Financial News

[southsider2k5]

http://www.cnbc.com/id/44099845

 

SEC Makes S&P Downgrade Inquiries

Published: Friday, 12 Aug 2011 | 4:09 AM ET

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By: Kara Scannell, Financial Times

 

The Securities and Exchange Commission has asked credit rating agency Standard & Poor’s to disclose who within its ranks knew of its decision to downgrade US debt before it was announced last week, as part of a preliminary look into potential insider trading, people familiar with the matter say.

 

The inquiry was made by the SEC’s examination staff, which has oversight of credit rating firms, one person familiar with the matter said. The exam staff can make referrals to the SEC’s enforcement division if it believes any laws have been violated, but the inquiry might not result in a referral.

 

This person said they were looking at who had the information as a starting point. The person added that the agency is not aware of a leak from an S&P insider, nor was it aware of an aberrational trade.

 

Proving someone leaked information about the downgrade, or traded ahead of it, could be challenging. Many traders anticipated the downgrade and bets could occur across numerous securities or currencies without inside information. In a traditional insider trading case, there is often a more predictable correlation between a company’s stock price and a particular development.

 

The inquiry comes as the SEC has sought to be more pro-active in its oversight responsibilities. The agency launched specialized units within its enforcement division last year and has revised the approach of its examination group after hiring new leadership.

 

The exam group first gained the ability to inspect credit rating agencies in 2007. Those powers grew following the passage of the Dodd-Frank law last year. The exam group, led by Carlo di Florio, has been working more closely with the enforcement division in its review of registered firms since the SEC reorganized those divisions.

 

If the investigation results in a case, it would not be the first time government-related information leaked or a rating firm employee was charged with insider trading.

 

The SEC’s look comes as the Senate banking committee has said it is looking at S&P’s decision.

Copyright 2011 The Financial Times Limited

[southsider2k5]

Wait, doesn't that completely support what Balta's been saying for a while? That we're growth-limited by energy availability?

 

It is the same thing I have been saying for a while too. The difference is his solution is to do nothing about it, mine is to actually try to cut into that by actually trying to get some oil onto the market.

[NorthSideSox72]

Drilling? Who needs drilling...

 

http://www.cnbc.com/id/44121011

Another reason to lower our dependence on oil as soon as possible.

 

[NorthSideSox72]

It is the same thing I have been saying for a while too. The difference is his solution is to do nothing about it, mine is to actually try to cut into that by actually trying to get some oil onto the market.

I'd be happy to do that, though honestly, that is not going to be much of a help. There are all sorts of fields open for use but the energy companies aren't using them... and even if they did, the total new oil to be introduced is very small.

 

We need a long term, sustainable plan, and adding a small amount more domestic oil can be part of that, but is only a tiny slice of a real solution.

 

[StrangeSox]

His solution is to stop relying on an energy source that's reached a production plateau by researching and investing, massively and stimulatively while interest rates are zero or negative, in alternatives.

[StrangeSox]

Also I'm pretty sure most of the domestic untapped reserves are higher-cost oil both for extraction and refining.

[NorthSideSox72]

His solution is to stop relying on an energy source that's reached a production plateau by researching and investing, massively and stimulatively while interest rates are zero or negative, in alternatives.

IMO, that is one of a couple models the Stimulus bill should have followed, but didn't. At this point, another stimulus bill seems impossible and a bad idea, but you can certainly use some of the major cuts to push money that way. And a re-write of the business tax code could help as well.

 

[NorthSideSox72]

Also I'm pretty sure most of the domestic untapped reserves are higher-cost oil both for extraction and refining.

And more damaging to the environment, and to people's health. But I'd still be willing to do it, if we made real investment in the long term sustainable energy plans as well. Maybe a trade? Give the oil industry virtually every permit and clearance they want for now, in exchange for them investing equal amounts into the more long term solutions.

 

 

[StrangeSox]

IMO, that is one of a couple models the Stimulus bill should have followed, but didn't. At this point, another stimulus bill seems impossible and a bad idea, but you can certainly use some of the major cuts to push money that way. And a re-write of the business tax code could help as well.

 

 

Why? Interest rates are basically at "free money" or "we'll pay you to take our money" levels, and even using conservatives' models with the revised GDP numbers the stimulus had a strong multiplier effect. We're not going to be able to cut ourselves into serious alternative energy research.

