Economic News

There are several MAJOR issues in the world today that are either adding to/or could add to our massive economic problems, and could eventually help tip the scales towards total economic catastrophe.


OIL

Yesterday a Suicide Attack on Saudi Arabia’s largest refinery caused Oil prices to jump $2.37 a barrel in one day of trading.

"It's new in the sense that this is the boldest attempt to strike at the heart of a Saudi oil- production complex," Antoine Halff, an oil analyst for Eurasia Group, said. "So far, they had been confined to office buildings and housing units."

Another article suggests this move "clearly signals that al-Qaeda is concentrating on oil, and not the government". Fimat analyst Mike Fitzpatrick said the Saudi incident added to jitters stemming from religious strife in Nigeria and concerns about Iraq and Iran. "Obviously, this has to heighten awareness of the increasing danger in that part of the world," he said.

Jim Lehrer NewsHour is reporting that Oil Supplies are Unstable and incorporates the perspectives of several smart folks.


VENEZUELA

In another move to create a rift between Hugo Chavez’s government and the US, Venezuela announced yesterday that it would prohibit Continental Airlines and Delta Air Lines from flying into their South American nation. They will also restrict flights by a third major U.S. carrier, American Airlines.


FANNIE MAE

Bloomberg is reporting that Fannie Mae Report Spotlights `Mind-Boggling' Accounting Errors.

``What do I have up my sleeve to solve an earnings shortfall?,'' Vice President of Financial Reporting Leanne Spencer asked Chief Financial Officer Timothy Howard.

The exchange was one of at least two deliberate attempts to fudge numbers to meet financial targets that led to $10.8 billion in accounting errors at the government-chartered company. The report concluded that Fannie Mae, which controlled assets exceeding $1 trillion, developed a culture that fostered misleading results and employed a staff ``unqualified'' to detect errors by top management.


BERNANKE

According to this new Bloomberg report, the Helicopter man will continue with “Easy Al” Greenspan’s policy of not targeting asset bubbles, and will continue the policy of “mopping-up” after a burst.

Feb. 24 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke, staking out a key policy in his first month on the job, said it's a ``bad idea'' for the central bank to try to influence housing and stock prices through interest-rate moves.

``To use interest rates to try to puncture the housing bubble would be a disastrously bad idea, and Bernanke obviously agrees, because he's not going to come close to doing that,'' said Alan Blinder, a former Fed vice chairman who is now a Princeton economics professor. He wrote a paper last year saying Greenspan might have been the ``greatest central banker'' ever.

Blinder said the Greenspan-Bernanke approach to bubbles is ``basically, you do nothing, and then the corollary to that is that you mop up after they burst to keep the financial system from taking a big fall.'' Bernanke's hands-off approach has ``been his position for years, since he was an academic,'' Blinder said.


GENERAL MOTORS

GM has more problems on the horizon. TheStreet.com reported yesterday: The Local 755 branch of the International Union of Electrical Workers-Communications Workers of America voted unanimously to authorize a strike if a bankruptcy judge cancels its labor contracts, according to a report from the Associated Press that cited Local 755 Chairman Keith Bailey. Local 755 represents 1,050 workers at a Delphi suspension parts plant in Kettering, Ohio, the A.P. said.

If Delphi workers go on strike, GM could end up in a standstill, and unable to get parts, they will bleed cash, increasing likelihood of ultimate Bankruptcy.


IRAQ

Sectarian violence continues to escalate in IRAQ. Reuters is reporting that Iraq is warning risk of endless civil war:

Iraq's defence minister warned of the risk of an endless "civil war" as sectarian violence flared again on Saturday, killing over 40, and Sunni and Shi'ite leaders met to try to halt four days of bloodshed.

With the gravest crisis since the U.S. invasion threatening his plan to withdraw 136,000 troops, U.S. President George W. Bush made a round of calls to Iraqi leaders on all sides urging them to work together to break a round of attacks sparked by the suspected al Qaeda bombing of a Shi'ite shrine on Wednesday.

"If there is a civil war in this country it will never end," Defence Minister Saadoun al-Dulaimi said earlier as a traffic ban around the capital was extended to Monday following attacks on Sunni mosques and car bomb in a Shi'ite holy city.


UAE PORT DEAL

Looks like the Bush Administration is taking a hard-line stance and won't reconsider the U.A.E. port deal. However, The Department of Homeland Security initially objected to the agreement.


ECONOMIC INDICATORS

INFLATION IS REARING ITS UGLY HEAD. Consumer Price Inflation is up .7% in January, as January Durables Orders Fell 10.2%. Also of Note: the Chinese YUAN hit new highs as the US dollar tumbled, and Gold soared $10 to close the week up 1%.


BIRD FLU

The Bird Flu is circling the globe like wildfire and has now made it to France and Germany. Experts are now saying “even if the current pandemic killing birds passes, no one should breathe a sign of relief because the threat to people will not be gone.”

"At best, a containment policy will only postpone the emergence of a pandemic, 'buying time' to prepare for its effects," Dr Marc Lipsitch and colleagues from the Harvard School of Public Health and Dr Carl Bergstrom from the University of Washington wrote.


IRAN-USA
This article is well worth the time spent reading it, and states that (based on their research and analysis), our current situation with IRAN could turn into a complete financial crisis of a scope comparable with that of 1929.


IMHO, based on trends & analysis of current information, I honestly believe our country and economy are headed towards very tough times.