SAR #8355/Wekender

The history of money is replete with riots.

Silver Lining: Oil is significantly underpriced and the big boys know it. They are socking crude away, with the futures market guaranteeing them a $10 a barrel profit. It's called 'contango'. Wanna dance?

Adjustments: Reporters are pointing out difficulties in comparing today's unemployment numbers with historical records due to this and that. Far more startling is that only 35% of the unemployed in the US qualify for unemployment payments.

Cut It Out: Undersea cables carrying telephone and internet service between Europe and the Middle East have been hit by "failures". Last January two such cables severed by a dragging anchor. Another example of non-redundant systems' vulnerability to the unanticipated.

A Curious Turn: Some are predicting that next year loan repayments will surpass new mortgages extended. Paying off debt is deflationary.

Who benefits? The biggest string on the automakers' loan is that they "quickly" reduce their debt by 2/3rds. Quickly, as in before they go bankrupt when this crust is gone. The GOP's union busting is in there, too, but the important thing is the big money institutions and individuals will have been bought out before the bankruptcy occurs and the common shareholders wiped out.

Reprise? The Soviet Union collapsed following the collapse of oil prices in the late 1980's. Russia is quickly changing from petro-rich to debtor nation, a fundamental step in that dance. Even $50 a barrel would pinch its social economy. Same with Iran, and at $30 for a couple of years Saudi Arabia could become an interesting place. Governments, like economies, run on oil.

Weather or Not: I know, I know, it snowed in Las Vegas. Yet over the last decade NOAA has recorded 230,000 new highs and but 110,000 new lows. Higher highs, fewer new lows. Sounds like a trend. And snowfall? Why, when I was a kid...

War on Unions: The Bush auto loan requires the UAW take wage cuts that will put GM/Chrysler "wages" on a par with transplant auto factories. But "wages" here means total labor cost including pensions and healthcare for retirees. In that current workers are paid roughly the same as their counterparts in Tennessee and Alabama, in order to reach this number current UAW workers will have to cuts to convenience store clerk levels. This is may be a sticking point in the process.

Business As Usual: We're supposed to be shocked that a broker lied to his clients and enriched himself at their expense. Why? How is this different - other than scale - from business as usual on Wall Street? Madoff was more efficient, not bothering with a lot of the mumbo jumbo middle steps, but the end result's the same - a fool and his money, parted.

Boosterism: Japan is planning to buy $227 billion in stock "to help stabilize" the market. How did this approach slip past Hank?

Cultural Difference: Belgium's supreme court found that the current government had interfered with the judicial system, and the prime minister had the good manners to propose his government's resignation. Unlike the US, where that sort of thing is routine in Bush's Just-Us Department.

Demand: The price of oil has come down farther and faster than ever, faster than demand dropped. The US drop in demand is down 4% from the peak, and is well in the lower range of the 5 year average daily demand. If OPEC is able to stick to the announced cutbacks in production, the price about 6 weeks out will be interesting to watch.

Non News: The dying Bush administration has decided to regulate the regulation of carbon dioxide emissions so that the EPA cannot control the gases causing global warming. EPA head Stephen Johnson emphasized that the ruling was made to protect the economy, not the environment.

Porn O'Graph: The Piggy Bank's broken.