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Archive for July, 2008

Global Economy Near Melting Point

It feels like the summer of 1931. The world’s two biggest financial institutions have had a heart attack. The global currency system is breaking down. The policy doctrines that got us into this mess are bankrupt. No world leader seems able to discern the problem, let alone forge a solution.

The US may soon tip into a second leg of this crisis as the fiscal package runs out and Americans lose jobs in earnest. US bank credit has contracted for three months. Real US wages fell at almost 10pc (annualised) over May and June. This is a ferocious squeeze for an economy already in the grip of the property and debt crunch.

No doubt the rescue of Fannie Mae and Freddie Mac – $5.3 trillion pillars of America’s mortgage market – stinks of moral hazard. The Treasury is to buy shares: the Fed has opened its window yet wider. Risks have been socialised. Any rewards will go to capitalists.

Severe Danger From Iraq Electrical Work

NEW YORK – Inferior electrical work by private contractors on U.S. military bases in Iraq is more widespread than the Pentagon has acknowledged, according to a published report.

A Senate panel investigating the electrocutions of Americans on bases in Iraq was told last week by former KBR Inc. electricians that the contractor used employees with little electrical expertise to supervise subcontractors in Iraq and hired foreigners who couldn’t speak English.

The Pentagon has said 13 Americans have been electrocuted in Iraq since September 2003.

During just one six-month period — August 2006 through January 2007 — at least 283 electrical fires destroyed or damaged American military facilities in Iraq, including the military’s largest dining hall in the country, according to the documents obtained by the Times.

Gore Calls for Carbon Free Power Within Decade

WASHINGTON — Former Vice President Al Gore said on Thursday that Americans must abandon electricity generated by fossil fuels within a decade and rely on the sun, the winds and other environmentally friendly sources of power, or risk losing their national security as well as their creature comforts.

“The survival of the United States of America as we know it is at risk,” Mr. Gore said in a speech to an energy conference here. “The future of human civilization is at stake.”

Stocks Extend Rally on Lower Energy Prices

NEW YORK (AP) – Wall Street surged Thursday, extending its rally into a second session as tumbling energy prices bolstered an already upbeat mood that followed stronger-than-expected quarterly reports from big names like JPMorgan Chase and United Technologies.

The Dow Jones industrial average rose nearly 150 points.Investors got a double dose of good news after weeks of angst about the economy. Light, sweet crude fell $5.31 to settle at $129.29 a barrel after dropping more than $10 in the previous two sessions.

Oil Prices Down and Stock Prices Up

NEW YORK – Wall Street at least temporarily shrugged off some of its many concerns Wednesday and bounded higher thanks to a drop in oil prices. The Dow Jones industrial average rose 276 points, or 2.5 percent, posting its best daily gain in three months.

The broader Standard & Poor’s 500 index also gained 2.5 percent, while the technology-dominated Nasdaq composite index surged 3.1 percent. Investors exited government bonds and back into stocks as it appeared that the slowing economy will curtail demand for fuel and, in turn, energy costs.

Light, sweet crude fell $4.14 to settle at $134.60 a barrel on the New York Mercantile Exchange, bringing its two-day decline to $10.58.