Oil rises after inventory report
Source: money.cnn.com
…
Gasoline demand: The government’s inventory report reinforced a weekly survey released Tuesday from MasterCard Advisors that showed demand for gasoline at the pump had hit its highest level since the beginning of the year, though it still remained significantly lower than the same week a year ago.“It seems the hard lessons that were learned at $4 a gallon (gasoline) and above have faded,” said John Kilduff, energy analyst with MF Global in New York.
Average prices for regular gasoline in the U.S. fell for the 13th straight day Wednesday to $3.926 a gallon after hitting a peak of $4.114 on July 16. Still, prices remain more than 35% higher than they were a year ago, according to motorist group AAA.
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In rich America, Third World inequality
Source: Reuters
The minimum wage in the world’s richest country has just been raised by almost 12 percent. That followed a 13.6 percent hike last year and looks like major progress for those at the bottom of the economic ladder. At first sight, at least.Examined more closely, the figures highlight poverty and economic inequality of Third World proportions.
The latest increase took effect last week and brought the minimum wage to $6.55 an hour. Adjusted for inflation, this is less than it was in 1964, the year President Lyndon Johnson declared “unconditional war on poverty in America.”
Poverty won, as free-market champion Ronald Reagan put it a quarter of a century later.
Then, 13 percent of the U.S. population lived below the official poverty line. In 2006, the most recent year for which the U.S. Census Bureau has statistics, it stood at 12.3 percent, or 36.5 million people. On the other end of the scale, the U.S. economy produced billionaires at a steady pace.
Bush signs housing rescue plan into law
Source: Reuters
As home foreclosures rise and property values slump, U.S. President George W. Bush on Wednesday signed into law a rescue package that includes emergency backstops for mortgage financing companies Fannie Mae and Freddie Mac.Despite opposition to a provision that offers $4 billion in grants to states to buy and repair foreclosed homes, Bush reversed his opposition to the overall legislation because it included numerous other key housing reforms.
The new law boosts oversight of Fannie Mae and Freddie Mac, which own or guarantee almost half the country’s $12 trillion in home mortgage debt. It also expands a temporary line of U.S. Treasury credit and gives the government the option to buy shares in them if they ran into trouble.
“We look forward to put in place new authorities to improve confidence and stability in markets, and to provide better oversight for Fannie Mae and Freddie Mac,” said White House spokesman Tony Fratto.
Bush signed the measure in the Oval Office shortly after 7 a.m. EDT with his economic team on hand, including Treasury Secretary Henry Paulson who helped negotiate the package with the Democratic-controlled Congress….
Fed extends emergency lending for banks
Source: FT.com
The Federal Reserve on Wednesday announced that it was extending two emergency lending facilities for banks until the end of January of next year.Both had previously been scheduled to expire at the end of September, and the announcement means that the emergency measures will stay in place until after the next president takes office.
Markets responded positively to the move, which came before trading opened in New York, and the dollar strengthened on the news. While the moves had been expected, the timing – a week before the Federal Open Market Committee is due to meet on monetary policy – came as a surprise.
The Term Securities Lending Facility, which provides loans of Treasuries, and the Primary Dealer Credit Facility, which provides direct loans to securities firms, were both introduced in March at the same time as the Fed revealed special financing to allow the purchase of Bear Stearns by JPMorgan Chase.
“These pre-emptive moves underscore that the liquidity tensions are with us for a while yet,” said Ciaran O’Hagan, strategist at Société Générale.
America’s house price time bomb
Source: BBC NEWS
With the American housing market in its worst crisis since the Great Depression of the 1930s, President Bush is authorising new legislation to pave the way for massive new government intervention designed to slow the slide.The intervention would come as a little known quirk of US law threatens to drive down house prices even faster.
Faced with seemingly never-ending falls in the value of their properties, some American home-owners are taking radical action; they are choosing to walk away from homes and their mortgages.In May 2006, at the height of the housing boom, Karen Trainer bought a $500,000 apartment in California - with money borrowed from her bank.
