Barrel of crude pushes past $120

SAN FRANCISCO (MarketWatch) -- Crude futures climbed to uncharted territory in New York Monday as concerns about supply disruptions in Nigeria and weakness in the U.S. dollar lifted prices past $120 a barrel in electronic trading.

Crude oil for June delivery climbed as high as $120.21 a barrel in electronic trading on the New York Mercantile Exchange. The contract was last up $3.43, or 3%, at $119.75 after peaking at $120 in regular trading.

Leanan of The Oil Drum has an excellent list of the present day attitudes, effects, and future consequences.

crossposted at American Street

Up is down

Does anyone else find this strange?

The number of European countries doing away with border checks expanded by nine early on Friday morning. Most of those joined were behind the Iron Curtain just 20 years ago.

Europe just got bigger. At one minute after midnight local time on early Friday morning, border controls vanished for nine more European Union members, many of them former members of the Soviet Bloc. Fireworks, cheers, music and speeches throughout the morning welcomed the expansion, which means that travelers can move from the far corners of Estonia all the way to the Atlantic coast in Portugal without once encountering a border guard.

Europe is becoming united, more peaceful, and the Euro is rising in value while the U.S. is building walls, becoming warlike and thuggish, and the dollar is in free fall. We just need to avoid getting a leader that gives rambling incoherent speeches, has an elite private army, and although democratically elected, gathers all powers to himself in order to protect our freedoms.... oh shit.

At least Bush doesn't have a toothbrush moustache...

A shot across the bow of the proud ship SSQuagmire

And the captain is pouting in his cabin....

The Iranian government reportedly is refusing U.S. dollars as payment for its oil, calling it an "unreliable currency."

Iranian Oil Minister Gholamhossein Nozari was quoted as saying Saturday that because "the dollar is no longer a reliable currency," his country would no longer accept it in oil sales, RIA Novosti reported.

"In line with a policy of selling crude oil in currencies other than the U.S. dollar, the sale of our country's oil in U.S. dollars has been completely eliminated," Nozari reportedly said.

The monetary move comes after Iranian officials proposed excluding U.S. dollars from oil sales at an Organization of the Petroleum Exporting Countries summit in November.

China's official Xinhua news agency said Iran's opposition of the U.S. dollar appears to be a response to growing pressure from the United States regarding the Middle Eastern country's controversial nuclear program.

Time to start digging the bunker...

As crude prices rise, so will everything else:

Blame it on crude oil. The rocketing price of crude oil is not only sharply hiking the costs of fueling the car and heating the home, but is bidding up prices on the raw materials that go into goods from produce to perfume.

At the same time, the push to develop ethanol as an alternative fuel through corn and similar products is inflating the cost of feed for cows, pigs and other farm animals - and that also increases the prices consumers pay.

"Oil affects everything from top to bottom," said Phil Flynn, energy analyst at Alaron Trading. "Most people wear crude oil every day."

And (via Gandhixmas at Pygalgia) this cheerful article:

America is finished, washed up, kaput. Foreign investors and central banks around the world have lost confidence in US markets and are headed for the exits. The dollar is sinking, the country is insolvent, and its leaders are barking mad. That’s bad for business. Investors are voting with their feet. They’ve had enough. Capital is flowing to China and the Far East in a torrent. It’s "sayonara" Manhattan and “Hello” Tiananmen Square.

Want some advice? Learn Mandarin.

The dollar fell another 2% last night, gold soared to $840 per ounce, oil topped $98 per barrel, General motors reported a $39 billion loss after the market closed on Tuesday, the real estate market continued its downward slide, and the major investment banks are marching in lock-step towards bankruptcy.

The news is all bad. The nation’s economic foundation is in shambles. US credibility is shot. Bush and Greenspan have put us on the road to ruin. Now their work is done. We’re flat broke.

The catalogue of fiscal ailments now facing the country is too long to list. We’d need a ledger the size of a small encyclopedia. There’s been a stampede away from the dollar even though it’s already lost over 60% of its value since Bush took office and even though central banks around the world will lose their shirts if it collapses. They don’t care. They’re getting out while they can.

Chris in Paris at AmericaBlog notes that oil has risen 41% in this last year alone.

Bryan of Why Now? quotes the AP about the Democrats of the House trying to help the middle-income taxpayers:

WASHINGTON (AP) — House Democrats on Friday pushed through an $80 billion bill to block the spread of a dreaded tax on middle-income people. The White House and Republicans, protesting tax increases in the bill affecting mainly investment fund managers, maintained that it would never become law.

The 216-193 vote to ”patch” the alternative minimum tax for a year sends the issue to the Senate, where its prospects are at best uncertain. Not one House Republican voted for it.

What is certain is that if Congress and the White House do not reach a compromise by the end of the year, anywhere from 21 million to 25 million middle-income taxpayers will be hit by the AMT, costing them as much as $2,000 in extra taxes.

Bryan points out why the Republicans don't want to help this bill:

The “tax increases” are the closing of a loophole that allows fund managers to declare their income as capital gains, which have a 15% rate, rather than wages which would probably be at a 35% rate. This change only affects thousands of overpaid Wall Street types, and everyone with two brain cells realizes that this is a loophole, not an intended outcome. The Repubs want the cuts, they just don’t want to pay for them which is why the deficits mounted when they controlled Congress. Borrow and spend - it’s the Repub mantra.

Start storing up cans of beans and bags of rice, guys. Start raising rabbits in the backyard. I think this would qualify as 'living in interesting times...'