[NorthSideSox72]

Why? Interest rates are basically at "free money" or "we'll pay you to take our money" levels, and even using conservatives' models with the revised GDP numbers the stimulus had a strong multiplier effect. We're not going to be able to cut ourselves into serious alternative energy research.

Why? Are you seriously not seeing the risks associated with the massive deficits we are running? I mean, I am not in favor of huge cuts to discretionary spending right now, but I am also not going to bury my head in the sand and not see the risks to our future associated with it.

 

We can make some cuts, and rejigger the tax code, in a way that allows a lateral flow of money into areas targeted not because of a favor-rider for a congressman, but for something in the best interests of the country's future.

 

I WISH, instead of the useless and illegal Iraq War, we had poured half that money (half a trillion) into alt energy, which would have had a way more positive effect. But we can't go back and change that now.

 

 

[southsider2k5]

His solution is to stop relying on an energy source that's reached a production plateau by researching and investing, massively and stimulatively while interest rates are zero or negative, in alternatives.

 

The irony is that in translation, the solution is to destroy the economy in the short term, for solutions that might work in the long term.

[StrangeSox]

And more damaging to the environment, and to people's health. But I'd still be willing to do it, if we made real investment in the long term sustainable energy plans as well. Maybe a trade? Give the oil industry virtually every permit and clearance they want for now, in exchange for them investing equal amounts into the more long term solutions.

 

Well as you already said, they've got plenty of permits they're not utilizing.

 

U.S. Shale Gas: Less Abundance, Higher Cost

 

I like to pop by that site from time to time.

[NorthSideSox72]

The irony is that in translation, the solution is to destroy the economy in the short term, for solutions that might work in the long term.

This is a myth. Going to alternatives does NOT have to mean any negative impact to the current economy, at all. "In translation" just means "if they do it the way I fear".

 

[southsider2k5]

This is a myth. Going to alternatives does NOT have to mean any negative impact to the current economy, at all. "In translation" just means "if they do it the way I fear".

 

It isn't a myth when the policy is very clearly to stop any new drilling wherever possible.

[StrangeSox]

Why? Are you seriously not seeing the risks associated with the massive deficits we are running? I mean, I am not in favor of huge cuts to discretionary spending right now, but I am also not going to bury my head in the sand and not see the risks to our future associated with it.

 

I think there's a bigger risk of prolonged high unemployment rates and a sustained cycle, which of course leads to higher deficits thanks to reduced revenues. There's also the self-imposed debt ceiling risks.

[StrangeSox]

This is a myth. Going to alternatives does NOT have to mean any negative impact to the current economy, at all. "In translation" just means "if they do it the way I fear".

 

Alternatively, refusing to invest in alternatives to a limited supply and instead only advocating for the short-term solutions of drilling more will destroy our economic abilities in the future.

[NorthSideSox72]

This is a myth. Going to alternatives does NOT have to mean any negative impact to the current economy, at all. "In translation" just means "if they do it the way I fear".

 

 

It isn't a myth when the policy is very clearly to stop any new drilling wherever possible.

 

Like I said, it is a myth because you assume that is the only way. If you bothered to read my earlier posts, you would see I said exactly the opposite of what you fear happening.

 

[StrangeSox]

 

http://www.theoildrum.com/node/8044#more

 

Worldwide production plateaued in 2004 despite high prices and several more years of strong economic growth around the world. A little bit of domestic drilling isn't really going to make a difference.

Edited August 12, 2011 by StrangeSox

[Balta1701]

It is the same thing I have been saying for a while too. The difference is his solution is to do nothing about it, mine is to actually try to cut into that by actually trying to get some oil onto the market.

I'm impressed Harry, where did you learn how to cast "Oilus Barrelus"

[Balta1701]

It isn't a myth when the policy is very clearly to stop any new drilling wherever possible.

Which of course doesn't show up in any data. The drilling rig activity count at the end of 2010 was higher than it was at any point since the price collapse in 2008. The "offshore drilling moratorium" doesn't even show up as a blip.

 

[StrangeSox]

OBAMA!!

[southsider2k5]

Its sad when the Carter years perception would be an improvement.

