Gulf Officials Optimistic That Cement Will Kill Well

Norway Oil Output May Drop 6% in 2011, Gas Rise 2.5%, Oil Directorate Says – Norwegian oil production will fall 6 percent this year, its 11th annual decline, as the world’s seventh-largest crude exporter struggles to maintain output after 40 years of pumping from aging North Sea fields.  Production will fall to 98.3 million cubic meters in 2011, or 1.7 million barrels a day, from 104.4 million cubic meters in 2010, the Stavanger-based Norwegian Petroleum Directorate said today. Gas output is expected to rise to 109.1 billion cubic meters from 106.4 billion cubic meters, the agency said.  “The fact that the companies on the Norwegian shelf are not able to achieve a maximum exploitation of our fields poses a challenge,”  “Although our recovery rate is among the best in the world, we are still not satisfied. If we manage to recover just 1 percent more, this would mean revenue in the hundreds of billions for Norway.”

2010 Year-End Foreclosure Report  RealtyTrac® today released its Year-End 2010 U.S. Foreclosure Market Report™, which shows a total of 3,825,637 foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on a record 2,871,891 U.S. properties in 2010, an increase of nearly 2 percent from 2009 and an increase of 23 percent from 2008.  Foreclosure filings were reported on 257,747 U.S. properties in December, a decrease of nearly 2 percent from the previous month and down 26 percent from December 2009 — the biggest annual drop in foreclosure activity since RealtyTrac began publishing its foreclosure report in January 2005 and giving December the lowest monthly total since June 2008. “Total properties receiving foreclosure filings would have easily exceeded 3 million in 2010 had it not been for the fourth quarter drop in foreclosure activity — triggered primarily by the continuing controversy surrounding foreclosure documentation and procedures that prompted many major lenders to temporarily halt some foreclosure proceedings,”

When Basel III Met the Yankee Bubblemeisters – Not being content with one housing bubble and its demise, let’s just say the US in its own inimitable way is trying to inflate another one via shenanigans such as the $600 billion Fed bond purchase programme. Now we come to another conundrum of international organization in the form of the upcoming Basel III macroprudential banking regulations. Interestingly enough, some of its framers propose including a mechanism for various countries to report that asset bubbles are afoot at home. In theory, the others would then be able to raise financial firms’ capital requirements to guard against troubles in the said country spilling across borders via this early warning device. It sounds great in theory, but what if the world’s largest economy is so magnificently distorted already by, say, still-historically elevated housing prices as to preclude rational analysis in neat and tidy Basel III frameworks? Beats me, and nobody should be surprised to see the bubblemeisters push back at the global negotiating table for Basel III:

Begich: As The Arctic Melts, Let’s Drill, Baby, Drill – Yesterday, Sen. Mark Begich (D-AK) said that the rapid warming of the Arctic because of oil pollution means that more Arctic drilling should commence. Begich was responding to the presidential oil spill commission’s report, which recommended new drilling around Alaska, subject to stronger standards. The Democratic senator from the state most changed by global warming pollution used the commission’s report to emphasize his desire for more “Arctic development“: As many of us have been saying for years, more resources and research are needed for Arctic development as warming temperatures make far north resources more accessible.

Trade Deficit declined slightly in November – The Department of Commerce reports [T]otal November exports of $159.6 billion and imports of $198.0 billion resulted in a goods and services deficit of $38.3 billion, down from $38.4 billion in October, revised. November exports were $1.2 billion more than October exports of $158.4 billion. November imports were $1.1 billion more than October imports of $196.8 billion.  The first graph shows the monthly U.S. exports and imports in dollars through November 2010. Imports have been mostly flat since May, and exports have started increasing again after the mid-year slowdown. The second graph shows the U.S. trade deficit, with and without petroleum, through November. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

 Corn Surges to 30-Month High After USDA Cuts Supply Estimates — Corn surged to the highest price in almost 30 months after the U.S. government lowered forecasts for domestic inventories, tightening global food supplies after adverse weather slashed harvests. Wheat also climbed. March-delivery corn rose as much as 1.7 percent to $6.42 a bushel on the Chicago Board of Trade, the highest price for a most-active contract since July 2008. The grain was at $6.3675 at 12:20 p.m. Paris time, adding to yesterday’s 4 percent jump. The U.S. Department of Agriculture cut its estimate of the country’s 2010 corn harvest, forecasting a global production deficit of 20.1 million metric tons, 17 percent more than it expected in December. Corn stocks in the U.S., the world’s largest grower, will fall to 745 million bushels (18.9 million tons) before this year’s harvest, the smallest since 1996, the USDA said