New economic indicator?

Model wants to be paid in Euros, not dollars:

New York, NY (CNS) - Leggy Brazilian supermodel Gisele Bundchen has recently admitted that she won't work for dollars and prefers to get paid in Euros instead. The 27-year-old beauty insists that the U.S. currency is too weak for her to accept as payment for her work.

According to Bloomberg news, Bundchen's manager Patricia said: "Contracts starting now are more attractive in euros because we don't know what will happen to the dollar."

Bundchen has already taken steps in assuring her paychecks come in the right currency. It has been reported that she has asked current employer Procter and Gamble, where she is the face for Pantene hair products, to pay her in Euros.

Forbes magazine lists Bundchen as the highest-earning model in the world.

Most recently, the American dollar has plummeted to its lowest ever last week against other currencies, including the euro, Canadian dollar, and Chinese yuan. It is also the cheapest in 26 years against the British pound.

Does the horse stamp out amounts or something?

Update: Think Progress says the report is false.

Update: The BBC says it's true.

How can you restore confidence when the dollar and house prices are tanking?

Bet you retail's counted-on-to-keep-in-the-black Christmas spending spree will be a dud, too:

The dollar has fallen to yet another all-time low against the euro, after further weak US economic data.

Figures showed that US consumer confidence has fallen to a near two-year low, while house prices have seen the sharpest drop in 16 years.

Analysts said the data boosted expectations that the Federal Reserve will cut interest rates still further.

In early trading on Wednesday, the euro hit a high of $1.4162, before pulling back to $1.4131 by 2230 GMT.

'Anti-dollar momentum'

The Fed cut US interest rates to 4.75% from 5.25% last week, in a move aimed at restoring confidence in both the housing and financial markets.

And then this by Max Fraad Wolff of The Asia Times:

New data for September are available now - after all, it is September now. These data suggest rising prices led by surging oil, wheat, gold and foreign-currency prices. Not to worry, the Fed will monitor that while pumping money into banks and slashing rates to prevent the economic downturn that has already arrived!

In early August it was clear that foreclosures were spiking, markets were boiling over and panic was rife. Bernanke decided that it was time to sound the all-clear with a cautionary note on inflation risks. After all, oil was a whopping and scary US$70 a barrel back then. Now it has settled down to $82, and so the worry has lifted?

Food costs - especially wheat - have surged in the month since the Fed worried about inflation. I guess that is why we are now worried about financial-market conditions. Across the one month and one week between the meetings, the broadest US stock-market index, S&P500, went from 1,476.71 to Monday's close of 1,476.65. This must have been the radical deterioration that caused the about-face!

Bernanke is ideally focused on inflation-fighting, price stability and economic growth. It would seem he is concerned about bank demands for liquidity and equity-market indices. I am not saying there is anything wrong with that. I am saying the talk, the action and the statements are not anywhere near to being on the same page.

[snip]

The truth is that Tuesday's reassurance and logic are as frightening as the logic and all-clear sounded on August 7. Buckling under Wall Street pressure and slashing rates help stock prices. The way and timing in which the discount rate was cut - twice now - attack market shorts and artificially push up stock prices.

Thus it will be seen as genius by those you hear on TV, radio, and many newspapers. I am concerned that the Fed acted late, is confused about where we are in the calendar year, pays no mind to its recent statements, and is acting to head off future economic trouble that everyone else knows is already here.

Now... just exactly how do I go about changing my dollars into Euros?

Saddam signed his own death warrant

When he decided to shift from the U.S. dollar to the Euro when selling his oil.


(via whig at Cannablog)

We went to war for control of oil and to stay the sole superpower. But we already knew that.....

Update 5/8: Via Sorghum Crow, this video of Robert Newman and his hilarious yet stunning History of Oil:

U.A.E. to sell dollars for euros

um.... this is not good.
"The Gulf state is among oil producers, including Iran, Venezuela and Indonesia, looking to shift their currency reserves into euros or sell their oil, which is now priced in dollars, for euros. The total value of the reserves held by the U.A.E. is $24.9 billion, Suwaidi said.

The dollar has fallen more than 10 percent this year against the euro.

Part of the reason for the decline is the outlook for slower U.S. growth, which makes the dollar a less attractive investment.

But fears that the dollar's level is unsustainable because of the heavy indebtedness of the United States to other countries is also behind the weakness this year, analysts said.

The shift to euros underscores its growing role as a reserve currency nearly eight years after its establishment. Central banks often keep the details about their currency holdings a secret."

I bet Bush thinks this is the reason:
"Almost all euro bank notes have traces of cocaine, according to a study by German scientists."

Dollar dropping.

"The dollar dropped sharply against a broad range of major currencies today, and the euro broke through the $1.30 mark for the first time in a year and a half, highlighting concern about the strength of the American economy.

The dollar’s losses came during a thin trading day in which the British pound rose to its strongest value against the dollar in two years. The Japanese yen and the Swiss franc also gained at the dollar’s expense.

Stocks closed lower on Wall Street today after a shortened trading session that was soured by news of the dollar’s woes.

Though the Thanksgiving holiday probably accentuated the dollar’s fall, analysts said the drop appears to reflect concerns that the American economy will continue to weaken as economies in Europe and Asia grow stronger.

[snip]

Analysts said that the dollar’s drop today reflected a growing anxiety over Chinese economic policy. China’s central bank holds a large amount of American currency, and speculation has intensified recently that it could begin selling off dollars to avoid being burned if the dollar collapses."