Monday, April 14, 2008

News of interest today

Much more of the same (now becoming quite routine) news: Oil Trades Near Record as Dollar Fall Spurs Inflation Hedging

(Hint to our policymakers as to why: It's all because of your inept boom, bubble, bust Monetary Policies! Stop cutting rates/injecting money and trying to bail out our banking/financial systems -- All you can do now is ease the pain, but your policies will likely make it worse over the long run... Another boom is unreachable without first undergoing severe pain and squeezing out the prior excesses that you created.

Easy money policies and >18% M3 increases will drive us into a hyperinflationary recession/depression! Right now your policies are merely creating high prices (stretching consumer budgets to the max), but tomorrow they could cause loss of status for the World's Reserve Currency. .. Therefore, STOP what you are doing to our currency and let the financial/banking system cards fall where they may -- before it's too late -- for both the US consumer and our country!

Crude oil traded near $112 a barrel after closing at a record yesterday as investors purchased futures contracts to hedge against the falling dollar. Brent crude reached an all-time high in London.

The euro is trading less than 1 cent from a record high against the dollar, spurring interest in energy and metals. China, the world's second-largest oil consumer, imported 25 percent more crude in March versus a year ago, offsetting projected demand declines in the U.S. this year.

``As the dollar weakens then the oil price becomes cheaper in terms of the euro and that encourages buying, so there may be some people who view oil as a hedge against dollar weakness,'' said
David Moore, commodity strategist at Commonwealth Bank in Sydney. ``The trend in China's imports is something that's contributed to the tightness in oil markets.

Oil has risen 37 percent and the dollar has dropped 12 percent against the euro since the Federal Reserve began lowering interest rates on Sept. 18.

The likelihood of the Fed cutting its target rate for overnight lending between banks by a half-point to 1.75 percent on April 30 rose to 52 percent from 36 percent a week ago, futures contracts on the Chicago Board of Trade show.

Anyone without a void between their ears knew this would become a problem:
Wachovia's Pick-A-Pay Becomes Pick-A-Problem

NEW YORK -(Dow Jones)- Wachovia Corp.'s (WB) controversial Pick-a-Payment mortgage program lets borrowers choose between four monthly payment amounts. Unfortunately for Wachovia, these "Pick-a-Pay" borrowers are increasingly inventing a fifth choice: Not making mortgage payments at all.

The Charlotte bank reported on Monday a $350 million loss during this year's first quarter, due in large part to stunningly high losses within its $121 billion-plus book of flexible-payment, or Pick-a-Payment, mortgages - a legacy of Wachovia's ill-conceived 2006 purchase of Golden West Financial.

On Monday, Wachovia conceded total losses from Pick-A-Pay loans could eventually amount to a staggering 7% to 8% of the loans' combined value, a range of $8.5 billion to $9.7 billion - meaning the bank, and its shareholders, will likely be coping with Pick-a-Pay losses for years to come.

Among Wachovia's book of Pick-a-Pay loans, "nonperforming assets" - or soured loans - "grew 309.8% year-over-year," compared with an annual bad-loan growth rate of 119.7% for Wachovia's traditional mortgages, said Byron MacLeod, an analyst with Gradient Analytics, in a note to investors.

I've been discussing this for months: Food costs rising fastest in 17 years

The U.S. is wrestling with the worst food inflation in 17 years, and analysts expect new data due on Wednesday to show it's getting worse. That's putting the squeeze on poor families and forcing bakeries, bagel shops and delis to explain price increases to their customers.

U.S. food prices rose 4 percent in 2007, compared with an average 2.5 percent annual rise for the last 15 years, according to the U.S. Department of Agriculture. And the agency says 2008 could be worse, with a rise of as much as 4.5 percent.

Higher prices for food and energy are again expected to play a leading role in pushing the government's consumer price index higher for March.



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