An article yesterday in the UK’s Independent newspaper by Robert Fisk claimed that “In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading.” It set off an immediate firestorm of response and attacks on Fisk’s credibility (one financial analyst I respect called it “a punk piece by a tireless controversialist”) which made for some interesting reading today. Assuming that the rumor hit around noon EST yesterday, then the dollar fell from 76.7 to 76.3 on the report–a negligible move in light of the action of the last week.

Until someone actually names names and provides some authenticated details, it’s impossible to know how true Fisk’s allegations may be. I have heard noises along these lines for at least five years running, and so far have not found any convincing evidence that such moves are an impending reality, so at this point I am not rendering an opinion. I will say that it does seem likely and rational that eventually the dollar will be at least partially displaced as a global reserve currency and/or the currency of choice for the  global oil trade.

In the meantime, it’s worthwhile to remain alert for developments in this story with real credibility. Here is a sampling of responses to the Fisk article I rounded up today, most of which rebut it.
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Just a few quick words about the bailout bill today and the markets. But before I get into that, if you wanted to catch my live online TV interview yesterday but were unable to tune in, it is now available in their archives. See http://www.getreallist.com/live-interview-on-cleanskies-tv-today.html for instructions on how to find it.

I think almost everybody expected that if the bailout bill passed the House today, the markets would rally and the good times would start rolling again. It was a tense morning as we watched the debate. The major indexes rose about 3%. And then the vote came.

The bill passed. And then, a couple of very unexpected things happened.

First, the credit markets didn’t move, and the LIBOR spread shot to a new high. That means that the Street considered the bailout to be inadequate to solve the problem at hand–which is liquidity, not just the solvency of a few institutions. In reaction, stocks sold off sharply, and the major indexes all ended the day about 1.5% down, marking the end to a wicked week.

Second, although the bill contained an 8-year extension to the 30% Investment Tax Credit (ITC) for solar installations, which was widely ancitipated and should have meant a banner day for the whole sector, solar shares sold sharply with the rest of the market, ending the day down as much as 8% after rising as much as 10% earlier in the day. Woof, how’s that for volatility, and counterintutive moves?

Meanwhile there were reports of widespread bloodletting in the hedge fund world, leading to more forced redemptions, indiscriminate selling to meet margin requirements, etc. See http://tinyurl.com/4uxdph. In short, the selling is continuing to feed on itself.

The take-home? Passing a bailout bill is one thing; unfreezing the credit markets is another. It ain’t over till it’s over, and we’re nowhere near done with this mess. Monday could be brutal, unless we have a new round of Sunday night shenanigans.

For a good summary of what happened today, check out my buddy Aaron Task’s end of day post:

Roubini: ‘Much More Radical’ Action Needed as Bailout Fails to Lift Confidence

I also recommend poking around at the archives there on Tech Ticker for some excellent insights from Howard Lindzon and Nouriel Roubini in particular.

Finally, for those who somehow missed everything I’ve been saying for the last month or more: get out, stay in cash, keep yer head down and good luck!

Now let’s try to have a nice weekend and forget this week ever happened, if only for a little while.

I have to give a shout out to Chris Martenson for his Crash Course. It’s an outstanding online video presentation telling you all you need to know about money, the economy, where we’re going, and how we got here. Rarely does such a complex subject get such a simple and accurate treatment. The next chapter (still to come) is about peak oil, and I’m looking forward to seeing it!

It will take you about 2.5 hours to get through the 16 short segments, so you can watch a new segment whenever you’ve got about five minutes to spare if you like. But I highly recommend it–I’d call it must-see material. Watch it, grok it, blog it, digg it, send it to your friends!

–C

Folks,

Several updates for you here. First, my column this week for Energy and Capital, which is the final part of my update on the big picture for the second quarter of the year. In part 1 of this series, I reviewed the trends in financials, fossil fuels and electricity. This week, I take a look at renewables, food and fertilizer.

After that, some recent media updates. I have lots of media stuff going on related to the book, so stay tuned for more.

Feel free to send me your feedback; I love hearing from my readers.
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Reposting a new interview with my co-author Brian Hicks about our book, by journalist Marc Kramer of The Bulletin.
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Folks,

It looks like blog is once again sending out email, after not working for a while. So if you haven’t already, you might want to check in to GRL and see what you missed!

Here’s my follow-up to last week’s article on good commodity investments that can help hedge your losses in energy, food, and stocks. Originally published at Energy and Capital.

–C
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Folks,

Here’s my latest article, originally published at Energy and Capital. Here’s the blurb: “Skyrocketing grain prices raise the specter of famine, but commodities can be a safe haven for investors.”

–C
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Folks,

I had to pass along a tip regarding last night’s Daily Show.

Quoting SilentPatriot at Crooksandliars:

In perhaps the most brilliant segment on “The Daily Show” I’ve ever seen, last night Jon ran through the last three decades of United States intervention in the Middle East to show how incoherent, ass-backwards and counter-productive it has been.

I agree–it was brilliant. And included the 1994 Cheney video.

Find it on the Comedy Central site by scrolling down the Most Recent Videos column to “America to the Rescue,” or find it on Crooksandliars here.

–C

Folks,

If you follow the markets, you are more than aware that they have been melting down for the last three weeks, with the Dow crashing hundreds of points in a day. For those of us who trade stocks, it’s been a very volatile time, with fear and greed hashing it out big-time.

The cause of all this was the “sudden” realization that a huge number of adjustable rate mortgages out there were sold to people with poor credit, and that many of those mortgages are about to have their interest rates raised, leading to a large number of defaults. This in turn caused the rapid devaluation of many other investing vehicles which were levered to those loans, which in turn has sharply devalued the businesses of some of the biggest banks on Wall Street, and caused carnage in the hedge fund world (like, losing 60% of their portfolio values).

I won’t try to get into more detail than that here–there is plenty to read elsewhere on the subject written by more knowledgeable observers–but I’ll give you my bottom line, based on my research: The economy is in trouble, banks are in trouble, there’s not a whole lot that the Fed can do about it, and it is going to take a while to unwind…not days or weeks, but months or even years.

Consequently, I have unloaded almost all my long positions and gotten short via ETFs: SKF and SRS. I believe that this is a good time to be in cash or in a defensive posture. But the markets have been extremely volatile and irrational. There has already been a rally since the first selloff two weeks ago–when the Dow and oil had both reached record highs–but it has been a classic “dead cat bounce” and more than a few investors (like myself) swooped in on an apparent buying opportunity, only to get stopped out of those positions a day or a week later.

Danger, Will Robinson, Danger!

That’s about all I’ll say on the markets right now.

Moving on…I feel compelled to comment on the announced resignation of “Hot” Karl Rove, since he’s been a regular whipping boy in these pages, but I’m not sure what to say. In a sense, I think I felt safer knowing approximately where he was and what he was doing. Who knows what his next trick will be? But of this I’m sure: he’s not going anywhere. I have no doubt that he will continue to work on Republican campaigns and do everything he can to divide and conquer America by actively destroying its social fabric, pitting us against each other in order to scrape a few more votes his way. Just for grins, feel free to email me your best guess at Rove’s next gig.

Finally, I did a short (~6 minute) guest appearance at the daily online podcast The Real Story with Aaron Task today. Check it out here (“No Shelter From the Selling”). My bit starts around 27:00.

Keep your powder dry and your stops tight, and good luck everybody!

–C

Folks,

I did another short (~ 5 minute) radio interview this morning on Traders Nation with Kurt Schemers in Phoenix, AZ, if you want to check it out:

Chris Nelder interview on Traders Nation

–C