Oil deepens slide to $122

Oil prices extended their steepest slide in a year and a half on Tuesday, as traders looked ahead to US oil stock data expected to show a rise in fuel inventories amid eroding demand in the world's biggest consumer. Prices, which are now at their lowest in nearly three months, were also under pressure from signs of strength in the US dollar, which held firm after rallying on a combination of weaker oil prices and an unexpected rise in US consumer confidence. US light crude for September fell 9 cents to $122.10 a barrel by 0316 GMT after slumping by $2.54 on Tuesday, hitting an intra-day low of $120.42, the lowest since May 6 and marking the deepest sell-off in prices since early 2007. London Brent crude fell 29 cents to $122.42 a barrel. "The reason prices are coming off is that there are expectations for inventory builds...on reduced demand," said Robert Nunan, a risk management executive at Tokyo-based Mitsubishi Corp US crude stocks were expected to have fallen by 1.6 mn barrels last week, but gasoline inventories were seen rising by 200,000 barrels and distillates by 1.9 mn barrels, according to a poll ahead of data due later on Wednesday. Oil has fallen more than 17 per cent from a record high of $147.27 set on July 11, pressured by signs that high prices and an economic slowdown are curbing demand, especially in the United States. The EIA said on Monday US oil demand in May was 660,000 barrels per day less than previously thought, while a separate government report said motorists drove 2.4 per cent less during the first five months of the year than the year before. A firmer dollar is also reducing the appeal of commodities to some investors playing the strong negative correlation between the markets in recent months, analysts have said. OPEC President Chakib Khelil said on Tuesday that oil prices were still abnormally high, and member nations should not cut supply as the oil market is now in balance. Khelil, who is also Algeria's oil minister, said oil prices could fall to $80 in the long term, if the US dollar continued to rise and geopolitical anxieties eased. But supply disruptions could limit losses, with traders particularly focused on Nigeria, where Royal Dutch Shell has been forced to declare force majeure on Bonny Light exports after militants blew up parts of a key pipeline.

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Oil prices fall past $126 a barrel

Oil prices extended their slide today after the government reported gasoline stocks rose more and crude supplies fell less than expected last week.Light, sweet crude for September delivery slipped $1.77 at $126.65 a barrel in morning trading on the New York Mercantile Exchange.
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September Brent crude fell $2.06 to $127.49 a barrel on the ICE Futures exchange in London.The Energy Department's Energy Information Administration reported that crude supplies fell by 1.6 million barrels inthe week ending July 18, slightly less than analysts surveyed by energy research firm Platts predicted.
Gasoline stockpiles jumped by 2.9 million barrels. Analysts had expected an increase of half a million. Neither figure would appear to give traders who have been largely selling off oil in recent days reason to change theirbehavior. Oil prices came under further pressure as the dollar strengthened against the euro. The dollar's decline has been a major factor in oil's rapid ascent over the past year, as investors bought dollar-denominated crude contracts as a hedge against inflation and a weakening US currency. But when the dollarstrengthens, that currency-related buying can unwind. In other Nymex trading, heating oil futures lost 7.82 cents to trade at $3.60 a gallon, while gasoline futures shedover 8 cents to $3.0641 a gallon. Natural gas prices fell more than 11 cents to $10.183 per 1,000 cubic feet.

THE US has backtracked on its refusal to negotiate with Iran over its nuclear program, sending a senior envoy to Geneva for top-level talks.

But US Secretary of State Condoleezza Rice has insisted Tehran must suspend its enrichment and reprocessing of nuclear materials before substantive talks with Washington.
"The United States doesn't have any permanent enemies," Ms Rice said, after confirming Undersecretary William Burns was to meet Iran's negotiator Saeed Jalili in Geneva.
"And we hope this signal we're sending, that we fully support the track that Iran could take for a better relationship with the international community, is one the United States stands fully behind.
"We have been very clear that any country can change course."
Rice called the move "a strong signal to the entire world that we have been very serious about this diplomacy".
She said she had endorsed the proposal from the so-called P5 Plus One - the US, France, Britain, China, Russia and Germany - on incentives to advance talks with Iran on halting its nuclear program.
She called sending Mr Burns to Geneva the "bookend" to that process, but added: "It should be very clear to everyone the United States has a condition for the beginning of negotiations with Iran and that condition remains the verifiable suspension of Iran's enrichment and reprocessing."
Asked if yesterday's meeting was a one-shot deal, Rice said: "This is."
On Friday Mr Jalili was optimistic the talks would be constructive, provided Washington went with the right approach.
"What is important for us is with what approach they come to the talks," he told the IRNA news agency.
"If it is with a constructive approach, and they refrain from past mistakes, then, for sure, we will have constructive talks."
Western countries suspect Iran is secretly trying to develop an atomic bomb.
- AFP

