Is BP too big to fail? Get ready for the latest BP stress test and a new BP thing to worry about. Reuter's reports that the U.S. Federal Reserve's New York branch has been investigating the exposure of major financial firms to BP to make sure that if BP can't meet the costs of its spill in the Gulf of Mexico, it won't put Wall Street or the world's financial system at risk. Reuters says that the New York fed, after two weeks of reviewing documents and asking banks about their BP exposure, found no systemic risk, and it hasn't asked firms to alter their credit relationships with BP, the sources said. The New York fed and BP officials declined to comment. Banks that trade with BP wouldn't comment publicly.
You are entering a new dimension. The dimension not only of sight and sound but of the mind and imagination, you are entering land and borrowing and illusion of cutting deficits. Beware you have entered the Euro Zone. The oil market seemed to have one eye on the storm had another eye on the Euro. The Euro really saw some pressure during the session as uncertainty about EU member nations ability to pay back debt became an issue. Dow Jones said the euro fell broadly Monday as worries mounted about financial-system strains ahead of the expiry of a large-scale European Central Bank lending facility later investors fear a liquidity shortfall. The euro fell to a fresh all-time low against the Swiss franc and its worst level since November2008 versus the U.K. pound.
It's clear now that tropical storm/hurricane Alex is not going to seriously disrupt oil production in the Gulf of Mexico. BP cleanup efforts may be slowed a bit but overall with Alex it could've been a lot worse. Right now the euro could do more damage to the price of oil on the downside that Alex could do on the upside.
Yet the market is also fearful this morning about growth in China. Overnight we hear of evidence that seemed to suggest that China's red-hot commodity driven economy may be slowing down. Dow Jones reported that the Chinese market dropped on concerns over the slightly lower-than-expected pricing range for the domestic part of Agricultural Bank of China's initial public offering, suggesting that investment activity may be slowing down. And Dow says that at the same time, a surprise revision to a leading indicator has contributed to the sharp fall in Chinese equities. The Conference Board leading economic index for China was revised down to 0.3% in April from a first estimate of 1.7% after what the Conference Board described as a calculation error. Error or no error there are concerns about China's growth especially when you combine that with Euro Zone and stability and it makes for a very nerve-racking holiday trading week.
Well you may or may not agree with Oliver Stone and his views on Venezuela in his new documentary South of the Border but one thing I do know is he used at least one reliable source. Apparently I was used in a short clip in the film and it appears that something I said caused a bit of controversy. Larry Rohter at the New York Times apparently took issue with the fact that I said that Venezuela was the number one supplier of crude oil to the United States! Well my honor was defended by none other than Oliver Stone himself in the letter to the New York Times.
Oliver Stone, Mark Weisbrot and Tariq Ali wrote in defense of their movie and me saying that, Also in the category of misinformation, Rohter writes, the United States does not 'import more oil from Venezuela than any other OPEC nation,' a distinction that has belonged to Saudi Arabia during the period 2004-10. The quote cited by Rohter here was spoken in the film by an oil industry analyst, Phil Flynn, who appears for about 30 seconds in a clip from U.S. broadcast TV.
It turns out that Rohter is mistaken, and Flynn is correct. Flynn is speaking in April 2002 (which is clear in the film), so it is wrong for Rohter to cite data from 2004-2010. If we look at data from 1997-2001, which is the relevant data for Flynn's comment, Flynn is correct. Venezuela leads all OPEC countries, including Saudi Arabia, for oil imports in the U.S. over this period.
You are downright correct that I am correct! At that time the demand for oil was low. OPEC members were fighting for market share. You could always count on Venezuela to cheat on OPEC production quotas. And what is more if Hugo Chavez would not have used the Venezuelan oil industry as his own personal piggy bank to fund his socialist agenda then Venezuela still might be the number one supplier to the US. Chavez fired oil workers for political reasons and has failed to keep up investment in the industry meaning that his country is being short changed.
The move may have cost this country millions in oil revenues. He has made a joke of the rule of law and has nationalized oil rigs and oil fields to help fund his socialist revolution. He likes to steal from the rich and give to the poor and make sure that he remains in the prior group and in power. I have not yet seen Stone's new documentary South of the Border and at the very least I know 30 seconds of it is definitely factual.
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