Yep.
After all the push-back from Democrats about how it would take over a decade for the drilling to produce oil, and how oil companies are not drilling on millions of acres of leases that they already hold, Dick Durban is talking up a McCain campaign talking point because he doesn’t want to see fuel economy standards raised for the car companies, because he represents Michigan.
Idiot.
In a stunning grasp of the obvious, the Fedederal Reserve is now saying that the economic downturn might continue into next year….Well duh!!!
In another example of supposed experts who are late to the glaringly obvious, the hedge fund whiz kids have discovered that they can lose money too. It’s still better than the market as a whole, but I expect that to change as their complex high yield instruments start behaving like the crap that they are.
In energy and currency, the news is neutral with oil and retail gasoline flat, though the dollar is down a bit.
Weekly mortgage application volume is up 7.5%, but I would go with monthly numbers which have less noise in them.
In any case, that’s what I think that Samuel L. Jackson would say about this new energy technology.
Basically, a team in the UK has developed a floating rubber tube that is squeezed by the waves as they travel along. It resembles a seawater filled sausage.
When the squeeze reaches one end of the tube, a turbine converts the energy into electricity.
They are testing scale models now, but a full size version would be 7 meters in diameter, and 200m long and produce 1 MW, somewhat better, and much less expensive, than rigid wave catching systems and buoys.
A film of it in action is below.
H/t Gismodo.
Bernanke is saying that the Federal Reserve’s money for crap loan program to the investment banks may continue well into next year.
In energy, we have generally good news, with oil falling to $136.04/bbl and
retail gasoline prices unchanged.
Not unsurprisingly the dollar strengthened a bit.
Housing, on the other hand just took another hit, with pending home sales falling 4.7% from last month and 14% from a year ago.
Well, the Employment Trends Index is down again. That 11 down over the past 12 months.
In energy, oil prices briefly brok $140/bbl on the downside before settling at $141.37, but the price of retail gasoline continues upward unabated.
Unsurprisingly, the dollar strengthened today, though I am unclear why. The fundamentals underlying the dollar, trade and budget deficits, would seem to point further down.
I wonder what happens when we run out of Dutch boys’ fingers to put in the levee.*
Meanwhile, I think that all those folks who said that it was only residential real estate that was crashing are now desperately trying to find their happy place, because we just saw the the worst Q2 in commercial rentals in 30 years.
*No, I’m not going there.
Ten years ago, bin Laden demanded barrel of oil should cost $144.bbl.
Thanks George….and by the way, thanks Ralph too.
Here:
Senior development sources believe the report, completed in April, has not been published to avoid embarrassing President George Bush.
“It would put the World Bank in a political hot-spot with the White House,” said one yesterday.
Is there anything he touches that does not collapse into a morass of failure, corruption, and self dealing?
In case you are wondering about inflation, retail gasoline just hit a new high, breaking $4.10/gallon, even thoughoil prices backed off a little bit.
FWIW, it’s not just oil. BHP Billiton and China’s Baosteel just negotiated a 96.5%rate hike.
The currency markets are predicting that the ECB won’t raise rates again, so the dollar strengthened a bit.
Finally, in real estate, we are seeing soaring home equity line of credit delinquencies.
It turns out that when Hunt Oil, run by a Bush political ally, cut a deal with the Kurds over oil last year, pissing off the Iraqi central government, and throwing a monkey wrench into the works of a comprehensive oil law, Bush and the state department not only knew about it, but they tacitly approved it.
Oh, well…Only 6 months and 20 days left for him and his to rape US interests for personal profits.
It’s a pretty slow day news wise, because everyone is waiting on the ECB’s decision on interest rates, and the latest unemployment numbers.
That being said, both Oil and gasoline hit new records, and the dollar is mixed.
Of more interest is, and some alarm, is that the the National Employment Report from Automatic Data Processing shows that 79,000 private sector jobs were lost in June, worse than the expected 40K jobs, and the worst number since 2002.
We also have factory orders rising, which sounds like good news, until you look closer and realize it’s all energy costs.
Construction spending is still down, though at an 0.4% seasonally adjusted rate, which is better than the predicted 0.6% rate.
Both oil, still above $140/bbl, and retail gasoline hitting another record.
Part of this is because the dollar is getting pummeled and that tends to drive oil higher.
So it now appears that these no bid oil service contracts were drawn up by a, “A group of American advisers led by a small State Department team.”
This confirms what was already suspected, that the deal was done by and for the US, and not for the owners of this oil, the Iraqi people.
I’ve been saying this for a while, but as I am an engineer, not an economist, dammit,*, but still, I have to wonder why it’s taken so long for the Bank for International Settlements to see that the world economy is in serious trouble, with a possibility of a world wide recession.