Gas prices 'could rise 70%'

Gas prices are set to soar and then remain high for the foreseeable future, a report has revealed.
The independent report commissioned by Centrica, which owns British Gas, warns that prices could increase by 70%.
Jake Ulrich, managing director of Centrica Energy, admitted that gas price rises were likely to lead to a "potentially significant" rise in the number of people in fuel poverty.
He also predicted that people would have to change their habits to deal with higher prices.
He told Channel 4 News: "I do think we will see people change their behaviour. I think people will use less energy and I hate to go back to the Jimmy Carter days in the US but maybe it's two jumpers instead of one."
He added: "I think people will change the temperature they keep the house, they'll be more cognizant of energy waste, they'll buy better appliances."
Gas prices will continue to rise for some time, he said.
"We're part of a world economy and I don't think we can rely on UK production or cheap gas, cheap energy of any sort any more.
"I think it's a reality not only in the UK but in Western Europe and North America - energy is going to become relatively much more expensive in the future."
Gas and electricity watchdog Energywatch called on the government to act now to reduce the pressure on wholesale gas prices and force the industry to deliver affordable energy for Britain's poorest consumers.
Chief executive Allan Asher said: "The government is right to say that the link to oil is a cause of the problems but wrong to say there is nothing that can be done.
"The local impact is so catastrophic it should be leading the international drive to end the hugely damaging and entirely unjustifiable link between the prices of gas and oil.
"Rampaging oil prices are a serious and global contagion. That does not mean we should just take to our beds and hope that the fever will pass.
"Government can and should act in those areas where it can have an effect. Action to cut to the price link between gas and oil, action to improve the working of the domestic market, action to help those who can least afford to keep warm."

US government bails out mortgage giants

The crisis in the US financial system has taken a major turn for the worse with the announcement on Sunday that the US Treasury and the Federal Reserve Board are to take emergency action to prop up mortgage giants Fannie Mae and Freddie Mac.

Under the rescue plan, Congress will be asked to pass legislation to increase the line of credit to Fannie and Freddie—the amount and terms to be decided later—as well as providing the authority for the government to purchase equity if needed. In addition, the Federal Reserve Board has granted the Federal Reserve Bank of New York authority to lend directly to the two companies “should such lending prove necessary.”

Announcing the measures after a weekend of hectic discussions with bankers, financial institutions and Congressional leaders, Treasury Secretary Henry Paulson said the two companies played a “central role in our housing finance system” and their “support for the housing market is particularly important as we work through the current housing correction.” There were fears that had the intervention not been made Freddie Mac may have had difficulty in a planned sell-off of $3 billion in debt scheduled for today.

Like the Bear Stearns rescue operation in March, the timing of the announcement was meant to allay fears before global markets opened for the week. Paulson said the international reach of the two “government sponsored enterprises” (GSE) necessitated the unprecedented action.

“GSE debt is held by financial institutions around the world. Its continued strength is important to maintaining confidence and stability in our financial system and our financial markets,” he said.

The emergency action came after a week of stock market turmoil that saw the stocks of the two firms plunge by up to 50 percent as fears grew that they were too poorly capitalised to meet losses incurred as a result of the collapse of the US housing market.

Between them Fannie and Freddie hold or guarantee more than $5 trillion out of the $12 trillion US mortgage market.

Fannie Mae—the Federal National Mortgage Association—was set up in 1938 by the Roosevelt administration to try to boost the housing market during the Great Depression. In 1968 it was given a new charter by Congress and became a publicly traded company that could seek funding from the private sector. Freddie Mac—the Federal Home Loan Mortgage Corporation—was created by Congress in 1970 as a competitor for Fannie.

Because they were set up by legislation, the two companies have been regarded as having an implicit government guarantee—a perception that has enabled them to borrow funds at lowered rates in the market. Over the past three decades, both firms have grown rapidly to the extent that their holdings and guarantee of mortgage debt is even larger than the $4,500 billion US Treasury market.

While they have not been directly involved in the sub-prime market, the rapid decline in US housing prices—the steepest since the Great Depression—has caused the two firms to suffer a loss of $11 billion over the past nine months, raising concerns about the adequacy of their capital.

Those concerns were heightened last Wednesday when the former St. Louis Federal Reserve President William Poole said the chances were increasing that the two mortgage companies would have to be bailed out. He said Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it technically insolvent. The “fair value” of Fannie Mae’s assets had fallen 66 percent and could go negative in the next quarter, he said.