CMBS delinquencies rose 79% in 2010: Moody’s -The number of delinquencies within the conduit/fusion space of commercial mortgage-backed securities rose 79% in 2010, ending December at 8.79% up from 4.9% a year earlier, according to Moody’s Investors Service. Analysts said the rate also climbed 16 basis points last month from 8.63% in November. While the rate continues to increase, it slowed considerably during the second half of last year. And the average monthly rate of change was slightly lower than 2009 despite greater volatility and large increases early in 2010. Moody’s expects new CMBS issuance of about $37 billion in 2011 and projects its delinquency tracker to end this year between 9.5% and 11%. The rate of delinquencies should moderate as the "capital markets continue to heal and the flow of loans into special servicing is slowing."

Producer Prices in U.S. Increased 1.1% in December on Fuel – Wholesale costs in the U.S. rose in December by the most in 11 months, led by higher prices for commodities such as fuel and food.  The producer price index increased 1.1 percent from November, Labor Department figures showed today in Washington. The so-called core measure, which excludes volatile food and energy costs, climbed 0.2 percent, in line with estimates.  An improving outlook for the world’s largest economy and rising demand in fast-growing emerging markets like China means producers are paying more for raw materials. 

Will Paychecks Shrink in 2011? – Workers expecting a raise in the next year, might get something very different–a pay cut. Wages have already been growing very slowly during the recession, up just 1.5%. That’s down from 3.5% at the beginning of the recession. And when you factor in inflation, real wages, which is the measure of whether you can buy more or less stuff with your paycheck, are basically flat. But is the pay picture set to get worse? Perhaps. As growing number of the 14.5 million Americans looking for a job re-enter the workforce, the pressure on wages might cause salaries to fall for the first time in decades. Here’s why: Wages typically don’t fall, even in recession. What’s changing is that the unemployment rate has stayed high much longer than in past recession. It’s been above 9% for 20 months and, despite dropping in December, is likely to stay there for most of 2011. What’s more, nearly half of the unemployed–6.4 million–have been out of work for more than 6 months. The longer someone is jobless the more likely they are to work for less.

 

More Silliness on the Debt Ceiling and Government Shutdowns – Over at The Caucus blog at the New York Times, Carl Hulse yesterday posted about a letter from Reps. Barney Frank (D-MA) and Norm Dicks (D-WA) to Defense Secretary Robert Gates asking him "to explain the military impact of putting the government into default," that is, what would happen if Republicans in Congress refuse to increase the federal debt ceiling when it’s reached later this year.  Here’s the money quote from Hulse’s post: More specifically, they asked the secretary what the effect would be on combat operations and military personnel in Afghanistan and Iraq “if Congress were to fail to raise the debt limit and a government shutdown occurred.”

`Huge’ Chile Inflation Concerns Prompt Switch to Rate Increase Predictions – Economists are abandoning forecasts for Chile to end seven months of interest-rate increases after the central bank’s $12 billion plan to weaken the peso sent inflation expectations soaring to a two-year high.  Policy makers will raise rates to 3.5 percent at their meeting today, according to the median forecast of 21 economists surveyed by Bloomberg. On Jan. 10, the median prediction was that the central bank would keep borrowing costs unchanged.  Investors increased bets on inflation expectations, as measured by Chile’s swaps market, to the highest since 2008.

Brown Budget May Cost Los Angeles County $2 Billion — Los Angeles County may face $2 billion in additional costs under the budget proposed by California Governor Jerry Brown, according to a report. The nation’s largest county, with more than 10 million residents, may see state welfare funding cut for more than 37,000 families and a shift of 13,550 felons from state prisons to county jails under the proposed budget, according Ryan Alsop, assistant chief executive officer. The county’s assessment of the proposed spending plan’s effects was released today. “The realignment the governor is proposing is a great big cost-shift,” Alsop said today in a telephone interview. “You can understand why we’re a little bit nervous about what’s happening. The cost-shift without the additional revenue would bankrupt all counties in California.”

Wisconsin Suffers as Build America Bonds Demise Raises Costs: Muni Credit – Wisconsin, whose 2011 tax revenue is forecast to increase 4.7 percent, is paying two-thirds more to borrow money this week than in an August sale of taxable Build America Bonds as it returns to the tax-exempt market.  Wisconsin is selling $429 million in tax-free debt this week with yields of 3.75 percent on bonds maturing in May 2021, according to data compiled by Bloomberg. Last year, its sale of Build Americas included 10-year securities priced to yield 3.45 percent. Minus the 35 percent federal subsidy on interest costs, Wisconsin paid 2.24 percent, Bloomberg data show.

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