ECB

”s Summer not Fall.

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Everyone is nervous about Europe.  Me too.  I have no way of knowing how much of this is already priced in the market.  You’d have to say a lot based on the violent reaction in the oil patch, some European markets but  I don’t see any positive outcome from this weekend vote in Greece.  If they vote to  keep the austerity demands in place, brief rally and the market will soon say the economy is just going to at best muddle along and at worse, be right back at the  bread line. On the other hand if they abandon austerity, … Read more

Spain’s Banking Rescue Should Become Example for Europe – Bloomberg

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Spain’s Banking Rescue Should Become Example for Europe   Europe’s leaders can’t save their currency union without figuring out a way to salvage the region’s banks. Spain is a perfect place to start.Perhaps no country better illustrates the mutually reinforcing links among the euro area’s banking, sovereign-debt and economic crises than Spain. Its banks are largely paralyzed amid concerns about heavy losses on real estate loans that, by various estimates, could require as much as 120 billion euros $150 billion in fresh capital to offset. Tight bank credit has in turn deepened the country’s economic slump, increasing banks’ potential losses … Read more

ECB Won’t Step Up Bond Purchases: Draghi – Bloomberg

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This is really pretty incredible.  It’s surprising to me that more people  are not talking about this.  While the headline reads all doom and gloom, if you read the article, the ECB just provided unlimited loans to banks and without question many of these if not all will be buyers of their country’s soverign debt.  This is the defacto unlmiited support peple are calling for.  I guess they may have to spell it out better.   The ECB is resisting pressure to increase its bond buying, saying governments need to find a lasting solution to the debt crisis. The central … Read more

For Europe, Only Way Out Is to Break Up: Kyle Bass – Yahoo! Finance

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For Europe, Only Way Out Is to Break Up: Kyle Bass CNBC – 47 minutes ago   With no workable solutions in sight and a sovereign debt crisis only likely to get worse, the European Union is likely to see an ultimate breakup, widely followed hedge fund executive Kyle Bass told CNBC. Bass, the managing partner at Hayman Capital Management famous for making huge sums from the collapse of the subprime mortgage industry, said last week’s EU summit produced “a blank piece of paper” on which “there are no details,” causing him to conclude, “It won’t work.” via For Europe, Only Way … Read more

Oil Hysteria: The Resurrection of Peak Oil

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It would be great if I’m wrong but chances are we’ll see prices for crude hit $140 before we see $80 barrels again….After hovering around $103 a barrel for the past week, light, sweet crude had jumped to over $107 a barrel on the Nymex (and Brent over $117 a barrel).  Let’s take a step back and try to understand why this is happening……

The situation in Libya is looking like a shit-show. Pro-Gadhafi forces have pushed back rebel forces, in spite of the coalition-imposed no-fly zone.  Plus the reports of British Ops & the CIA tearing it up in Libya, doesn’t make matters any better.  And let’s not forget about the geopolitical unrest in Syria, Yemen and Bahrain.

The situation in Libya raises a broader, far more concerning set of questions. If it can happen in Libya, why not in Saudi Arabia, where the government is still essentially tribal in nature and will not be winning any prizes for their human rights record anytime soon. Women are still not allowed to drive. Take their 12 million barrels/day off the market, even for a few days, and the geopolitical implications are large, very large (despite the fact that the US imports only 2 million barrels a day from the mid east).Having said that, Canada is now our largest foreign supplier, followed by Mexico and Venezuela (I’ll save my opinions on Chavez for a later date). But oil is a globally traded commodity, and if you prick the supply line in one place we all have to pay. Remove Saudi Arabia from the picture, and the results could be catastrophic, for China first, but for ourselves as well.

While unlikely, if the US keeps demand relatively flat through the use of new alternatives (which there are a great deal of), new conservation efforts and a growing economy, China promises to eat up all of this increase. That my friends, is when the sushi hits the fan. I think oil could easily hit $300/barrel by 2020.

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