On Friday, the New York Times published a report that the two companies may be put into a “conservatorship” if their problems worsened. Under a conservatorship, regulators appoint a person or an entity to run the financial institution until stability is restored.

Fear about the viability of the two firms set off a round of discussions in government, financial and banking circles about emergency action. Paulson has insisted that so far as the administration is concerned it wants Freddie and Fannie to continue in their current form as “shareholder-owned companies.”

This is because the alternative—a full-scale takeover or nationalisation by the government—would have vast implications for the financial position of the US. Taking on the debts and obligations of Fannie and Freddie would mean a more than 50 percent increase of US sovereign debt virtually overnight, bringing the total to the equivalent of the US gross domestic product.

In a bid to bolster confidence, the Democratic chairman of the Senate Banking Committee, Chris Dodd, told CNN on Sunday that Freddie and Fannie were both financially sound.

“What’s important here are facts,” he said. “And the facts are that Fannie and Freddie are in sound situation. They have more than adequate capital—in fact, more than the law requires. They have access to capital markets. They’re in good shape. The chairman of the Federal Reserve has said as much. The secretary of the treasury has said as much.”

Given the experiences of the past year, such “boosterism” will not cut much ice. As the Wall Street Journal commented caustically in response to similar remarks by Dodd last week, the senate chairman claimed that the companies were so safe that the Fed might have to rescue them.

Last Thursday Fed chairman Ben Bernanke and Paulson, appearing before the House Financial Services Committee, emphasised that the regulator of Fannie and Freddie, the Office of Federal Housing Enterprise Oversight, had found that both companies were adequately capitalised. Similar assurances were also given about Bear Stearns just days before it was taken over.

While attention has focused on Fannie and Freddie, the depth of the US housing and financial crisis has been underscored by the collapse of IndyMac Bank in California.

The Pasadena-based mortgage lender, which had $32 billion in assets, was seized by federal regulators on Friday following an 11-day $1.3 billion run on its funds. IndyMac, which specialised in Alt-A loans to borrowers who did not fully document their assets or their income, ranked as the ninth largest US mortgage lender by volume.

The collapse of the bank—the third largest failure in US banking history after the demise of Continental Illinois in 1984 and the American Saving and Loan Association of Stockton in 1988—is expected to cost the Federal Deposit Insurance Corporation between $4 billion and $8 billion. This is a sizeable chunk of its $53 billion deposit insurance fund, which is expected to be called on again as more banks go under.

Besides pointing to the sheer size of the financial crisis, the Fannie-Freddie rescue operation has underscored the speed with which it is unfolding. On Thursday, Paulson and Bernanke told Congress that they were not seeking new legislation. Just three days later, an emergency package is to be brought forward with no guarantee that further measures will not be required even in the next few days.

UPA obsessed with nuke deal, has not kept its promises: Left

NEW DELHI: The Left parties on Monday launched a nationwide campaign to explain to people the reasons that prompted them to withdraw support to the UPA government which, they alleged, "failed" to keep promises due to its "obsession" with the nuclear deal. (See Ninan’s cartoon)


Top Left leaders addressed a meeting here where they cited the UPA's "failures, including rising prices and inflation, surrendering of national interest, and unkept promises with regard to the Common Minimum Programme (CMP)". ( Watch )

The leaders "vigorously" attacked the government for its "refusal" to take appropriate steps to tackle the "runaway" inflation and "back-breaking" price rise.

The campaign was launched to explain to people the reasons for withdrawing support besides "explaining the UPA's pro-American and anti-people policies which are resulting in price rise and other problems," CPM General Secretary Prakash Karat said.

The Left parties are trying to rally other democratic and secular forces "who do not want either the Congress or BJP to be the only alternative".

In the course of the campaign, he said the Left will also place before the people an alternative to meet energy requirements for development and for putting an end to the economic policies pursued by the Government which are "harmful to farmers, rural poor, workers and other sections".

Karat said the Government and the Congress wanted to fulfill their promise to US President George W Bush. "It is their primary aim and not tackling inflation or price rise."

Karat said, "Nuclear deal and price rise are the issues on which we withdrew support".

Plans are afoot to field top leaders, who will crisscross the country, to attend public meetings and rallies organised in major towns in all states.

The focus of the campaign will be on youth as the "cream of the country" needs to be educated on the "ill-effects" of the nuclear deal and other problems facing the country.

Meetings will be organised at all major centres as well as in towns and villages. Pamphlets and handbills will be published.