By this year, Karen still owed $500,000 on her mortgage, but her apartment was worth $200,000 less.
So she was deep in negative equity and, to make matters worse, the interest rate on her loan was about to increase.
“I thought ‘this is crazy’,” Ms Trainer says. “It just does not make financial sense.”
FDIC learns it ignores bloggers at its peril
I see. The public needs to be educated about the FDIC. For some strange reason I am not comforted by this at all.
Source: Los Angeles Business from bizjournals:
The federal agency insuring bank deposits learned that it can’t afford to ignore the blogs following its seizure this month of IndyMac Bank, the largest bank failure since the 1980s.“The blogs were a bit out of control,” Sheila Bair, chairman of the Federal Deposit Insurance Corp., told the San Francisco Business Times after a speech in San Francisco this week.
That’s putting it mildly. Following the FDIC’s takeover of Pasadena’s IndyMac on July 11, widely followed blogs were speculating on bank runs on some of California’s largest banks based on nothing more than people waiting for their branch to open or large deposits moving between financial institutions.
The FDIC plans to pay closer attention to the blogosphere in the future.
“We’re very mindful of the media coverage and blogs in controlling misinformation. All I can say is were going to continue to stay on top of it,” Bair said. “The misinformation that came out over the weekend fed a lot of depositors’ fears.”
The FDIC also plans to begin airing public service announcements as part of a public education campaign on the nation’s deposit insurance program.
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U.S. Economy: House Prices Fell at Faster Pace in May
Source: Bloomberg.com
Home prices in 20 U.S. metropolitan areas fell at a faster pace in May, and consumer confidence stayed near the lowest level since 1992 this month, posing a threat to household spending.The S&P/Case-Shiller home-price index dropped 15.8 percent from a year earlier, the biggest decline since records began seven years ago. The Conference Board’s confidence index rose to 51.9, from 51 in June.
Home prices have fallen every month since January last year, eroding household wealth at a time when consumers are trying to cope with record fuel costs and the credit crunch. While both of today’s figures were higher than economists’ estimates, the reports still underscored forecasts for spending to slow in the second half as the stimulus from tax rebates wanes.
“It’s definitely too early to break out the confetti,” said Michael Feroli, an economist at JPMorgan Chase & Co in New York and a former researcher at the Federal Reserve.
“Household wealth is declining, and that should restrain consumer spending.”
WTO talks collapse amid farm stand-off
Source; Reuters.com
Marathon talks on a new wave of trade liberalization collapsed on Tuesday after nine days of intense but ultimately fruitless negotiations.Following are some reactions, with latest at top:
MARIO MARCONINI, DIRECTOR OF INTERNATIONAL NEGOTIATIONS OF THE SAO PAULO INDUSTRY FEDERATION (FIESP)
“It seems some countries want the round to fail, notably India and Argentina.
“The others abandoned Brazil. China never said anything and decided to oppose everything.”
SORAYA ROSAR, DIRECTOR OF INTERNATIONAL NEGOTIATIONS WITH BRAZIL’S NATIONAL INDUSTRY CONFEDERATION
“It’s really bad news. It’s sad to have lost so many years of work. For an emerging market, it is worrying to see a WTO that is not strong.”
SERGIO MENDES, HEAD OF NATIONAL ASSOCIATION OF CEREAL EXPORTERS, BRAZIL
“With the failure of the talks, which we hoped would reduce subsidies, Brazil’s rapid growth may be slowed. But there’s no way it will end growth.
PEDRO CAMARGO NETO, HEAD OF THE BRAZILIAN ASSOCIATION OF PORK MEAT EXPORTERS:
“It’s bad but not the end of the world. It’s not a setback that puts everything at risk. It’s not chaos.”
ADRIAN VAN DEN HOVEN, TRADE DIRECTOR AT EUROPE’S MAIN EMPLOYERS’ GROUP, BUSINESSEUROPE
“Obviously, we are disappointed that the talks came this far only to break down.
