March 21. No-fly zone operation commences in Libya

–Military action to create a no-fly zone in Libya commenced.  However, it’s unclear whether this action will create more certainty regarding oil supplies and mideast stability.  US rates moved higher Friday as worst case fears about Japan eased slightly. Even so, my personal bias is that the market is not fully pricing dislocations related to Japan, and that treasury rates will move lower, as will equities.
–The humanitarian crises in both Japan and the Mideast have highlighted the collision between energy and environment.  My guess for the foreseeable future is that all energy sources will become more expensive.  Plans for nuclear power plant expansion are being reviewed the world over.  Mideast oil supplies may become targets in protracted conflicts.  There are reports of another huge oil slick in the Gulf of Mexico.  And the process of “fracking” to release oil and natgas from shale is being halted due to concerns about increased earthquake risks (mostly in southern US).  Higher energy prices are going to make people revisit the idea of a “double dip” recession.
–From BBG: “The mounting debt burden of the world’s most developed nations, set for a post-World War II record this year, is unsustainable and risks a future fiscal crisis, the International Monetary Fund’s John Lipsky said.”
–From Huffington Post: “A study by of Federal Reserve data found that last year, while banks wrote off a total of $75 billion in credit card debt, the level of the debt only declined by around $67 billion. This, according to Cardhub, suggests that the “entire decrease [in overall debt] is the direct result of Americans defaulting on their debt.”

Fracking links×654531

Posted on March 20, 2011 at 4:48 pm by alexmanzara · Permalink
In: Eurodollar Options

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