Tuesday June 24th 2008

Dow Chemical raising prices by another 25 percent
Dow Chemical Co. plans to raise the price of its products for the second time in a month to deal with what it calls the relentless rise in costs of energy and related raw materials.The Midland-based chemical company said Tuesday it will raise prices by as much as 25 percent next month. That follows prices increases of up to 20 percent that took effect last month. It also plans a freight surcharge in North America.The company also plans to temporarily idle or cut production at a number of manufacturing plants. Dow's automotive unit is cutting costs that include workers and plants in light of a North American sales decline.Chairman and CEO Andrew Liveris says the steps are "extremely unwelcome but entirely unavoidable."

What Does This Company Do?
Dow Chemical is the largest chemical company in the U.S. It produces plastics, chemicals, agricultural products, and other specialized products. Commodity products, such as plastics and chemicals, account for about 40% of sales, performance (specialty) products make up another 40%, and agriculture and other products make up the remaining 20%. International sales contribute more than half of overall revenue. Dow acquired Union Carbide in 2001.

Four years of home gains have been wiped out
Prices fall in all 20 cities in Case-Shiller index in past year
Home prices in 20 major U.S. cities have dropped a record 15.3% in the past year and are now back to where they were in 2004, according to the Case-Shiller home price index released Tuesday by Standard & Poor's.
Prices in the 20 cities are now down 17.8% from the peak two years ago. The biggest declines were seen in Las Vegas, Miami and Phoenix, with prices falling by 25% or more in the past year. Prices in 10 cities have fallen by more than 10%.

Gold, Platinum Rise in London as Crude Advances, Dollar Weakens
Gold rose in London as crude oil advanced and the dollar weakened, bolstering demand for the metal as a hedge against inflation and an alternative investment.The metal has gained 6.7 percent this year as the dollar has lost 6.3 percent of its value against the euro. Crude advanced, trading within 2 percent of its $139.89 a barrel record and adding to inflation concerns.``As long as stagflation is such a key theme, gold has a lot of support at these levels,'' said Susanne Toren, an analyst at Switzerland's Zuercher Kantonalbank, said by phone from Zurich. The term stagflation refers to a period of slow economic growth coupled with high inflation rates.

Will Gold Break Out?
According to Jamie Chisholm of the Financial Times, gold's now staging a breakout move. Traders, however, may find it difficult to take much comfort in that headline because Mr. Chisholm is hedging his bets.Is gold headed higher or lower? Hard to tell from his perspective. Physical demand for jewelry is off and investor demand, expressed in share creations for gold grantor trusts, is flat or falling.Inflation, expressed through the foreign exchange market, though, seems to be the factor that buoys Mr. Chisholm's bullish spirit. Interest rate moves signaled by the U.S. Federal Reserve, he says, hold the key to gold's destiny.

A warning to put your affairs in order
PERHAPS it is time to hoist the storm warning flags and, at the same time, take as calm a look as possible at what this might mean for resources portfolios.What we've read in the past week suggests that, while companies producing oil and metals can continue to expect firm demand and prices, those at the shareholding end might experience somewhat more of a bumpy ride.You just have to look at the way most gold stocks performed -- or, more correctly -- didn't perform when the physical metal headed through $US1000 an ounce.Most of the time, Pure Speculation concentrates on the daily foibles and fads of the resources market with all the superficiality and joviality that is required for such matters. But this week we are putting on our serious face.Bob Janjuah was certainly putting on his.

Oil continues to rise as Nigerian rebels attack Shell platform 120 miles offshore
The market took little comfort from Saudi Arabia's pledge for an incremental increase in oil production at the weekend as the price reversed its fall in recent days to rise to $136.45 per barrel, just a few dollars off its record high.Gordon Brown added his voice to a chorus of global leaders calling for production hikes in an effort to stave off debilitating, oil-inspired inflation at a global energy summit in Jeddah at the weekend. The resulting pledge by Saudi Arabia to hike production by 200,000 barrels per day – equivalent to just over 2 per cent of its current 9.7 million barrels of daily output – did not have the desired result.

Congress rushes to fill oil speculation loophole
Speculation can add $70 to the price of a barrel of oil, critics charge.
By Gail Russell Chaddock | Staff writer of The Christian Science Monitor
In a scramble to find a fix for energy prices, Congress has tried (and failed) to strip tax breaks from Big Oil, to open protected sites for exploration and drilling, and to jump-start a new era in nuclear power.Now, Capitol Hill is zeroing in on speculators and the legal loopholes that some lawmakers say are adding as much as $70 to the price of a barrel of oil."Energy speculation has become a fine growth industry and it is time for the government to intervene," said House Energy and Commerce Committee Chairman John Dingell (D) of Michigan, at hearing on Monday.

Critics of oil speculators and short sellers are missing the point
By Simon Denham, Head of Capital Spreads
So the US is getting hot and bothered once more about those nasty ‘speculators’ who are apparently driving up the price of oil. The Senate looks to be at odds on whether to pass some type of law restricting ‘non end user’ trading in commodities.Skipping over the rather unfortunate fact that the price actually rose (from $100 to $135) while the exchanges estimate that speculative positions have been pretty much flat. For the country that has been the bastion of capitalism for the last 120 years to moan about the effects of supply and demand and effectively say that “it is not fair, we want to change the rules”, smacks of desperation.