“We are not sure what is going to happen next in terms of WTO. We don’t want to sound alarmist, because we have seen this kind of crush in the past.
“Considering how close the talks were to reaching an agreement, it would be foolish to let everything fall apart.”
CARIN SMALLER, INSTITUTE FOR AGRICULTURE AND TRADE POLICY, NGO
“This deal did not collapse over small technicalities. It was doomed to fail from the start. There is no political support for what is on the table: not from India or France or Argentina or South Africa. Following the same WTO model is impossible now: governments are no longer willing to sacrifice other concerns strictly for the sake of trade. People are on the streets rioting over food and energy prices. The business world is in a state of shock over the financial crisis. These are the problems that governments have to focus on. And the Doha Round cannot help them.”
MATTHEW COGHLAN, ADVISER TO CHRISTIAN AID
“We applaud the stand that developing countries have taken throughout the talks in defending the livelihoods of the poorest and most vulnerable farmers. We hope that any future talks can place development firmly back on the agenda.”
EDWARD GRESSER, DIRECTOR, TRADE AND GLOBAL MARKETS PROJECT, PROGRESSIVE POLICY INSTITUTE, WASHINGTON, DC
“The time for developing countries to strike a deal over agriculture was now, not later. This year’s high prices created a window for lower rich-country subsidies and tariffs that may not open again, and it’s unfortunate that the big developing countries didn’t take the opportunity.”
“This fourth collapse after Cancun, Hong Kong and Potsdam suggests that the WTO members may need to rethink the agenda rather than try again with the same program. In particular, they might move agricultural reform out of the center for a few years, and focus instead on big newly emerging industries - energy/environmental industries and medical equipment for example - where attitudes are less entrenched and emotional.”
SHERMAN KATZ, TRADE SCHOLAR AND DIRECTOR OF OUTREACH, PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS, WASHINGTON, DC
“The underlying problem from the U.S. perspective is the readiness of developing countries, such as India, to open their markets to higher levels of agriculture imports. In the current environment of understandable anxiety in the American workforce about trade, neither this (Bush) Administration nor the next one, whether Democrat or Republican, will accept terms for a Doha deal that does not expand significantly market access for both farm and industrial goods as well as services. And that means strong resistance against special safeguards’ in poor nations that can prevent such access from taking place.”
MICHAEL WOOLFOLK, A SENIOR CURRENCY STRATEGIST, BANK OF NEW YORK MELLON, NEW YORK
“The impact on the U.S. economy and on the U.S. dollar for now will be an indirect one. The dollar has benefited in the past from globalization and freer trade. If this means that more barriers will be imposed and countries will take the side of protectionism, it may hurt exports and therefore the economy and the dollar.”
JAMES DUNSTERVILLE, GRAIN ANALYST, GENEVA-BASED AGRINEWS
“Life goes on. The WTO talks have broken down for so many years that the surprise will come if they succeed not when they break down.”
“The breakdown is not a change, only a breakthrough would have been one.”
MICHAEL T. DARDA, CHIEF ECONOMIST, MKM PARTNERS, GREENWICH, CONNECTICUT
“I think it’s a strong negative and it really follows on the heels of a retreat from globalization and trade that were really the building blocks for the prosperity of the last several decades. It’s scary.
“The last thing that we need right now, as we are dealing with the unwinding of a massive credit bubble, is to turn our backs on trade and move into a protectionist stance. It would be a huge blow to the global economy and very negative for the world’s poor.”
BRIAN BETHUNE, U.S. ECONOMIST, GLOBAL INSIGHT, WALTHAM, MASSACHUSETTS
“These agricultural trade issues have been in talks for years. It’s really a tough situation because of the large trade protection offered to the farm sector in various forms and guises for many years. It’s hard to rein in these subsidies.”
“There doesn’t seem too much progress on this. It’s more important now with some of the shortages of global food supply. Something’s got to be done to improve this to reduce price distortions.”
“The progress on (agricultural) ag-trade is incremental. It’s not going to be revolutionary. Frequently there are these breakdowns. They often go back to it again. There is a higher sense of urgency.”
