2008, the Year of $100/Barrel Oil

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As freep pointed out, the price of oil has officially topped $100/barrel.

Surging economies in China and India fed by oil and gasoline have sent prices soaring over the past year, while tensions in oil producing nations like Nigeria and Iran have increasingly made investors nervous and invited speculators to drive prices even higher.

Violence in Nigeria helped give crude the final push over $100. Bands of armed men invaded Port Harcourt, the center of Nigeria’s oil industry Tuesday, attacking two police stations and raiding the lobby of a major hotel. Word that several Mexican oil export ports were closed due to rough weather added to the gains, as did a report that OPEC may not be able to meet its share of global oil demand by 2024.

Light, sweet crude for January delivery rose $4.02 to $100 a barrel on the New York Mercantile Exchange, according to Brenda Guzman, a Nymex spokeswoman, before slipping back to $99.15.

I’m not surprised in the least that this symbolic limit has been passed (however briefly–this was just a single transaction). It’s just kind of creepy that it happened on the first business day of the New Year (along with a 200 point decline in the Dow).

We started last year with the hope that somehow we could scale back Bush’s disastrous imperialism. A year later, Bush’s policies and the developed world’s addiction to oil continue to destabilize the world. Only now, the economic impacts of those policies are taking center stage.

Tommy K’s Everywhere

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This was a story I was expecting to see: a report that, in recent years of lax oversight, a large number of people have been defrauding mortgage companies.

The number of mortgage fraud cases has grown so fast that government agencies that investigate and prosecute them cannot keep up, lenders and law enforcement officials have said.

Reports of suspected mortgage fraud have doubled since 2005 and increased eightfold since 2002. Banks filed 47,717 reports this year, up from 21,994 two years ago, according to statistics from the Federal Bureau of Investigation and the Financial Crimes Enforcement Network of the Treasury Department. In 2002, banks filed 5,623 reports.

“I don’t think any law enforcement agency can keep up with mortgage fraud, because it’s such a growth industry,” said Chuck Cross, vice president of mortgage regulatory policy for the conference of state bank supervisors, an organization of regulators and bankers. “There’s too many cases, not enough agents.”

Mortgage fraud covers crimes like false statements on mortgage applications and elaborate “flipping” schemes that involve multiple properties and corrupt appraisers, title companies and straw buyers.

What I’m waiting for, now, is news of what these people used their fraudulent money for. Are these tens of thousands of cases of mortgage fraud just con men getting rich in the easiest way possible? Or were they funneling their ill-gotten money to something or another. In the case of Tommy K, he used his fraudulently gained money bribing Republican Congressmen. Was he the only one capitalizing on the corporatists’ refusal to regulate industry to funnel more money to corporatists?

Competence versus Populism

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A number of people are pointing to David Frum’s seeming come-to-Jeebus realization that Conservatives should beware of picking incompetent hacks in the guise of political loyalty.

Here’s the lesson to learn: It’s always important to respect the values and principles of the voters. But politicians who want to deliver effective government and positive results have to care about more than values — and have to do more than check their guts. They need to study the problem, master the evidence, and face criticism.

It’s not only conservatives who succumb to gimmicks of course. The left still feels a lingering attachment to socialism, the most disastrous gimmick of them all. Tough-minded conservatives slashed that illusion to pieces decades ago. But since then, we have begun to go a little easy on ourselves. And over the past half dozen years, the consequences of our militant anti-elitism has come home to roost.

If elitism means snobbishness, then of course it is a vicious thing. If it means being impressed by credentials instead of evidence, then again: good riddance. But if it is elitist to expect politicians to be able to see through glaringly false and stupid ideas — well in that case, call me elitist.

But few note where Frum’s criticism is directed: to those who support Mike Huckabee or Ron Paul. Read more →

Breaking: Persians Still Better at Chess than Americans

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Is it any surprise that Iran chose this moment to ditch the dollar?