The false claims and assumptions made by Government will be exposed and real facts will brought before them, a senior Left leader said.

The campaign plank will be anti-imperialism and defence of the country's sovereignty, anti-communalism and defence of secular domestic polity and protection and improvement of common people's livelihood against attack of big business.

Will Left get the 'right' response?

Soon after Prime Minister Manmohan Singh declared that the government would "very soon" approach the International Atomic Energy Agency (IAEA) to move forward on the Indo-US nuclear deal, an upset Left announced withdrawal of support to the UPA government. The move ended weeks of suspense on the issue. Now, with the PM declaring that there is no threat to the government’s stability, stage is set for a flurry of activities on the political scene. The Communists had also come down heavily on the government for approaching the IAEA to finalise the India-specific safeguards pact. With more and more support making the number game crucial, the big question is whether the determined Left parties will be able to rock the Indo-US nuke deal boat?

Hindustantimes.com brings together the stories that have dominated the popular mood in the recent times.

Obama reluctant to seek changes in nuclear deal

Barack Obama

Democratic Party candidate for the United States Presidential election Barack Obama has said he was reluctant to seek changes in the civilian nuclear deal with India, and hoped to see the process concluded before the year-end.

The existing nuclear agreement balanced both issues – America’s strategic relationship with India and its non-proliferation concerns. “I am therefore reluctant to seek changes,” he told Outlook magazine in an interview.

He admitted to some reservations over the “original agreement” but subsequently concluded that it would “enhance our [Indo-U.S.] partnership and deepen our cooperation” to combat global warning.

Asked whether an Obama administration in 2009 would reopen or scrap the deal if it was not concluded this year, he said, “A final judgement on the deal…must await the IAEA’s approval of a safeguards agreement and changes to be agreed [upon] by the Nuclear Suppliers Group. At that point the U.S. Congress will decide whether to approve the agreement. I continue to hope this process can be concluded before the end of the year.”

Indian connections

Disclosing several Indian connections, Mr. Obama said he would continue with the tradition established by George W Bush and Bill Clinton of visiting India during their tenure as Presidents. He was fortunate to have close Indian-American friends. He pointed out that his mother did rural development work in India.

“Throughout my life, I have always looked to Mahatma Gandhi as an inspiration, because he embodies the kind of transformational change that can be made when ordinary people come together to do extraordinary things. That is why his portrait hangs in my Senate office: to remind me that real results will come not just from Washington – they will come from the people.”

Asked in what areas he would like to see U.S.-India relations grow, his reply was, “across the board would the short answer.” Specifically, he would like to focus on counter-terrorism, greater military ties, promotion of democracy in the region and beyond and combating climate change and global poverty. “I would also like to see agriculture given a higher priority in our relations, as India pursues its goal of a second green revolution.”

Mr. Obama spoke against the Bush administration’s Pakistan policy of “putting all our eggs in the Musharraf basket” and wanted the U.S. to align with “Pakistan and its people and not just oone individual.”

The Hindu

Jesse Helms

Jesse Helms, a conservative American, died on July 4th, aged 86

SUPPORTERS put the best face they could on him. A real Southern gentleman, from owlish glasses to black wingtip shoes, who would hold the door for any woman and thank you, with a nod and a smile, for smoking North Carolinian tobacco in his office. A kind-hearted soul, who had adopted a boy with cerebral palsy, who bought ice-cream for his congressional pages and was delightful at dinner, both to Democrats and Republicans. A true patriot, who saw America as God’s country and the world’s hope, who defended its values against the liberal media and the “muck” of decadent artists, and who had no truck with arms-control treaties, test-ban treaties, missile reduction, or any crimp on sovereignty. An anti-communist to make all others fade, convinced that the Soviets were irredeemable cheats and liars, determined never to deal with Fidel Castro’s Cuba but to make sure the tyrant left it “in a vertical position or a horizontal position”, preferably the latter. A doughty lover of liberty, who believed government should be small, laws unobtrusive, and men left alone to take responsibility for their own lives and their own decisions. “Compromise, hell!” he wrote in 1959. “If freedom is right and tyranny wrong, why should those who believe in freedom treat it as if it were a roll of bologna to be bartered a slice at a time?” He would have said the same, with his unwavering gimlet glare, 50 years later.