Earthquake rocks Los Angeles
I have no idea why people want to live in California.
Source: CNN.com
A magnitude-5.4 earthquake has struck just east of Los Angeles, according to the U.S. Geological Survey.
Los Angeles was hit by a 5.8 magnitude earthquake Tuesday.Los Angeles was hit by a 5.8 magnitude earthquake Tuesday.
The quake’s epicenter was about 2 miles southwest of Chino Hills and about 5 miles southeast of Diamond Bar, the USGS said. Chino Hills is about 30 miles east of downtown Los Angeles.
The center was about 7.6 miles deep. In general, earthquakes centered closer to the Earth’s surface produce stronger shaking and can cause more damage than those further underground.
A 5.8 magnitude quake is considered by the USGS to be “moderate,” which can cause slight damage to buildings and others structures. About 500 can happen globally each year, the survey says.
According to the USGS archives, it’s the biggest California earthquake since September 28, 2004, when a 6.0 quake was recorded south of Parkfield, which is about 70 miles northwest of Bakersfield.
“It’s too early to tell if there’s any major damage but all units are checking overpasses, bridges and tall buildings,” Anaheim Police Sgt. Ken Seymour told The Los Angeles Times.
“I can tell you that we had a good-sized shake here in the bureau,” said CNN Los Angeles Bureau Chief Pete Janos. “It started slowly. It continued on, shaking the bureau pretty well. … Right now we’re just sort of assessing the situation. Nothing fell off the walls … but there definitely was a shake.”
Janos said he has lived in southern California for about 12 years. “I can tell you this is probably the best one we have had,” he said.
VIDEO: COP BODY-CHECKS BICYCLIST
Very nice, another piece of dangerous criminal scum removed from the streets.
A rookie cop - the son of a highly respected New York City detective - has been stripped of his badge and gun after being caught on video viciously attacking a bicyclist who was part of a Times Square demonstration. ‘
The startling YouTube video shows Officer Patrick Pogan, 22, apparently setting his sights on - and then tackling - a bicyclist as he pedaled along Seventh Avenue as part of last Friday’s controversial Critical Mass ride.
Christopher Long, 29, was among a throng of riders as he whizzed toward the corner of West 46th Street at 9:30 p.m. and appeared to try and swerve away from the officer.
But the video shows Pogan pick up his pace as he stares down Long before shoving the cyclist, slamming him to the pavement.
To the dismay of stunned pedestrians, Long, who was not wearing a helmet, hurtles several feet through the air as he flips off the bicycle and lands on the curb.
Pogan and a second officer then lunge toward the prone cyclist as the video fades to black. The footage, filmed by a tourist and posted anonymously on YouTube, sparked imme diate public outcry and prompted the NYPD to place Pogan on desk duty while the Internal Affairs Bureau investigates.
The NYPD declined to comment further.
Hedge funds muck in down on the farm
I need to buy more seed….much more.
This also, from: FT.com
Hedge funds and investment banks are swapping their Gucci for gumboots as they bet on rising food prices by buying farms.Billions of dollars are flowing into farmland across the world as investors gorge themselves on vast tracts of Australia, South America and eastern Europe.
“Sell banks, buy cheese,” Crispin Odey, manager of London-based hedge fund Odey Asset Management who has started investing in farming companies, said recently.
The Food Chain - Food Is Gold, So Billions Invested in Farming
Source: NYTimes.com
Huge investment funds have already poured hundreds of billions of
dollars into booming financial markets for commodities like wheat, corn
and soybeans.But a few big private investors are starting to make bolder and longer-term bets that the world’s need for food will greatly increase — by buying farmland, fertilizer, grain elevators and shipping equipment.
One has bought several ethanol plants, Canadian farmland and enough storage space in the Midwest to hold millions of bushels of grain.
Another is buying more than five dozen grain elevators, nearly that many fertilizer distribution outlets and a fleet of barges and ships.
