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Originally posted by jiesen
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It's Monday morning 8 am on the East coast and the lucky folks with the number 7 in their SSN are cashing in their gub'mint checks:
The $140 oil today had NOTHING to do with that fire in the headlines.
Next Monday it'll be $145 on a strike in Mexico, cyclone in Indonesia, or a thundercloud spotted over the oil sands in Canada.
The $140 oil today had NOTHING to do with that fire in the headlines.
Next Monday it'll be $145 on a strike in Mexico, cyclone in Indonesia, or a thundercloud spotted over the oil sands in Canada.
Oil again settles above $145 a barrel
Notice the reasons they give in this piece include
1) A strike in Brazil
Geopolitical concerns continued to support oil prices.
About 2,500 workers in Brazil's Campos Basin, which produces more than 80 percent of Brazil's oil output, began a strike Monday to demand that state-run oil company Petrobras give them an extra day off at the end of each two-week shift on the platforms.
2) Saber-rattling in Iran
Iranian officials vowed on Sunday that the Islamic Republic would fight back against any attacks on it and "cut off the hands" of invaders. The comments came amid heightened speculation that Israel and the United States will attack Iranian targets to destroy what they say are Tehran's suspicious nuclear programs.
But of course they made sure to mention that
The dollar advanced marginally against the euro and yen, but fell against the pound and the Swiss franc. Investors have been buying dollar-denominated crude contracts as a hedge against inflation and a weakening dollar, pushing the price of oil to about double in the past year. When the dollar strengthens, such currency-related buying often unwinds.
"We believe that in light of the dollar reversal, energy bulls could find things rather difficult on the upside, at least during the early part of the week," Edward Meir, an analyst at MF Global, said in a research note.
Meanwhile, the US government offers up the taxpayers as guarantors of over $5 trillion in GSE debt:
Goldman Economist: GSE Takeover Wouldn’t Balloon Federal Debt
Goldman Sachs economist Jan Hatzius issued a research note this afternoon on the storm swirling around Fannie Mae and Freddie Mac. Below, his thoughts about the impact of a government takeover on the federal debt, which currently stands at about $9.5 trillion, according to the U.S. National Debt Clock.
“Undoubtedly, a move toward bringing the GSEs [Fannie and Freddie] onto the federal balance sheet would raise concerns about a sharp deterioration in the federal budget outlook. This is understandable because the budget outlook is already deteriorating because of the economic downturn, and because such a move would make it explicit that the federal government is ultimately responsible for GSE losses. But the potential impact is far smaller than suggested by some of the rhetoric. We have heard assertions that such a move could lead to a downgrade of federal government debt because it would increase the government debt by $5.3 trillion. This is misleading because the $5.3 trillion refers to the GSE’s holdings of mortgages and loan guarantees, which is not at all the same thing as outright liabilities. To be sure, the government would have to cover any GSE losses, and this would likely have a negative budgetary impact. But this will be a much, much smaller number under any reasonable set of assumptions.”
Hatzius’s comments match the thinking of credit-market firms, which don’t believe the trouble at Fannie and Freddie could end up hurting the government’s triple-A rating. As the Journal reported today, Steven Hess, an analyst at Moody’s Investors Service, said even under a “serious stress scenario…the amount of money that the U.S. government would have to come up with would not at all be something that would threaten the government’s balance sheet and therefore is not a threat to the rating.”
I think if you read everything this dude says as its exact opposite, this article makes complete sense.
1) Taking on $5.3 trillion in debt will balloon the federal debt.
2) GSE holdings of mortgages are liabilities.
3) Credit-market firms do believe that trouble at F&F could hurt the US's AAA rating. They just won't admit it until it's too late for their opinion to be of any use to anyone besides themselves or their close buddies.
So I wonder what oil will cost after another $5 trillion is pumped into the system... $200? $300? How about after Obama decides to buy a (re)election with yet another tax rebate? Is there anything that a cool trillion from the treasury can't fix? Not for today's politicos.
Just keep paying for today by borrowing from tomorrow, and it can't possibly fail, right? Just as long as you're not around the day after tomorrow to face the music...
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