Speculators Not to Blame for High Oil Prices
A new study authored by IER economist Robert Murphy , Speculators Fixing Oil Prices? Don’t Bet On It , sheds some much needed light on the role speculation plays in the global oil market.
* Record-high oil prices demand a target, and some politicians are increasingly pointing the finger at speculators in the commodities futures markets. But high oil prices are due to restricted supply, booming demand, and a weakening dollar.
* There is no hard evidence that speculators are responsible for high oil prices. If the price of oil truly were above the level that the fundamentals could support, we would see growing inventories of crude. But inventory levels show no such pattern.

At Last, Some Truth About Iraq and Afghanistan
by Eric Margolis
PARIS – After a sea of lies and a tsunami of propaganda, the ugly truth behind the Iraq and Afghanistan wars finally emerged into full view this week.Four major western oil companies, Exxon, Mobil, Shell, BP and Total, are about to sign US-brokered no-bid contracts with the US-installed Baghdad regime to begin exploiting Iraq’s oil fields. Saddam Hussein had kicked these firms out three decades ago when he nationalized Iraq’s foreign-owned oil industry for the benefit of Iraq’s national development. The Baghdad regime is turning back the clock.

Fed to have greater powers after near-collapse of Bear Stearns
Tom Bawden in New York
The US Federal Reserve is on the point of expanding its Wall Street role by adding the regulation of investment banks to its existing responsibilities of commercial banking and bank holding companies.The extension of the central bank's remit, which could be announced as soon as this week, is part of a broader restructuring of how Wall Street is regulated in the aftermath of the near-collapse of Bear Stearns in March. Although the Securities and Exchange Commission (SEC) will continue to be the ultimate regulatory authority for the investment banks, it will share with the Fed data on areas such as their trading positions and leverage levels.

Wall Street feels the heat
The US government is taking action against people involved in the sub-prime mortgage crisis that has infected the entire financial system and which threatens a recession. By Stephen Foley
It's that time of the boom-and-bust cycle when the Feds crack out the handcuffs.
First in front of the cameras this time out, two heretofore obscure hedge fund managers from inside the defunct investment bank Bear Stearns. Matthew Tannin and his boss Ralph Cioffi, readied for their close-up, were taken in cuffs from Manhattan's FBI headquarters last week and charged in a Brooklyn courthouse with a fraud that cost their investors $1.6bn when the value of its holdings in sub-prime mortgages collapsed.

Jawboning the dollar may bite Federal Reserve
WASHINGTON (Reuters) - The unrelenting rise in oil prices has put U.S. Federal Reserve Chairman Ben Bernanke in the precarious position of trying to talk down inflation without raising interest rates.The result may be a blow to the central bank's credibility, just as Bernanke was finally winning plaudits from many on Wall Street for his handling of the credit crisis."They've painted themselves into a corner," said Gabriel Steinan economist at Lombard Street Research in London. "I think the Fed is losing credibility by the buckets right now."The Fed is expected to keep its benchmark federal funds rate unchanged at 2 percent when its policy-setting committee meets this week.

Bernanke Plays `Dangerous Game' Balancing Rate Talk With Action
Federal Reserve Chairman Ben S. Bernanke, by voicing concern about inflation and the slumping dollar, has fanned investor expectations for an interest-rate increase as soon as August. He may regret it.Raising rates may exacerbate the economic slowdown and roil banks whose losses sent their stocks down the most in a decade this month. Forgoing a rate boost next quarter risks damaging the Fed's credibility and deepening its divisions. Already this year, three officials have dissented on rate decisions.

The United States Fiat Money & The Federal Reserve System
by Darryl Schoon
Fiat money is an oxymoron. Traditionally, money has been both a storehouse of value and a medium of exchange. Fiat money exists by mimicking both; but when its ability to do so ends, fiat money exposed for what it is, reverts to what it is—government issued coupons with expiration dates printed in invisible ink.Fiat money distorts the time value of money and in so doing destroys both money and the economies that use it. Real money like gold and silver has value over time, the greater its value and the longer it endures, the more likely it will be accepted as money.

Too much for a fiat currency
By The Mogambo Guru
"What's your solution?" asked a Daily Reckoning reader. "Or isn't there one? If the world's population is going to implode, will that be through mass starvation/dehydration? Or will we run out of beer and all end up killing each other? Or will a terrorist bomb wipe us all out first? Will technology save the day? Isn't the whole thing survival of the fittest? Is survival of the fittest really the best way of describing it for the human race? Or is it more 'luck' ... Is there a solution, or do we just sit back and watch the world fall apart!

FBI promises more fraud arrests
Reports of mortgage fraud have increased significantly over the past year. According to the US Treasury Department, banks reported almost 53,000 cases of suspected mortgage fraud in 2007, up 37,000 a year earlier.
By Greg Wood
A senior FBI officer has told the BBC that more arrests will be made as part of its probe into mortgage fraud and the credit crunch.Section chief for Financial Crimes, Sharon Ormsby, said hundreds of arrests already made were just a "good start".More than 400 US real estate brokers have been arrested and charged with fraud in the past few months.
And two former Bear Stearns executives have been charged over the collapse of two hedge funds.