And three institutional investors, including the giant BlackRock fund group in New York, are separately planning to invest hundreds of millions of dollars in agriculture, chiefly farmland, from sub-Saharan Africa to the English countryside.
“It’s going on big time,” said Brad Cole, president of Cole Partners Asset Management in Chicago, which runs a fund of hedge funds focused on natural resources. “There is considerable interest in what we call ‘owning structure’ — like United States farmland, Argentine farmland, English farmland — wherever the profit picture is improving.”
These new bets by big investors could bolster food production at a time when the world needs more of it.
The investors plan to consolidate small plots of land into more productive large ones, to introduce new technology and to provide capital to modernize and maintain grain elevators and fertilizer supply depots.
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Haiti: Mud cakes become staple diet as cost of food soars beyond a family’s reach
Source: The Guardian
At first sight the business resembles a thriving pottery. In a dusty courtyard women mould clay and water into hundreds of little platters and lay them out to harden under the Caribbean sun.
The craftsmanship is rough and the finished products are uneven. But customers do not object. This is Cité Soleil, Haiti’s most notorious slum, and these platters are not to hold food. They are food.
Brittle and gritty - and as revolting as they sound - these are “mud cakes”. For years they have been consumed by impoverished pregnant women seeking calcium, a risky and medically unproven supplement, but now the cakes have become a staple for entire families.
It is not for the taste and nutrition - smidgins of salt and margarine do not disguise what is essentially dirt, and the Guardian can testify that the aftertaste lingers - but because they are the cheapest and increasingly only way to fill bellies.
“It stops the hunger,” said Marie-Carmelle Baptiste, 35, a producer, eyeing up her stock laid out in rows. She did not embroider their appeal. “You eat them when you have to.”
These days many people have to. The global food and fuel crisis has hit Haiti harder than perhaps any other country, pushing a population mired in extreme poverty towards starvation and revolt. Hunger burns are called “swallowing Clorox”, a brand of bleach.
The UN’s Food and Agriculture Organisation predicts Haiti’s food import bill will leap 80% this year, the fastest in the world. Food riots toppled the prime minister and left five dead in April. Emergency subsidies curbed prices and bought calm but the cash-strapped government is gradually lifting them. Fresh unrest is expected.
According to the UN, two-thirds of Haitians live on less than 50p a day and half are undernourished. “Food is available but people cannot afford to buy it. If the situation gets worse we could have starvation in the next six to 12 months,” said Prospery Raymond, country director of the UK-based aid agency Christian Aid.
S&P: Home prices drop by record 15.8 pct in May
Source: The Associated Press
A closely watched housing index shows home prices fell by the steepest rate ever in May, as the housing slump continued to deepen nationwide.
The Standard & Poor’s/Case-Shiller 20-city index, released Tuesday, is off 15.8 percent for May compared with a year ago, a record decline since its inception in 2000. The narrower 10-city index has fallen 16.9 percent, its biggest decline in its 21-year history.
No city in the Case-Shiller 20-city index saw price gains in May, the second straight month that’s happened. The monthly indices have not recorded an overall home price increase in any month since August 2006.
The steepest decline in the index is in Las Vegas, where prices fell 28.4 percent in the month. Miami is a close second, with prices down 28.3 percent.
U.S. Headed for ‘Heightened Alert’ Stage
Source: ABC News
Government officials have been quietly stepping up counterterror efforts out of a growing concern that al Qaeda or similar organizations might try to capitalize on the spate of extremely high-profile events in the coming months, sources tell ABC News.
Homeland security is on alert with Olympics near, elections on horizon.Security experts point to next month’s Olympics as evidence that high-profile events attract threats of terrorism, like the one issued this past weekend by a Chinese Muslim minority group that warned of its intent to attack the Games.
Anti-terror officials in the U.S. cite this summer and fall’s lineup of two major political parties’ conventions, November’s general election and months of transition into a new presidential administration as cause for heightened awareness and action.
This is what the Department of Homeland Security is quietly declaring a Period of Heightened Alert, or POHA, a time frame when terrorists may have more incentive to attack.
