kehenry1, that's brilliant!
Also, thanks for the link to your other work. This is one of the clearest explanations of the threat that I've seen.
Question: do you have any references or links about pre-9/11 trading by probably terrorists? I've heard the rumors. There were investigations, but I recall (just from memory) that their official reports denied this theory.
Originally Posted by Fabius Maximus
The insider trading case of Amr "Tony" Elgindy is also interesting.Poteshman, Allen M., 2006, Unusual Option Market Activity and the Terrorist Attacks of September 11, 2001, Journal of Business 79, 1703-1726. (PDF)
Abstract:
After the terrorist attacks of September 11, 2001 there was a great deal of speculation that the terrorists or their associates had traded in the option market on advanced knowledge of the impending events. It is nearly impossible, however, to assess the option market trading leading up to this or any other event in the absence of systematic information about the characteristics of option market activity. This paper provides this information by computing the distributions of option market volume statistics both unconditionally and when conditioning on the overall level of option activity, the return and trading volume on the underlying stocks, and the return on the overall market. When the option market activity in the days leading up to the terrorist attacks is compared to the benchmark distributions, volume ratio statistics are seen to be at typical levels. An indicator of long put volume, however, appears to be unusually high which is consistent with informed investors having traded in the option market in advance of the attacks.
bourbon, thanks for the link to this valuable article!
Speaking as an amateur in all aspects of this (esp forensic security trading analysis), I find Poteshman's article more compelling than the official government verdict. For unknown reason I cannot copy from the pdf of 9-11 Commissions report, but you can see it on page 499, note 130 to Chapter Five: "The SEC and the FBI, aided by other agencies and the securities industry, devoted enormous resources to investigating this issue ... These investigators have found the apparently suspicious consistently proved innocuous."
You can see their full explanation (one paragraph!) here: Report of the National Commission on Terrorist Attacks upon the United States (you can scroll down to download just the notes section, as the full report is 7.4 meg).
oil market
Oystein Noreng is a professor and petroleum economist at the Norwegian School of Management. After the '91 the Norwegian government tasked Professor Noreng to study to the relationship between Islamist movements and the oil industry in the Middle East and North Africa. This resulted in the publication of his book Oil and Islam: Social and Economic Issues in 1997. While I have not read the book, I have read a speech of his on some of the findings, and consider this an appropriate thread to share it.
Noreng also recently gave a speech at Flynt Leverett's Geopolitics of Energy Initiative at the New America Foundation titled: Restructuring World Economic Power Relations through High Oil Prices. I think it is particularly relevant to this thread.
Finally, I have come across two particularly good newpaper items:
Oil's Recent Rise Not as Familiar as It Looks: Traders, Not Political or Supply Concerns, May Be Pushing Fuel Toward $100, By Steven Mufson. Washington Post, November 5, 2007
Transcript: Interview with IEA chief economist, Financial Times, Published: November 7 2007.
Fatih Birol, chief economist of the International Energy Agency, interviewed by Ed Crooks and Javier Blas of the FT
Perhaps oil/gas deserves it's own thread? I some connections to small wars in the past, and in the foreseeable future. Albeit a particularly sensitive topic imho.
more about oil
Here is a note giving links to valuable presentations about Peak Oil, and how to prepare for it.
As a followup to the link bourbon gave to the FT interview with the IEA Chief Economist, I recommend close attention to the comments of the International Energy Agency's officials (I posted a link to their 2007 Outlook below). They are being increasingly alarmed by developments in the world's oil supply.
In the next chapter or so in my series of blognotes about Peak Oil, I'll discuss the theory that oil prices are rising as the Saudi's keep the tap tight. For the past two years they have said that world commercial oil stockpiles are too large. Perhaps they have taken action to "fix" this problem. OECD stockpiles (as of, I believe, July) are just now down aprox to their five year average.
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