 

http://www.bloomberg.com/news/2011-08-12/u...igan-index.html

 

Confidence among U.S. consumers plunged in August to the lowest level since May 1980, adding to concern that weak employment gains and volatility in the stock market will prompt households to retrench.

 

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment slumped to 54.9 from 63.7 the prior month. The gauge was projected to decline to 62, according to the median forecast in a Bloomberg News survey.

 

The biggest one-week slump in stocks since 2008 and the threat of default on the nation’s debt may have exacerbated consumers’ concerns as unemployment hovers above 9 percent and companies are hesitant to hire. Rising pessimism poses a risk household spending will cool further, hindering a recovery that Federal Reserve policy makers said this week was already advancing “considerably slower” than projected.

 

“The mood is very depressed,” said Chris Christopher, an economist at IHS Global Insight Inc. in Lexington, Massachusetts. “Consumers are very fatigued and very uncertain. In the short term, people are going to pull back on spending.”

 

Estimates of 69 economists for the confidence measure ranged from 59 to 66.5, according to the Bloomberg survey. The index averaged 89 in the five years leading up to the recession that began in December 2007.

[Balta1701]

Political supporters of Rep. Xavier Becerra (D., Calif.), one of the appointees to deficit-reduction committee, have already figured out how to raise revenue—by touting his seat on the panel to raise money for his political campaign.

 

About two hours after House Minority Leader Nancy Pelosi named Mr. Becerra to the committee on Thursday, a political supporter began notifying Wall Street lobbyists about a $1,500-per-person fund-raising event on Aug. 31.

Sigh

[Balta1701]

It's the Washington Post, so take it for what its worth, but this was at least a provocative read.

Like many struggling Washington area residents, Horsey is hoping that the plummeting price of oil, down about 25 percent from May’s peak of $113.52 to about $85 a barrel Friday, will ease prices at the pump and let him keep more money in his wallet.

 

But those savings are unlikely to be big. Unlike in years past, when the price of oil and the price of gas moved closely in tandem, in 2011 the relationship between the two has been murkier. Oil prices have fallen precipitously, but District residents are still paying $3.83 per gallon of regular gas on average — 22 cents above the national average and only 9 percent less than the District’s all-time high of $4.21, according to the American Automobile Association.

 

“What we’ve seen for the first time in recent memory is this disconnect between the price of crude and the price of gasoline. It’s almost like it’s moving in its own orbit,” said John Townsend, spokesman for AAA of Mid-Atlantic.

 

The disconnect could pose another headwind to the U.S. economy, because higher gas prices typically translate to less money that consumers are able to pump into the economy. “Extra money would be helpful,” Horsey said as he filled up his van. “I could finish my deck in the back of the house.”

 

The usual rule of thumb is that a $10 dollar decrease in the price of oil translates to about a 25 cent per gallon decrease at the pump. With oil down nearly $30 from its May peak, that should be about 75 cents. But the difference for District residents is only about half that. “We should be paying much lower for gas,” Townsend said.

 

Analysts blame some of the disconnect on the country’s increasing reliance on foreign oil, which is priced higher than the main domestic benchmark, the West Texas Intermediate Oil future. As of Friday, West Texas crude cost about $22 less than its major foreign counterpart, the U.K.’s Brent Crude future.

 

“As a result, the price of oil that we see in our screens every day is not representative of the price of oil that most Americans pay for their fuel,” said Pavel Molchanov, an oil analyst with investment bank Raymond James in Houston. So even though the price of the West Texas crude has fallen to about $85 a barrel, a level last seen before February’s price spike, “the consumer, sad to say, doesn’t see those savings,” Molchanov said.

 

It can also take time for cheaper petroleum to work its way through the distribution system. And the global economic slowdown is reducing demand for oil, which is putting further downward pressure on gasoline prices.

 

“If crude stays flat at this level, you’re going to pay 35 cents a gallon less than you did three weeks ago,” said James Williams, an oil analyst with WTRG Economics on London, Ark.

I'm not sure it's accurate that the U.S. is actually taking in more oil than it did in say, 2008, but it's probably accurate to say that we are using more expensive sources, like the Canadian tar sands, much more heavily.

[Jenksismyhero]

I agree with this:

 

http://www.nytimes.com/2011/08/15/opinion/...s&seid=auto

 

I get in a perfect world why ubber fiscal conservatives wouldn't like this, but thems the breaks.