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US Oil Fields on Decline
Source: washingtonpost.com
In May 1899, a pair of oil prospectors wielding picks and shovels dug into a bank of the Kern River where some gooey liquid had seeped to the surface. About 45 feet down, they hit oil, and when the local newspaper printed the news, it set off an oil rush that swept up hundreds of fortune seekers, oil companies, a big railroad and even some enterprising school districts that bought up tracts in hope of turning a profit.
Today, on an arid square of land the size of Manhattan, thousands upon thousands of black derricks crowd the landscape, bobbing gently up and down and sipping crude oil from the field discovered a century ago. The wells aren’t gushers these days, but they still squeeze out a few barrels a day here, a few more there.
Chevron has injected steam into the reservoirs, coaxing the sedimentary rock into giving up millions of barrels of heavy oil that was too thick and sticky to retrieve using the technology of decades past.
But the Kern River field, like most U.S. oil fields, is in decline. After surging to new highs during the 1980s, Kern River production has dropped to just over 80,000 barrels a day, more than 40 percent below its peak. Enhanced recovery techniques will continue to prolong its profitable life, but its days are numbered.
Kern River is the story of America’s oil supply. Four decades ago, the United States was the world’s biggest oil producer. But U.S. crude oil output peaked in 1970, at 9.6 million barrels a day, which was enough to cover the bulk of the country’s needs back then. Now, U.S. crude production stands at 5.1 million barrels a day. Together with liquids derived from natural gas and other inputs, domestic production covers only 42 percent of the country’s needs. The balance comes from imports. Ever since President Richard Nixon called for “Project Independence” in a 1973 address to the nation, U.S. energy independence has been little more than a throwaway line in political speeches.
The United States is at the leading edge of what may lie ahead for worldwide oil production. Global petroleum output is still rising, but the rate of growth is slowing. Supply is not increasing fast enough to keep up with soaring global demand, putting ever more upward pressure on oil prices.
New technology is opening virgin areas for exploration — especially off the shores of Brazil, the west coast of Africa and the Gulf Coast of the United States — and extending the lives of older fields. But elsewhere, war and other political obstacles are impeding the development of prospects that would otherwise be the most accessible and cheapest to exploit.
Even if these fields become fully available, many oil experts warn that the world’s production will hit a peak soon if it hasn’t already. With the exception of Iraq’s, most of the “easy oil” in large reservoirs close to the surface is gone. Mexico’s biggest field, Cantarell, is in steep decline. Indonesia has become a net oil importer, withdrawing from the Organization of the Petroleum Exporting Countries as output from its largest fields has slipped and new discoveries have lagged. Production in the North Sea is plummeting, and Russian output is hitting a plateau.
Future discoveries may not turn the tide. New deepwater fields peak fast and then decline because of their unique geology. Deepwater prospects and fields of heavy oil, like those already being exploited in western Canada and Venezuela, are expensive and energy-intensive to develop.
In the meantime, it’s getting more expensive to keep oil flowing from existing fields. Older infrastructure, including aging pipelines on the North Slope of Alaska and outdated equipment in Iran, cry out for costly maintenance.
Full Article
IMF sees no end in sight to credit crisis
Source: FT.com
Global financial markets are “fragile” and indicators of systemic risk remain “elevated” almost a year into the credit crisis, the International Monetary Fund said on Monday.The fund warned credit growth in the US could fall further as a result of ongoing financial system stress and warned that emerging markets would be tested as global financing conditions tighten and policymakers grapple with rising inflation.
The IMF also noted that house prices had softened in a number of European economies including the UK, raising the possibility of further problems in those markets.
The assessment came in the July update to the Global Financial Stability Report, led by former Bank of Spain governor Jaime Caruana.
The IMF said that while likely losses on US subprime mortgages have “largely been acknowledged” in the form of writedowns, financial institutions faced a second wave of losses on other loans.
Credit quality “across many loan classes has begun to deteriorate with declining house prices and slowing economic growth.”