Iran, the second-biggest producer of crude oil in the Middle East, has “completely halted” all oil transactions in dollars, the state-run ISNA news agency said, citing Oil Minister Gholamhossein Nozari.

No, I don’t think so. After all, the release of the NIE this week will make it very difficult for the US to respond with full-scale war–as some believe the US did when Iraq moved away from the dollar. The Administration has been telling us for weeks now that Iraq is all peachy keen, which will make it hard to claim that Iran is destabilizing Iraq. And now the Administration has just said Iran has no active program to develop nukes–the other convenient excuse to start a war. Moreover, by pushing Europe to strong-arm Iran, all the while hoarding the information that Iran didn’t have the nuke program we claimed they did, has really pissed off our European allies.

And, at the same time, Iran has picked a moment that may have maximum effect on OPEC as a whole.

The Organization of Petroleum Exporting Countries has set up a team to study pricing oil in another currency, the INSA cited Nozari as saying. The measure is designed to prevent further losses in revenue to oil exporters, ISNA reported.

The group’s findings will be announced at the next OPEC meeting, Nozari said, according to ISNA.

IANAE, but it seems that each time an oil producer moves away from the dollar, it’s going to be more and more tempting for others to follow. So by moving while the issue is under consideration, it may pressure those on OPEC (our Saudi bankers) who want to help the US out.

Two weeks ago, the Annapolis Conference looked like an opportunity for the US, the Saudis, and the Israelis to forge some kind of agreement that might counter Iranian power. But things haven’t gone so well for them in the interim two weeks.

Big Shitpile Data Point

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Last week I noted that Tommy K, Duke Cunningham’s briber, dealt at least $50 million of his fraudulent mortgages to one of the companies buried deepest in the mortgage meltdown shitpile, Washington Mutual. I’m not suggesting that WaMu knew they were buying up Tommy K’s greek shitpile–though I do suspect that the same things that enabled WaMu to create its own corner of the shitpile (like lax oversight) made them an easy mark for a guy like Tommy K.

But the coincidence got me wondering: I wondered whether WaMu had been similarly bilked by others. And who were the other companies getting cheated in mortgage fraud leading up to the explosion of the shitpile?

So I decided to check the other politically-tainted mortgage fraud case, that of Democrat Katheryn Shields in Missouri. The day before she filed to run for Mayor of Kansas City, Shields and her husband got indicted for mortgage fraud by none other than Brad Schlozman, who replaced Todd Graves after he refused to take bogus cases against Democrats. Shields and her husband were recently acquitted of the charges.

As it turns out, it wasn’t WaMu that got stuck with the over-valued mortgage after Shields sold her home. But it was another of the mortgage companies stuck deep in the shitpile: Fieldstone Mortgage, which just filed for bankruptcy. Read more →

That’s What I Like in a Financial Advisor

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He opines, from deep inside the Beltway, that "real America" is doing just peachy in this economic crisis.

"We obviously have problems in the housing sector and we have problemsin the financial sector, but … real America is doing just fine," hesaid.

From which I assume he means those "real Americans" who have neither investments nor a house nor a low income.

And then, he gets out while there are still lifeboats available.

Top White House economic adviser Allan Hubbard is expected to leave hispost at the end of this year, the Wall Street Journal reported onWednesday in its on-line edition.

That way, he doesn’t have to share his lifeboat with any "real Americans."

Update: Attaturk seems to like these kind of financial advisors, too.

Oil Bucks

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I’m a determined skeptic about broadcast "accidents." But for the life of me, I can’t understand the precise goal of allowing a discussion about not discussing the falling dollar at the OPEC summit to be caught on tape. Here’s the Financial Times’ version of events–which depicts it as disagreement about the underlying issue. 

In a landmark summit, leaders of the Organisation of the PetroleumExporting Countries are meeting in Riyadh, Saudi Arabia, were dividedover how they should respond to the weakness of the US dollar, whichhas fallen 16 per cent this year against a basket of leading currencies.

