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Consumers face challenges in handling debt
Rising interest rates and higher gasoline prices are putting the squeeze on consumers’ budgets, and many are finding it harder to keep up with their bills.
Credit counseling agencies say that consumers are coming in in droves seeking help.
“My phones are going crazy,” said Howard Dvorkin, president of the nonprofit Consolidated Credit Counseling Services Inc. in Fort Lauderdale, Fla. “Consumers are carrying an exorbitant amount of debt — and they don’t have any savings to fall back on if things don’t go right.”EXT
(5 July 2006)
UK: Surge in oil imports sees trade gap widen
Philip Thornton, The Independent
Britain’s goods deficit with the rest of the world widened to its second highest on record in May as the UK became a net importer of oil, official figures showed yesterday. A rise in total imports to a record £27.9bn combined with a fall in exports to leave a deficit of £6.8bn, of the Office for National Statistics said.
This was an increase of £1.2bn from April’s £5.6bn, making it the highest deficit since February’s £7.2bn, which was the highest since records began in 1697.
The increase was driven by a worsening of £521m in the UK’s oil position, which switched from a £201m surplus in April to a £320m deficit in May. The UK has been a net importer for 10 of the last 12 months
(12 July 2006)
Major global economic shock could rock UK banks, BoE warns
Philip Thornton, The Independent
A major global economic shock would trigger a financial crisis that could wipe up to 40 per cent off the value of the UK banking sector, the Bank of England warned today.
The results of a “stress test” showed a sudden tightening in credit constraints or a substantial fall in asset prices would inflict “significant” damage on the financial system.
The Bank’s financial stability report, published twice a year, said increased appetite for risky investments had pushed the financial system “further up the risk spectrum” over the past six months. But it said the financial system was “remarkably resilient” and the chances of a shock hitting the UK were very low.
It identified six key risks and, for the first time, has published the results of stress tests carried out to see how the City of London would react. The risks were a disorderly unwinding of economic imbalances; a sudden rise in risk; a fresh spate of over-leveraged deals to take advantage of low risk premia; a sudden rise in household debt problems; the collapse of a hedge fund; and disruption to the clearing and settlement system…
In its report, the Bank said: “Far and away the most likely outcome in the near term is that none of the vulnerabilities crystallises. Moreover, even if these vulnerabilities were to crystallise individually, they would be unlikely to erode to any significant extent the capital base of the UK banking system.”
But the Bank admits it must consider a number of these risks crystallising simultaneously – something it describes as an “extreme but plausible scenario”.
The Bank “stress-tested” two: a recession sparked by a spike in oil prices that forces banks to reassess firms’ creditworthiness and causes a sharp turn in the credit cycle; and a substantial fall in asset prices triggering an “abrupt and widespread” rise in risk premia that would have major implications for household and corporate vulnerabilities.
(12 July 2006)
Addicted to Oil (video)
Ruckus Productions, Oil Change International
A humorous video based on the old Robert Palmer film clip. Part of a campaign to ‘Separate Oil and State‘ by Oil Change International.
Senate approves expanded drilling in Gulf of Mexico
Mark K. Matthews, Orlando Sentinel via SJ Mercury News
U.S. Senate leaders announced a compromise Wednesday that would expand oil and gas drilling in the Gulf of Mexico by millions of acres, but keep exploration at least 125 miles from Florida’s western shoreline.
In the deal, Florida Sen. Mel Martinez appears to have gained a major concession by moving the buffer zone for drilling farther from his state’s coastline than originally planned by Senate Energy Committee Chairman Pete Domenici.
The agreement was announced by Senate Majority Leader Bill Frist, R-Tenn., Domenici, R-N.M., Martinez and lawmakers from other coastal states. Frist said it tries to strike a balance by tapping oil and gas reserves in the Gulf of Mexico while also protecting Florida’s multibillion-dollar tourism industry.
The deal will “protect our shoreline,” Martinez said.
But others were not so sure. Environmentalists are against expanding any exploration in the Gulf. They also note that the Senate plan would allow offshore development in an area of the eastern Gulf known as Lease Sale 181, where government bans have kept drilling off limits.
(12 July 2006)
Oil costs continue effect on trade deficit, overseas sales
Marcy Gorgon, Associated Press via Seattle Post-Intelligencer
WASHINGTON — A record jump in the price of imported oil pushed the trade deficit to $63.8 billion in May, offsetting robust overseas sales gains by American companies.
On Wall Street, stocks dropped sharply after a separate report showed that weekly oil inventories fell to their lowest level since early March.
That raised the prospect that the U.S. will have to import even more oil.
The price of foreign oil jumped by the largest amount since the run-up to the first U.S.-Iraq war in 1990, and the U.S. trade imbalance rose 0.8 percent from a revised April deficit of $63.3 billion, the Commerce Department said Wednesday.
The monthly deficit was the sixth-largest ever.
“Oil is sucking us dry, and even stronger world growth cannot keep the trade deficit from widening,” said Joel Naroff, chief economist at Naroff Economic Advisors.
(13 July 2006)
Guide to Russia’s key energy clients
Energy has become the hot topic this year in Russia’s relationship with its European neighbours.
Most depend to some degree on Russian gas and were shaken by the dispute between Russia and Ukraine in January, which led to a brief suspension in supplies.
(11 July 2006)