The Fund said bank balance sheets were under “renewed stress” and that the decline in bank share prices had made it more difficult for them to raise new capital.
This “increased the likelihood of a negative interaction between banking system adjustment and the real economy.”
Dow Drops 200 Points
Source: Yahoo! Finance
Wall Street retreated Monday, taking the Dow Jones industrials down almost 180 points as investors’ anxiety about the financial sector had them selling stocks across the market. Bond prices rose, the beneficiaries of investors’ latest search for a safe haven.Financials, which had rallied in recent weeks after logging huge declines, suffered Monday from the same worries about souring debt that caused an abrupt end to their run-up late last week. Wall Street is concerned that a further withering of the housing and credit markets will damage bank balance sheets.
Frederic Dickson, chief market strategist at D.A. Davidson & Co., said investors are still trying to get a longer-term view on the stability of the banking industry, particularly the regional banks.
“Corporate depositors and individual depositors are looking at balances at individual financial institutions. I think that’s unsettling some of the banks.”
Credit card rates soar by up to 35%, just in time for the family holiday
it’s simple, although I admit rather old fashioned: If you don’t have the money to pay for it, then you can’t have it. That’s the best way to avoid such high interest rates.
Source: Mail Online
Credit card companies have imposed ‘phenomenal’ interest rate rises as families head for their holidays.Customers have found themselves facing annual percentage rates of up to 34.9 per cent.
Charges for using credit and debit cards abroad and for withdrawing cash from an ATM have also increased.
credit cardsInterest rates on credit cards are soaring - a tough fact for those who pay just the minimum balance or have large debts
The US - owned card giant MBNA, which runs seven million of the 70million cards in circulation, is at the centre of the rate rises.
The increases are a hammer blow to families heading off on summer holidays, which generate the biggest card bills of the year on items like hotels, food and car hire.
Britons are expected to spend £22billion on credit cards during July and August. With 13.8million customers regularly failing to pay off their balances each month, the rate increases will bring a cash bonanza for the card companies.
Almost one in three customers have faced a rate rise in the past year.
Personal finance expert Michelle Slade, of the website Moneyfacts.co.uk, said: ‘As the credit crunch continues to bite and family finances are stretched, many are resorting to using their credit card to fund their holiday.
‘The number of increases to APRs is quite phenomenal. Normally card providers avoid such increases as these are the rates customers see first.’
In fact, many banks are getting around this problem by not printing the APR on monthly statements. They are using only the monthly interest rate, which many people find hard to understand.
Iran says oil could reach $500 on dollar, politics
Source: NewsDaily
Iran’s OPEC governor said world oil prices could reach as high as $500 per barrel in a few years’ time if the dollar falls further and political tension worsens, an Iranian weekly said.
Venezuela’s President Hugo Chavez takes a sample of crude during his weekly broadcast at a nationalized oil field at Orinoco’s belt in the southern strip of the eastern Orinoco River in this February 17, 2008 file photo.“If the dollar’s value continues to decrease and if the political crisis becomes worse, the oil price would reach up to $500,” Mohammad Ali Khatibi told Shahrvand-e Emrooz in an interview published on Saturday.
He was asked about predictions that oil prices could reach up to $200 per barrel in the next two or three years.
Oil dropped $2 to a fresh seven-week low on Friday, extending a decline that has knocked more than $24 off crude in two weeks as high fuel prices continue to batter demand.
Crude prices reached an all-time peak of $147 earlier this month.
Worried Banks Sharply Reduce Business Loans
Source: NYTimes.com
Banks struggling to recover from multibillion-dollar losses on real estate are curtailing loans to American businesses, depriving even healthy companies of money for expansion and hiring.Two vital forms of credit used by companies — commercial and industrial loans from banks, and short-term “commercial paper” not backed by collateral — collectively dropped almost 3 percent over the last year, to $3.27 trillion from $3.36 trillion, according to Federal Reserve data. That is the largest annual decline since the credit tightening that began with the last recession, in 2001.
