India should speak to Nancy Reagan
Or at least, say, her skeleton.
The news is three-fold, and ever-entertaining. You guessed it: it also includes one or the other of Bernanke or Paulson.
Crude oil prices appear increasingly likely to hit a record in real terms reached during the second oil crisis in 1979, as nominal prices on Monday continued rising well above $90 a barrel.
The price leap came after Mexico said it was shutting about 600,000 barrels a day of oil output, or 20 per cent of its total, due to bad weather in the Gulf of Mexico. Authorities hope to restore output in the near term as the cold weather front moves away from the production and terminal areas.
Supply is down, price is up; peak is at. The US dollar is shit (and failing fast). Bad earnings continue to come in (assuming they aren’t delayed). Housing inventory is up; building jobs are down. One would expect ‘the market’ to react accordingly, right? That thing about fundamentals.
Wall Street shares opened higher on Monday, with investors focused on an expected cut from the Federal Reserve later this week.
Oil prices set a new record high as the dollar plumbed fresh depths, while bond yields were higher in early New York trade.
“We look for the Fed to cut the Fed funds rate by 25 basis points to 4.50 per cent, while noting that economic conditions have deteriorated as inflation expectations receded,” said David Rosenberg, economist at Merrill Lynch.
Fundamentals indeed. Perhaps if they just began pumping Adderall straight in via the air-conditioning? One can only wonder. All the news points to one simple reminder: the people in charge of the money are doing exactly that. They are worried about money: keeping it and making it. They are not worried about the economy, or the fact that money and the economy are barely even within hailing distance of one another, anymore.
Meanwhile, our parade of idiot-Svengali “leaders” continues with Paprika-like non-abation. Specifically:
Hank Paulson on Monday hailed what he called “a new era of cooperation” between India and the US while urging New Delhi to pick up the pace of financial and economic reforms and to resist curbs on capital flows.
“As recent experience in the region has shown, administrative restrictions of capital flows are blunt instruments and can have unintended consequences. They tend to inhibit efficiency and lose their effectiveness over time. I encourage India to continue liberalising such restrictions,” Mr Paulson said.
He said in the longer term, India should scrap other rules, such as those forcing banks to hold large amounts of government debt, as well as reduce requirements for banks to lend to certain sectors, such as agriculture, and remove caps on foreign investment in the financial sector.
“Limits on debt and equity financing and asset allocation restrictions on financial institutions are impediments to putting resources to their most productive use,” Mr Paulson said.
I wonder what mad-man Paulson’s audience thought had meandered into their midst.
Just imagine (if you will) the effect of anyone, anyone at all, attending to the US in such a manner. Or if Russia’s Secretary of State (equivalent) copied Rice, and showed up here to give support to anti-government groups while hectoring the Bush administration. Indeed.
Meanwhile, oil prices, the dollar and inflation remain anathema to ordinary newspapers.