SIGTARP on Citi Rescue: Ignoring a Bomb That Has Yet to Be Defused – Yves Smith – On the one hand, I must confess to a “I love the smell of napalm in the morning” response to reading the SIGTARP report on the extraordinary assistance extended to Citigroup, starting in November 2009. The well-documented, blow by blow account, taken from the perspective of regulators, dovetails neatly with the reports here and on other blogs during those fear-filled, gripping times. But on the other hand, the SIGTARP report is annoying, in that it fails to connect some critical dots, diminishes the importance of its key finding, and is far too complimentary to the officialdom. It’s odd that the reports of the Congressional Oversight Panel are consistently more hard-hitting than those of SIGTARP. While most commentators were pleased with its report on AIG (it correctly criticized Geithner for failing to renegotiate the credit default swaps payouts to AIG counterparties, we found the report pulled its punches and incorrectly backed the Fed on its retrading of the AIG financing.
Canada Flips China the Loon Preparing for an Oil Sands Showdown – I recently reminded my readers of China’s never-ending quest for energy… The International Energy Agency reported China’s energy demand will jump 75% by 2035. Can you blame them for buying stakes in nearly every major oil project on earth? There’s one area in particular they’ve set their sights on: the Canadian oil sands. Their oil sands buying spree is still going strong. The country has funneled more than $8 billion into oil sands investments during the last 15 months. PetroChina snagged a 60% stake in two oil sands projects, costing nearly $2 billion. Hopefully OPEC won’t feel too left out… The problem, however, is that China might not get what they’re after. Alberta is welcoming oil sands investors with open arms, but Premier Ed Stelmach has made it clear that they won’t take over — no matter how much money is thrown at the province.
CNN: Oil prices pushing near $100 a barrel — Oil has risen to within reach of $100 a barrel for the first time since the 2008 price spike amid mounting optimism that global economic growth will boost demand. But the sharp rise has also heightened concerns about the impact of soaring commodity prices on the global economy, particularly in emerging countries, as it comes on top of high costs for agricultural commodities and metals. The oil surge also comes on the back of supply disruptions such as this week’s outage in a pipeline in Alaska and strong investor inflows in commodities. Traders said there was a growing consensus that the Organisation of the Petroleum Exporting Countries was comfortable with prices near at $100 a barrel. In the past, Saudi Arabia, the cartel’s de facto leader, had said it would work to keep oil prices at $70-$80. Brent crude, the global benchmark, hit an intraday high of $98.8 a barrel on Wednesday, the highest since September 2008, when oil prices were in the midst of a collapse from their $147-a-barrel record
Alaska Pipeline Problem Signals Future Oil Shortages – The four-day shutdown of the Trans Alaska Pipeline, which sent a jolt through world energy markets, pushing the price of oil up $4 a barrel in two trading days, could be a sign of things to come, according to officials. That’s because the 33-year-old pipeline could outlive its usefulness, unless new sources of oil are developed in northern Alaska. The flow of oil through the 800-mile pipeline was partially restored late Tuesday. Officials hope to have it fully restored in a matter of days, with another brief shutdown to install a bypass around a leak at a pumping station that led to the initial shutdown. The pipeline is now running at a rate of around 400,000 barrels per day. But even at full strength, currently around 650,000 barrels per day, the flow is a fraction of what it once was. At its peak in the late 1980s, the pipeline carried more than 2 million barrels per day. It was designed to carry 1.5 million per day, according to Alyeska Pipeline Service Company, the consortium that owns and operates the line.
PlanetGreen: Confirmed: Mercury Cancels Out the Health Benefits of Fish Oil – Lately, a shadow has perched itself over the fish oil industry. While no one disputes the benefits of a diet rich in omega fatty acids, Rachel wrote about a number of studies pointing to myths associated with fish oil. Most recently, a new study was released that confirms that any benefits that come from fish oil are cancelled out but excessive mercury in the system. According to Environmental Health News, methyl mercury is transferred to people who eat the fish, which is especially concerning for pregnant women whose children are exposed while developing in the womb. The study, published in Environmental Research, said this: "Of the five nutritional components evaluated, only the beneficial effects of DHA – as measured by the children’s test scores – were negatively impacted by increased mercury exposure. The nutritional benefits of DHA were significantly reduced and then disappeared altogether at the higher exposures."
December Foreclosure Filings Slump By Biggest Annual Amount In History As Fraudclosure Clampdown Persists – RealtyTrac has reported its December foreclosure data: at a total of 257,747 default notices, foreclosure auctions and bank repossessions, total foreclosure activity dropped by 1.8% in December and 26.3% from a year earlier, "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." Specifically, December Default notices (NOD, LIS) decreased 4 percent from the previous month and were down 35 percent from December 2009; Scheduled foreclosure auctions (NTS, NFS) decreased 3 percent from the previous month and were down 20 percent from December 2009; and bank repossessions (REO) increased nearly 4 percent from the previous month — thanks in part to substantial month-over-month increases in some states such as Nevada (71 percent increase), Arizona (52 percent increase) and California (47 percent increase) — but were still down 24 percent from December 2009.
More banks walking away from homes, adding to housing crisis – A new type of property is adding to neighborhood blight: the bank walkaway. Research to be released Thursday, the first of its kind locally, identifies 1,896 "red flag" homes in Chicago — most of them are in distressed African-American neighborhoods — that appear to have been abandoned by mortgage servicers during the foreclosure process, the Woodstock Institute found. Abandoned foreclosures are increasing as mortgage investors determine that, at sale, they can’t recoup the costs of foreclosing, securing, maintaining and marketing a home, and they sometimes aren’t completing foreclosure actions. The property, by then usually vacant, becomes another eyesore in limbo along blocks where faded signs still announce block clubs. "The steward relationship between the servicer and the property is broken, particularly in these hard-hit communities,". "The role of the servicer is to be the person in charge of that property’s disposition. You’re seeing situations where servicers are not living up to that standard."
The risks of raising interest rates too quickly – Martin Wolf – To tighten or not to tighten, that is the question. It is one on which the current UK discussion risks becoming more than a bit hysterical. Yes, inflation is well above target. Yes, the Bank of England failed to forecast this. Yet these facts are neither a necessary nor a sufficient argument for tightening policy. Famously, monetary policy works with long and variable lags. No sane monetary policy – that is, no policy that seeks to avoid the certainty of futile slumps – could prevent an overshoot of the target over the next few months or even over the next year. These are just bygones. All anyone can do over bygones is weep. The question, however, is whether this overshooting might continue. The answer? Probably not. We can, in short, see no sign of an incipient wage-price spiral. Nor does one seem imminent. Expectations implicit in gaps between yields on conventional and index-linked government bonds are volatile. But they are currently at about 3 per cent. This is slightly below their average of the past six years.
Get a Model, Plug in Guesses, Cure Unemployment – Just when you thought you’d heard the last of “jobs created or saved,” the Obama administration’s quarterly report card on its $814 billion fiscal stimulus, along comes the Federal Reserve with its own model-derived guesstimates. The Fed’s full menu of securities purchases “will have raised private payroll employment by about 3 million jobs,” said Fed Vice Chairman Janet Yellen. Yellen’s projections are based on simulations performed by the Fed’s macroeconomic model, known as FRB/US, not real jobs. That would be the same model that failed to grasp that mortgage loans made during a period of exceptionally low interest rates by lenders with no skin in the game might not be repaid, putting major financial institutions on the brink of insolvency; the same model that failed to understand how new and exotic derivatives based on these mortgages would perform; the same model that failed to see the millions of jobs that would be lost if housing and credit bubbles were allowed to inflate until they burst; and the same model that predicted an unemployment rate of 8.8 percent in the fourth quarter of 2010 without the enactment of a fiscal stimulus.