The scarcity of credit has intensified the strains on the economy by withholding capital from many companies, just as joblessness grows and consumers pull back from spending in the face of high gas prices, plummeting home values and mounting debt.
“The second half of the year is shot,” said Michael T. Darda, chief economist at the trading firm MKM Partners in Greenwich, Conn., who was until recently optimistic that the economy would continue expanding. “Access to capital and credit is essential to growth. If that access is restrained or blocked, the economic system takes a hit.”
Companies that rely on credit are now delaying and canceling expansion plans as they struggle to secure finance.
Administration official projects record deficit
Source: The Associated Press
A Bush administration official said Monday the next administration will inherit a record federal budget deficit for next year that approaches $490 billion.The official said the deficit was being driven to record levels by the sagging economy and the stimulus payments being made to 130 million households in an effort to keep the country from falling into a deep recession. A deficit approaching $490 billion would easily surpass the record deficit of $413 billion set in 2004.
The administration official spoke on condition of anonymity because the new estimate had not been formally released. Administration officials were scheduled to do that at a news conference later Monday.
White House press secretary Dana Perino had no comment on the $490 billion figure. But she told reporters that the White House and lawmakers acknowledged months ago that they were going to increase the deficit by approving a short-term boost for the slumping economy.
“Both parties recognized that the deficit would increase, and that that was going to be the price that we pay,” Perino said.
The White House had predicted next year’s deficit at $407 billion. Figures for the 2008 budget year ending Sept. 30 may also set a record.
February’s White House estimate predicted the next administration would inherit a $407 billion deficit. That’s expected to rise too, given the continuing weak performance of the economy.
Oil majors’ profits to soar on record crude
Source: Reuters
The world’s five largest fully publicly traded oil companies are expected to, yet again, report record profits next week, thanks to high oil prices, even as investors fret over the recent pullback in crude.In addition to earnings, investors will also be watching for news on controversial, long-delayed service agreements with Iraq and for signs soaring costs are easing.
Oil prices averaged over $120 a barrel in the second quarter — almost double the level in the same period of 2007 — before rising to a record high above $147/barrel on July 11.
Analysts predict this will push sector earnings up around 30 percent in the quarter compared to the same period in 2007, and is likely to attract further criticism from politicians and hard-pressed motorists.
Senate blocks bill to help poor pay energy costs
Note the previous story, also from Reuters. I suppose that all the money is being used for this emergency financing to mortgage giants Fannie Mae and Freddie Mac.
Source: Reuters
In a rare Saturday session, the U.S. Senate voted against moving forward with legislation that would boost funding for a federal program that helps low- income families pay their cooling and heating bills.The legislation would nearly double money for the Low Income Home Energy Assistance Program, commonly known as LIHEAP, to $5.1 billion.
“At a time when the cost of home heating fuels and electricity are soaring, and when the economy is in a decline, millions of Americans are finding it harder and harder to stay warm in the winter or cool in the summer,” said independent Sen. Bernie Sanders of Vermont, who sponsored the legislation.
Low-income families spend on average about 15 percent of their income on home energy bills, compared with 3.4 percent for all other households.
Senators voted 50-35 to limit debate on the bill, but fell short of the 60 votes needed to move to final passage.
Congress approves housing bill
Source: Reuters
The U.S. Congress approved a massive housing market rescue bill on Saturday, offering emergency financing to mortgage titans Fannie Mae and Freddie Mac, and setting up a $300-billion fund to help hundreds of thousands of troubled homeowners.Approved by the Senate in a 72-13 vote, the election-year rescue bill was passed by the House of Representatives on Wednesday. President George W. Bush was expected to sign it promptly, amid doubts about how much it would help.
With foreclosures at record levels, home sales sluggish and property values down, America is in its deepest housing slump since the Great Depression.
Fears that Fannie Mae and Freddie Mac, the largest U.S. mortgage companies, might collapse rattled global markets earlier this month and led the Bush administration to call for emergency measures to bolster investor confidence.
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