrels = 118 usd per barrel

Why? The oil producer has to guarantee that they get interest, as a hedge against the risk of the barrel price changing due to (at least in my example) inflation. Of course, in reality, they have to hedge against foreign exchange risk (dollar fluctuations), projected increases in demand, and acts of God.

Keep in mind, the math is more complicated than this, as scaling is used to adjust the price over time. I'm keeping it "simple" just so you can see the effect on the price of oil.

So the price of oil just jumped from 100 to 118 USD per barrel.

On top of that, for the next 6 years, Mr. O's oil company's production "dropped" by 5,555,555 1/2 barrels a month. Although the oil is still in the ground it is now earmarked. So there is less oil to buy.

Now, this is justified since Exxon will use the oil (just like JetBlue and Boeing in my prior examples). However, future traders don't take the oil, they trade shares on the agreement. Which means: They sell off pieces of the deal (basically they sell the oil they just bought). They take advantage of the "drop" in oil production, to drive the barrel price up, making money off the difference between their agreement with the oil producer and the sale of the shares they sold. Basically, they are bidding on oil prices rising from the time they bought the oil to the point in time they sell the oil, without owning the actual oil barrels.

This is an artificially induced demand on oil, which causes an increase in our fuel prices.

This of course makes oil companies extremely rich, since the oil is worth more than it actually is.

This happened before 9/11. 9/11, Katrina, Middle East unrest affects Futures trading. When speculators are nervous, they over-value future trading, which works in the oil company's favor. But the price of oil was already over inflated. How much is due to the war? Probably not a whole lot to be honest. Katrina had far more impact since the refineries were off line, which has a far greater impact on fuel prices (without the refineries you can't produce fuel from crud oil). There is some impact, but it is short term as speculators are quick to react, and quick to forget. Longer term issues are cutting back of oil production, because many (such as key investors at Morgan Stanley) are afraid that we are riding on a bubble which can burst. This happened in the 80's when over production caused the oil market to crash leading to black monday in 1987. Due to these fears, production has been held or even cut back. This has greater effects on the futures market, since the forecasts predict possible cuts in oil production, either due to the peak production being reached, or fears of a burst.

[Taurec]

It's always about the money, with the invasion they wanted stability but boy did that went up in smoke...

Not to mention the holy mountains of golden reconstruction deals that the grateful happy liberated people of Iraq would give to Mr. Construction.

[KiLlEr]

Yes reconstruction is a cash cow indeed. }B>

[Taurec]

Now back to the fun stuff. had some time to filter a little information and picked out the "lowlights”.

Lies...

The Operation Iraqi Freedom started in 2003, For the following reasons:

- Reports made it clear that Saddam had WMD's
- Saddam had ties to Al Qaida.

(January 2005 the Iraq survey group concluded he didn't have em. In 2007 the UN stopped its own investigation.)
(Ties to Al Q. this month the Ministry of Defense concluded after a review of 600000 documents that in fact he didn't have ties to Al Q.
The press conference to make this announcement has been canceled and distribution of this report has been limited because it was
"politically sensitive".... )

--------------------------------------------
5 years of shit hitting the fan.

Please press the degauss button on your monitor when we move in the timeline for optimal dramatic effect.

*degauss*
March 20 2003: the Start of Operation Iraqi Freedom.

April 5 2003: USA takes Baghdad and didn't we all got a heart warming feeling when they took down the statues of Saddam.

May 1 2003: Bush claimed "mission accomplished."

November 15 2003: The temp. gov. of Iraq accepted the Bremer plan to return power 6/2004 and have a elections end of 2005

December 13 2003: After a little searching they found a trail of candy bar wraps to the secret "bad"cave and they found Saddam who looked like Chris Kringle - Ladies and Gentlemen, we got him.

March 8 2004 - Iraq signs the new constitution...

*degauss*
Meanwhile in the office of Mr. Bremer; "We didn't create enough shit, bring in some fans while I'll kick out 50000 members if the Baath Party" but we still don't have enough shit lets kick out 300000 Iraqi soldiers".
*degauss*

May 11/12 2004: Bremer managed to piss off and create 350000 new enemies.

2003/2004:
Major shit hit the fan, a lot of violence while the US army (size of 140000) is doing nothing when someone is having a "sale" in Saddams armories.
It's of course a ridiculous idea that they will use the weapons they have stolen against US soldiers.

April 2004: Abu Ghraib scandal.

May 2004: A Militant fraction released the Nicolas Berg video.

September 2004: Colin Powell admitted that they didn't had proof of the Saddam Al Q. ties and in October Rumsie said he was with stupid.

November 2004: Colin Powell went fishing and Rice took over.

*degauss*
So then there was 2005 and the US infantry Haditha bloodbath.

December 2005: Elections in Iraq.
*degauss*

February 2006: Golden Mosque / Samarra and the violence increased.

December 6 2006: Iraq study group comes with the following conclusions:
Pull out troops and start talking to Iran / Syria
- Bush admits the situation is "bad"

December 30 2006: Saddam got hanged.

January 10 2007: (crap I forgot to degauss) Bush present a new Iraq plan - more troops +30000....

