Bank Bailouts and High Oil Prices
Fail Roadside Sobriety Test
By Andy Carpenter 
The first US president with a Yale B.A. and Harvard a M.B.A. has finally clarified what led to the country’s crippling bank bailout and credit crisis. At a closed Republican fund-raiser in Houston last week – one at which video recording was banned, but one attendee captured on a mobile phone – President Bush described what caused the US’s current economic malaise this way: “Wall Street got drunk – that’s one reason I asked you to turn off your TV cameras – it got drunk, and now it’s got a hangover. The question is, ‘How long will it sober up and not try to do all these fancy financial instruments?’” On Monday the White House tried to clean up the President's statement. A Bush spokesperson said, “The markets were using very complex financial instruments that had grown up over the years, and when confronted with the shock of this housing downturn, they did not fully understand what the consequences were going to be.” Oh baby, you know this one is right in my wheelhouse. I can’t stop singing the chorus of The Band’s “Up On Cripple Creek.” But, other than to reveal my new excuse for getting hammered – “The bartender and bar were using a very complex system of service and pricing while I failed to grow up over the years and when I was confronted with closing time I did not fully understand consequences of ordering three doubles…” I will demure on this one. Instead, I’ll just leave this one teed up for you. On “Wall Street got drunk,” I eagerly await your comments via the exercise of your First Amendment guarantee of free speech – use it while you still have it – this White House still has six months left to work on that. And, I promise, if you grip it and rip it; I’ll run a bunch of your responses next week. Now, onto more oily thoughts. Up, With Two Olives Please I spent the past two weeks researching Iraq’s oil industry for a story I wanted to run today. It’s a heck of a story. Then every financial writer on the planet spent the same time writing, on alternating days, about oil or the failure of deregulation as expressed by federal mortgage lenders. So, I am going to spike the Iraq piece and save it for a time when the financial media have moved onto to their next obsessions such as – gold that’s found in offshore oil wells that were purchased with loans from Freddy Mac… and about an ex Fannie Mae accountant who’s now a gas station attendant who refuses to let customers buy $4.50 gas with gold or bottles of first growth Bordeaux, because neither are legal tender. Just like sticks aren’t money… just like birch bark isn’t money… just like yak poo isn’t money… just like gold is not money. Unless, that is you own a website or you write books about grand monetary conspiracies... that’s just pure gold. Though, I do wonder how the customers of those websites’ manage to pay for the stuff they buy. It must be very time consuming to get all that the gold into the little wires that brings the Internet from house to house. So, no oil this week, okay, maybe just a drop or two, later, down at the bottom – but nothing heavy like a discussion of Iraq’s geology. Like you, I am simply awash in oil stories. Instead, this week, I want to share with you a story about outrageous consumption.
You see, since 2005, China has been the world’s biggest consumer of oil… edible oils that is. In fact, the Chinese now annually consume about 44 pounds of edible oil per person. And, for the past six years that rate has risen at a steady 10% a year, which is a trend that should peak around 2111. 
In the next couple of years, the country’s bean oil, palm oil, olive oil and grape seed oil imports will top a combined 350 million tons. Within the edible oil industry, the Chinese olive oil market is now the focus of global attention.
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That’s because though there are some Chinese regions that might be suitable for growing olives, they can’t be widely planted because the country lacks the planting technology, olive seeds and technical expertise to do the job. So, today, more than 100 brands of olive oil make their way to China, and nearly 100% are imported from Spain, Greece, Italy, Turkey, Tunis, Portugal, Jordan and Australia. Most of that imported olive oil is consumed in Beijing, Shanghai, Shenzhen, Guangzhou, Tianjin and other large cities. Remember, China has about 70 cities with a population of one million or more. In fact, since 2001, olive oil imports have jumped more than 70% a year. 
This year, China will likely import 20,000 tons of olive oil… by the time the 2010 World Expo lands in Shanghai, that number will jump to more than 60,000 tons… it’ll double after that. So, as with cement, steel, copper, asphalt, rice, beer… everything… China’s ravenous consumption has created a booming market for olive oil. Its scale will only increase. And, that’s also great news for companies like Gushan Environmental Energy (NYSE:GU), which takes used cooking oil (among other things) and converts it into biodiesel fuel. You Can Always Find Me Here Till Closing Time As for the other oil… Well, clearly the question on the tips of every financial writer’s fingers these days is whether or not the crude oil bubble is ready to pop. They all fear they’ll be in the half that will have to explain what went wrong with their nifty predictions. So, my answer to the will-it-or-won’t-it-pop conundrum is a firm and definite – maybe. But I can tell you one thing for sure. The oil market is blitzed. It’s bombed. It’s snockered. It’s knee-walking, commode-hugging drunk. How long has it been drunk? Well, President Bush told G8 leaders that the energy mess was a long time in the making and it will take a long time to fix. He said this with a straight face, too, clearly unaware that nearly eight of the years that make up this long-in-the-works-mess happened on his watch. So, apparently oil has had the time to start its binge with single malts then slide to rail brands, wine, beer, malt liquor from brown bags and, now, Sterno strained through a dirty sock. On top of that, it staggered through the While House for going on eight years now. But it wasn’t wearing a dishadasha, kufi and sandals, so the drunkard went completely unnoticed. Maybe the next guy will notice and have the guts to throw oil out of the White House. It would be a welcome change. Have a great weekend. Andy
P.S. To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com. [Ed. Note:In the past 10 months Asia Business & Investing subscribers have booked outlandish gains. These recent winners include 562%, 300%, 383% 197% 149% 123%, 102%, 649%, 319%, 179%, 77%, 196% 100%, 126%, 185% and 430%. Find out more about how you could tap into superb gains like these right here.]
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