When one considers spiking oil prices and a new record for gasoline prices, the news is not going to be good.
Given the dollar’s rather unclear future, along with increased Euro-Zone inflation, which implies more rate hikes, and hence downward pressure on the dollar, things are pretty twitchy out there.
The Chicago Purchasing Manager Index is up, to 49.6 from 49.1 last month, but any number below 50 still represents a contraction.
We can wait for tomorrow’s Institute for Supply Management’s June manufacturing survey to get a better picture.
*I LOVE IT when I get to go all Doctor McCoy!!!
Consumer spending jumped 0.8% in May, largely driven by the income tax rebates, though one wonders how much of that spending went into people’s gas tanks.
What’s more, given that oil hitting a new record, even if retail gasoline is edging a bit lower, it’s highly unlikely that the giant sucking sound coming from our cars will change.
What’s more, this is continuing to drive the dollar lower.
At the core of the American economy, we have been living beyond our means for many years, and there will be some painful adjustments.
Weekly Jobless claims hold steady at 384,000, though the less volatile 4 week moving average went up a bit, 2,250 to 378,250.
In energy, we have oil hitting a new record. It has broken $140/bbl.
Retail gasoline is flat today.
Existing home sales are up for 2nd time in 10 months, though I think that a lot of that may be short sales and REOs.
We have the latest figures for Q1 GDP, and they show that GDP increased at a 1% annual rate. Note that core inflation was 2.3%, and 1% minus 2.3% does not give one a positive number.
It’s more spending on food and fuel, not real growth.
All this news has the dollar down a bit, and I’m sure that European Central Bank President Jean-Claude Trichet strongly implying more rate hikes did hastened the decline.
Just a few weeks ago, analysts were saying that the worst of the banking problems were over, but now they are saying oops! The banking downturn still has a way to go, so their “buy” message was premature.
This is not surprising, considering that analysts are low looking at something like $30 billion in additional losses just for WAMU for home mortgages, commerical loans, and credit cards.
I think that the only bank’s revenue remaining stream is check bounce fees, it appears.
Not surprising, considering that real estate is still crashing, with mortgage applications continuing to crater, and new home sales falling 40% from this time last year (and off 63% from the 2005 peak).
It’s no wonder that the changes in regulation allowing for Fannie Mae and Freddie Mac to repackage jumbo loans has had little effect, with the GSEs choosing instead to focus on repurchasing some of their own mortgage backed securities, which serves to minimize potential losses.
In terms of Jumbo loans, those over $417K, Fannie wrote $24 million and Freddie wrote $220 million since they could in March.
By comparison, in April alone, they spent $32.4 billion to buy back their old securities.
Nothing is moving until the players have a reasonable assurance that this is not all smoke and mirrors that they are dealing with.
Of course, the whole housing bubble breaking is not just academic. It now appears that a lot of the early babl boomers will have very little to live on retirement because of the housing crash.
In the wonderful world of energy prices, oil is down a bit on high inventory levels, and retail gas prices continue their downward path.
This lack of confidence, and lack of money, is probably why durable goods orders remain anemic.
While I think that the predictions of a rapid decline in far suburbs is premature, it’s clear that increases in fuel costs, and hence the cost of commuting have driven some changes in attitudes regarding distant suburbs.
I disagree with land use expert Christopher Leinberger, who says, “Many low-density suburbs and McMansion subdivisions, including some that are lovely and affluent today, may become what inner cities became in the 1960s and ’70s – slums characterized by poverty, crime and decay,” if just because these McMansion subdivisions were remarkably poorly constructed, and the houses will not survive long enough to become slums.
I would expect, however, that as the exurbs were first into the housing crash, they will be the last out, and the land values won’t reach the relative levels that they had to more urban neighborhoods ever again.
Well, we have analysts saying that oil and gas are have had twice their price doubled by speculation, but I think that this is a load of crap. I agree with Paul Krugman, that the effects are smaller than that. If you were to argue that there were a 5% effect on the price over the short term, I would buy that, but 50% is way out of ling.
Krugman had a nice picture on the relationship between oil futures, contracts for later delivery, and spot prices, where the oil is delivered immediately: 
Simply put, there would be more of a spread if there were more of a speculative effect.
That being said, market volatility, which aggressive speculation exacerbates, does a lot of damage otherwise, so I do support some of the measures that the Congressis considering in order to reign in excessive speculation.
That being said, at its core, we have demand for raw materials outstripping supply. That’s why we are seeing things like a 96% jump in iron ore prices, a market in which there are no futures contracts.