September 2007: Al Maliki claims Iraq has become a lot safer, the road has been cleared to let the UN help with "make peace" and rebuilding. If possible Bush wants to ship back 30000 soldiers.

November 2007: 5000 troops return and 20000 more have to return till july 2008.

January 2008: In 2007 869 US soldiers have died.


----------------------------------
The numbers according to UNCHR/OPEC:

3988 US Soldiers died.
According to a recent study, over a million Iraqi civilians.

Oil production in Iraq:
Before the war 2.58 million barrels / day
After 2.47 million barrels / day

-----------------------------------
Remember Lawrence B. Lindsey, he was the financial advisor of Bush till December 13 2002 that day he got fired because after an interview in the Wall Street Journal.
He estimated that a war would cost 100 - 200 billion dollar but Dick, Donald and Paul claimed he was an idiot and that the war would only cost 60 billion tops.
Besides Iraq is rich and could finance the reconstruction by itself.

March 20 248000 troops invaded Iraq. there are now 158000 left, this year Robert Gates needs 158.7 Billion making the total cost now 608.7 billion dollar
according to the financial accounting team of Congress. At least they hope so, because Gates fails to give a detailed report about where the money goes.
A full troop return would cost another 147 Billion dollar and if they would opt for a slow retreat and leave 40000 troops in Iraq by 2010 it would cost another 318 billion dollar extra.

The rate it's going now the this whole mess will cost the US tax payer 1000 billion dollar...

[LeoXiao]

Today I skipped class (most of the teachers allowed it) to attend a student-led protest against the five years in Iraq. I went back to school with my friend just before a bunch of people got arrested. It was pretty cool since about 2000 kids from the various high schools in the city came.

[Taurec]

I wonder how the Iraq veterans get treated back in the states,
I've read some disturbing stories about VA hospitals gave a few vets the finger and as a result of that they took their own life.

How would you act towards somebody who got back?

[HELLFIRE]

// wades into the (potential) flamewar...

Enough has been said of how we got into this and there's little point in repeating it. The question is "how the hell do we get out?"
I pity the poor jerk who has to figure THAT one out. Either way, it's a lose-lose situation, and it'll keep press secretary-types up
nights imagining ways to put a positive spin on it.

Personally, I'd seriously like to ask those who claimed at the beginning this would not turn into another Vietnam to tell me that now.
If it looks like s*t, and smells like s*t, it certainly ISN'T roses.

...though I am glad this thread has kept relatively logical and sane. Thanks all!

@Tau
What if we don't have degauss buttons?




Regards

[Anonz]

i think we should just leave honestly
i don't think our presence there is ever going to improve things, and vietnam turned out fine when we left... sortof

[KiLlEr]

Vietnam doesn't have oil. But they do have a big loli trade.
"We have no oil, here, have a child"..

I can easily see Iran taking over politically, either by invasion or subversion. Although that would have happened eventually. They don't exactly like each other.

Abandoning the Iraqi people will make a double negative:
a) The people don't hate us will hate us, for abandoning them.
b) The people who hate us will claim victory.

Unfortunately leaving would put us in a bad position, not that we're in such a good one now.

I believe we shouldn't have gone in in the first place, regardless of the presence of WMD, regardless of the tragedies that Hussein was committing to his people. The US is not the world's police force, and it shouldn't pretend to be. Just because there is a certain way of life in the US, do not be so high and mighty to think that it is the only acceptable way of life, and on top of that bill yourselves as "tolerant" when that has not been achieved. I predicted that that we will take over Iraq in a month or two, then spend at least 10-12 years fighting insurgents. After the invasion is where the real fight is, and, as again I predicted, this country cannot stomach anything that takes longer than a week or two.

My predictions (stares into his crystal ball):
There are 2 paths:

1) Hillary or Obama will order a stepped withdrawal over the next 2-3 years as soon as they take power. A sudden increase in taxes will push the country further into a recession, as more pressure is placed upon the middle class to pay for government programs. This will push more property foreclosures (there are also issues with arson and abandoned properties that will further degrade housing prices), further increasing the issue with subprime lending.

2) McCain will continue the war, until public sentiment drives him into a withdrawal at a faster pace, possibly less than 2 years for a withdrawal. I make no predictions on how long public sentiment will take. I'm weary about hidden tax increases, but it isn't obvious, like Hillary/Obama who both stated publicly that they will repeil the tax cuts.

In both cases, Iraq will fall into a civil war as opposing groups fight for control. The winning group will be supported by Iran most likely. The US will lose face in the near and middle east.

Further on:
With Iran aligned with Iraq, more pressure will be placed on Israel. The US dollar will drop to new lows due to negative international trade. Oil prices will continue to increase due to demands put upon it by India and China, as they continue to advance in trade.

The only thing that can save us financially is US companies becoming competitive in China. Also, If the dollar devalues enough, it will spark increases in exports as our products align with international prices, as well as an increase in travel into this country. (I've seen an increase in the number of foreign visitors in Manhattan this passed new years, this is a good thing).

The big issue is the subprime bomb. If the housing market is allowed to collapse further, forget a recession, we *will* end up in a depression.