Thedollar has dropped 44 per cent against the euro since Opec leaders lastmet in Caracas, Venezuela in 2000. Opec members are also divided aboutwhether the group should seek to play a greater role in world politicsas well as in the oil market.

The disagreement was revealed whena ministerial meeting Friday afternoon, supposed to be in closedsession, was accidentally broadcast live to reporters for about 30minutes, before Saudi officials cut off the transmission.

But look atBloomberg’s version:

Saudi Arabia, the world’s largestcrude oil exporter, rejected a proposal by Iran and Venezuela todiscuss the weak dollar at this weekend’s OPEC summit in Riyadh,saying it didn’t want the U.S. currency Read more →

The Lead Rubber Ducky in Grover’s Bathtub

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There’s an interesting case study going on over at the Senate Commerce Committee. The Committee is trying to write legislation to return the Consumer Product Safety Commission to its former strength so it can prevent things like lead-filled toys from entering the toddler chew chain. Yet the Commission’s acting head, Nancy Nord, is trying to preserve the Norquistian "ideal" of small government–she’s objecting to Senate plans to give her Commission more money and other resources.

The nation’s top official for consumer product safety has askedCongress in recent days to reject legislation intended to strengthenthe agency, which polices thousands of consumer goods, from toys totools.

On the eve of an important Senate committee meeting to consider the legislation, Nancy A. Nord, the acting chairwoman of the Consumer Product Safety Commission,has asked lawmakers in two letters not to approve the bulk oflegislation that would increase the agency’s authority, double itsbudget and sharply increase its dwindling staff.

Ms. Nordopposes provisions that would increase the maximum penalties for safetyviolations and make it easier for the government to make public reportsof faulty products, protect industry whistle-blowers and prosecuteexecutives of companies that willfully violate laws.

I’m sure it will surprise no one reading that Nord was not chosen for Read more →

Exxon Would Like to be Excused

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Back when I taught, at the beginning of the school year each year the school would hand professors a description of the incoming freshman class so the professors could understand what world their students were coming from. It usually read something like:

2007: This year’s incoming freshmen were born in 1989.

The top TV series for most of these students’ teen years was American Idol.

These students matured after the first big judgments against online file-sharing.

During these students’ freshman year of high school, the first legal gay marriages were performed in this country.

The Exxon Valdez disaster happened the year most of these freshmen were born.

I made up the whole list (though I think I’m close on most counts)–and my ignorance of current pop culture has been pretty well established. But my point was to contextualize the Exxon Valdez disaster which did, indeed, occur the year that most incoming college freshmen were born. It’s been 18 years, and the interim years have seen record-smashing profits for Exxon, not to mention two wars to ensure our access to oil in the Middle East.

But Exxon is still fighting the fines imposed on it for the disaster.

The Supreme Court today agreed to hear an appeal by Exxon Read more →

Funny Money

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Atrios provides some crack former econ professor analysis on the dollar …

WHEEEEEEEEEEEEEEEEE

Dollar sinking.

Thedollar fell as low as $1.4426 per euro, the weakest since theintroduction of the 13-nation common currency in 1999, before tradingat $1.4420 as of 6:29 a.m. in Tokyo from $1.4393 in late New York onOct. 26. It may drop as low as $1.4530 this week, Gibbs said.

And gjohnsit offers a really excellent eulogy for the petrodollar.

The news came out yesterday when few would notice.

CARACAS (Reuters) – OPEC is likely to discuss creating a basket ofcurrencies for oil pricing at its next summit due to the steady declinein the dollar, Venezuela’s Energy Minister Rafael Ramirez said onFriday.

"The need to establish a basket of currencies … will probablybe a point of discussion in the next OPEC summit," Ramirez toldreporters during an evening event in the presidential palace.

"The dollar as a benchmark currency has been weakening quite a lot and it creates distortions in oil markets."

While disturbing, it wouldn’t mean much except for the fact thatthis is merely the latest step in a trend away from the dollar by OPECnations. For example: