Global markets are trying to recover as the ECB provides some cover for the Greeks with a surprise rate cut against a backdrop of some better than expected US economic data. Europe was trying to continue to kick the Greek can down the road and tried to end the charade with a package to head off a Greek default. Greek PM Papandreou created a world of turmoil proposing a referendum of the EU handouts as the markets gyrated headline after headline. The Greek people want a bailout but they don't want to make the spending cuts that will be necessary. Austerity is no fun, especially when you think you hold Europe and the world hostage and that you can still have your cake and eat it too.
Rumors that Papandreou would resign or that the referendum was off the table created wild swings and crazy things. Yet ECB cut rates helped restore sanity in an insane world.
The market also hoped that the G20 would do the Cannes can and help provide confidence to the global market place. The AP reports, The United States, China, Germany and other major rich and emerging economies have pledged to fight cross-border tax evasion under an agreement approved Friday, which supporters say could raise tens of billions of dollars at a time when indebted European nations are scrambling for more revenue. The deal approved during the Group of 20 summit adds to a marathon campaign by the United States and the European Union to pressure Switzerland and other tax havens to scrap practices they say help wealthy individuals and companies hide income. Supporters say the agreement could help governments collect tens of billions of dollars in taxes on previously hidden income. The G-20 governments marked the official approval of the agreement Friday by all of the group's members during the summit in this Mediterranean resort. The Organization for Economic Cooperation and Development, which developed the agreement with the Council of Europe, has pointed to estimates that the United States loses $100 billion a year and Greece $30 billion to tax evasion.
For the oil market maybe China is trying to restore sanity in the products. Sometimes the Chinese have to admit that in a controlled economy it is almost impossible to control prices. Fuel shortages in China and dislocation of supply may inspire China to let refiners set their own price for oil. In fact at times the disruptions created by the government trying to control the price of oil and heating fuel have led to major shortages in winter that have left people freezing and railroads stranded. Reuters News reported, China's top refiners have bought about 320,000 tons of diesel to cover domestic shortages of the power-generating fuel, traders said on Friday, rare purchases by the world's second largest economy that will squeeze an already tight market. Chinese demand would likely buoy refinery margins for producing diesel into the early months of 2012, industry sources and analysts said. The market is very tight right now, a trading source based in Singapore said. There is no oil left in North Asia for spot buying and everyone's competing for barrels. We are very short of barrels right now. Traders and industry sources said Unipec, the trading arm of China's top refiner Sinopec Corp and the second-largest refiner PetroChina had bought a combined 240,000 tons for November delivery and 80,000 tons for December delivery. Unipec's purchases were the first in over a year and the two companies bought almost half their tonnage from South Korea's Hyundai Oilbank and S-Oil , industry sources with knowledge of the deals said. The supply squeeze in China is expected to ease in December as Sinopec and PetroChina bring on line new crude refining units and as plants return from maintenance, traders said. China had been expected to import diesel to alleviate a power shortfall through boosting electricity output at power plants and private diesel generators in factories. Both of China's top state-owned oil companies have been ordered by local authorities to increase diesel distribution to areas urgently in need of the product. Sinopec has curbed diesel exports for most of the year, but had not been in the international market for imports. Diesel is part of a group of products known as middle distillates. The flow into China was expected to bolster the refining margin in Asia for producing middle distillates from crude - known as the gasoil crack - which is already at a three-month high of $19.44 a barrel above Dubai crude.
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