Zimbabwe: more beatings, more abductions as the world watches
The UN security council last night warned Robert Mugabe that a free and fair election in Zimbabwe was "impossible", after the opposition leader Morgan Tsvangirai quit the presidential race and sought refuge in the Dutch embassy in Harare amid escalating violence.As Mugabe's forces kept up their assault on the opposition, raiding the opposition Movement for Democratic Change's HQ and hauling away scores of people sheltering from abductions, beatings and worse, the security council unanimously adopted a statement condemning the government's "campaign of violence" that had "denied its political opponents the right to campaign freely".

Zimbabwe is out of control
The situation in Zimbabwe is now out of control, African National Congress (ANC) president Jacob Zuma told a conference in Johannesburg on Tuesday."You now need a political arrangement there, and then further down the line an election," he said. Meanwhile, the violence in Zimbabwe could descend into genocide like that in Rwanda in 1994, former international envoy Paddy Ashdown warned on Tuesday.Military intervention in Zimbabwe had to remain an option, the former high representative for Bosnia told the Times of London, while also lamenting the "thunderous" silence of South African President Thabo Mbeki."The situation in Zimbabwe could deteriorate to a point where genocide could be a possible outcome -- something that looks like Rwanda," he said,

Military intervention in Zimbabwe 'could be justified'
Lord Ashdown says terror must be ended
Michael Evans, Defence Editor
Military intervention in Zimbabwe would be justified to stop the violence there deteriorating into mass slaughter, Paddy Ashdown told The Times last night.Lord Ashdown of Norton-sub-Hamdon said: “The situation in Zimbabwe could deteriorate to a point where genocide could be a possible outcome - something that looks like [another] Rwanda.”

U.S. Embassy staff, soldiers killed in Baghdad blast
BAGHDAD, Iraq (CNN) -- An explosion rocked a municipal building Tuesday in Baghdad's Sadr City neighborhood, killing six Iraqis, two U.S. soldiers and two civilian U.S. Embassy employees, an embassy official said.
An Iraqi soldier removes razor wire to allow a vehicle to pass in Baghdad's Sadr City earlier this month.An Iraqi soldier removes razor wire to allow a vehicle to pass in Baghdad's Sadr City earlier this month.The U.S. military said troops detained a suspect in connection with the attack. The person was captured "fleeing the scene and tested positive for explosive residue," the military said.The embassy official said the American civilians include "a direct hire civilian employee of the Department of State and a Department of Defense civilian employee."

Explosively False Propaganda Bush's Middle East legacy
by Muhammad Sahimi
No part of the world, not even the United States, has been more deeply affected by George W. Bush's presidency than the Middle East. From the lofty goals of starting a "democratic revolution," making a "new Middle East," and helping the Palestinians to have their own independent state, to the bogus "war on terror," invasions of Iraq and Afghanistan, and meddling in Lebanon, Bush's Middle East policy has been simply one disaster after another.The reality is that the Middle East is of utmost strategic importance to the U.S. U.S. involvement in that region will not end after Bush leaves office in January 2009.

Israel 'will attack Iran' before new US president sworn in, John Bolton predicts
By Toby Harnden in Washington
John Bolton, the former American ambassador to the United Nations, has predicted that Israel could attack Iran after the November presidential election but before George W Bush's successor is sworn in.Bolton: 'the argument for military action is sooner rather than later'The Arab world would be "pleased" by Israeli strikes against Iranian nuclear facilities, he said in an interview with The Daily Telegraph."It [the reaction] will be positive privately. I think there'll be public denunciations but no action," he said.Mr Bolton, an unflinching hawk who proposes military action to stop Iran developing nuclear weapons, bemoaned what he sees as a lack of will by the Bush administration to itself contemplate military strikes.

Hitchens’s Trotskyite Morality
Posted by Patrick J. Buchanan
Did Hitler’s crimes justify the Allies’ terror-bombing of Germany?
Indeed they did, answers Christopher Hitchens in his Newsweek response to my new book, Churchill, Hitler and the Unnecessary War: “The stark evidence of the Final Solution has ever since been enough to dispel most doubts about, say, the wisdom or morality of carpet-bombing German cities.”Atheist, Trotskyite and newborn neocon, Hitchens embraces the morality of lex talionis: an eye for an eye. If Germans murdered women and children, the British were morally justified in killing German women and children.

George Carlin: A Four-Letter Threat to Authority
by Butler Shaffer
When I was in high school, I got into a discussion with a couple of my classmates over the role institutions played in our lives. I had made some comment critical of government, or organized religion, or corporations – I don’t recall which – and was asked if I was opposed to all such systems. I replied that I was "distrustful of all organizations, from two-handed poker on up." This intuitive insight has stayed with me all of my life. Many years later, I would discover a man whose life-work consisted of using humor to express these sentiments.

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