Crude oil from the “light end of the barrel” hit $120 this morning. Forget what Bernanke and the MSM are telling you. They keep showing the WTI price. Even supposedly smart guys like Mark Zandi have said recently that $100 oil is not a problem for the US. Wrong. The US needs light crude for the gulf refineries. And consumers will be paying $4 a gallon before Zandi or his pal Bernanke can catch their breath.
More Pirate Stuff
The Somali pirates hit another civilian sailing boat of the coast of Oman. This is even worse than a few weeks ago when the bad guys captured two elderly couples that were delivering bibles. This time they have four adults and three kids. They also got two other merchant ships in past five days.
The family and crew are Danish. What they were doing in these waters and not part of a convoy is a mystery to me. They were asking for trouble. The pirates have already issued a warning that if there is an assault by special forces they will kill everyone. This can easily get stepped up a notch or two. It’s unlikely that there will be a repeat of the disaster of a fortnight ago.
A recap of that action is that there were 4 large US Navy vessels surrounding the boat with the four Americans. They had an FBI hostage negotiator on board. They got two of the pirates onboard the Navy ship and the Feebs promptly told them they were not going to let them get to shore. They could free the hostages, take they boat and go free or there would be a bad end.
Not surprisingly the pirates were not pleased with this and fired off a rifle grenade. The Navy does not take kindly to that sort of thing so all hell broke lose and the hostages were killed before a Ranger team could get onboard. A complete balls up in my opinion.
US amphibious forces have left the area to patrol off Libya. So don’t look for US troops to get involved. This time it will be NATO Special Forces that get to play hero. Hopefully they will do a better job at negotiating a deal than the FBI. That or they do a better job than our Rangers did (I think we should have had the SEALS do that job).
Junk for Sale
The FDIC is having a big sale up in Michigan. They are auctioning off homes and property they got from failed banks.
Part of me feels that this is fine. We have to clean out the problems. So as unpleasant as it is to have the FDIC driving down real estate prices up in Michigan it something that has to be done.
There is another part of me that looks at this as a measure of how desperate things have become. Is it really necessary for an institution as significant in our economy as the FDIC to be selling dreck like this? There has to be a better way.
Irrelevant Dollar
About two weeks ago Tyler Durden first made the observation that the dollar was becoming irrelevant. At the time I disagreed. There is too much history to say that this is not so. Now a few weeks later I have to agree with TD. The dollar has become irrelevant.
That there has been no significant adjustments in FX rates while the Middle East has boiled and burned is sort of unfathomable. There should have been some flight to quality move. But there wasn’t. For me this is a warning sign. I have to wonder what the dollar will do when/if there isn’t a crisis someplace that keeps it stable.
Sometime ago I recommended a long dollar Yen position. Two months later and it is back to where it started and I/you have nothing to show for it. I still think that the Yen is the worst reserve currency out there, but as far as recommendations go, I have to take this one off the table. It has done nothing for anyone, beside waste time and focus. Sorry for the blank.
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