Yet there was no discounting the other side. Mr Helms was a racist, who thought the Civil Rights Act of 1964 “the single most dangerous piece of legislation” ever to come before Congress; who blocked what he could of the Voting Rights Act; who made fast friends with apartheid South Africa, and turned his back on Nelson Mandela; who let his re-election campaign in 1990 send out cards telling blacks that they risked jail for voting “improperly”. When the rest of America had moved on, Mr Helms still carried in his head the mores of old Monroe, North Carolina, where he was born: the hot, quiet streets among the cotton fields, flowers on the steps of the Confederate monument, Negroes stepping into the gutter to let whites pass. No mingling occurred there. God’s dictates were observed. Good conduct was rewarded, uppityness punished, with a horsewhipping if need be. In Monroe Mr Helms learnt to play the race card, that fear of touching and that sense of suppressed disorder. “Do you want Negroes working beside you?” asked the first political campaign he worked for, in 1950. “You needed that job…but they had to give it to a minority,” ran one of the last, in 1990, as a white hand crumpled a rejection slip.

His bigotry also spread further. As a radio and TV commentator in the 1960s he railed against the welfare-scrounging poor, socialists and draft-resisters, as well as blacks. His five terms in the Senate, from 1973 to 2003, saw him set firm against government payments for the disabled, free school lunches and anything that encouraged bums in their “bum-ism”. “Senator No” was powered by contempt, as well as small-government frugality.

By the 1990s homosexuals had become his prime targets: “disgusting people”, who had brought AIDS upon themselves by their revolting behaviour. “Nothing positive”, he said, “happened to Sodom and Gomorrah.” Beyond those feckless, flouncing crowds, in the wider world he surveyed as chairman of the Senate Foreign Relations Committee, he blocked aid from going down “foreign rat holes” and resisted for years paying money that was owed to the United Nations. Old age brought a mild repositioning, but no repentance, and no yielding on the subject of race. It was hard-wired into him.

Towards the culture wars

The truth was that American conservatism owed much to Mr Helms. He demonstrated, in 12 years of peak-time broadcasts for the Tobacco Radio Network and WRAL-TV, the power of talk radio to move minds, well before Rush Limbaugh caught on to it. He developed, in his North Carolina Congressional Club and later through Richard Viguerie (a direct-mail maestro), an independent donor base that raised millions for his campaigns and became a template for the Christian right. The efforts of the NCCC in 1976 delivered North Carolina to Ronald Reagan at a point where his primary campaign was collapsing, and stiffened his spine for subsequent runs for office. Mr Helms, therefore, helped to give America its greatest conservative president. He also prefigured the Republican renaissance in the South and across the country, changing parties in 1970 and luring working-class Democrats in overalls and pickup trucks to vote for him, the first Republican senator from North Carolina for more than a hundred years.

For that assistance there was a price to pay. Mr Helms was a polariser: so much so, that he never won more than 55% of the vote in North Carolina. With such a man let loose in the Senate, there was no hope of bipartisanship. Legislation and appointments alike were blocked on conservative principle. The wounds of the Johnson and Nixon years opened again and became the culture wars: one half of the country against the other, unable to understand, sympathise or compromise. In Jesse Helms, Southern charm personified, American conservatism embraced its own dark side.

From The Economist print edition

Indian stocks worst BRIC performers in 2008

NEW DELHI: With the bears strengthening their hold on the domestic stock market, Indian equities have given the worst returns to investors compared to their peers in the three other BRIC nations Brazil, Russia and China so far this year.

According to an analysis of MSCI Barra indices, a measure of returns from various stock markets across the world for foreign investors, Indian stocks have given the highest negative return among the four BRIC countries till July 11.

Indian stocks have provided a negative return of over 41 per cent so far this year, while China and Russian markets have given losses of 25.55 per cent and 10.15 per cent, each.

At the same time, investors have actually gained in Brazil, although marginally, with stocks there rising 0.13 per cent since the beginning of this year, according to an analysis of performances of MSCI Indices for various nations.

"India was among the best performing markets last year, but the correction suffered by the domestic market this year has been very severe which has sent it into a downward frenzy," Arun Kejriwal Director of Kejriwal Research and Investment Services (KRIS) told PTI.

Another reason why Indian markets have performed badly is that all the macro economic indicators which were driving the bulls last year such as strong GDP growth, strengthening of the Indian currency and inflation at controlled levels, have all back-fired this year, Kejriwal added.

Father of heart surgery DeBakey dies at 99

WASHINGTON: Legendary US physician Michael DeBakey, father of modern heart surgery, is dead.

DeBakey died of natural causes Friday at the age of 99 at Houston's Methodist Hospital, a hospital spokesperson told the Houston Chronicle Saturday.

DeBakey was known for his innovative bypass operations and heart transplants.

As one of the great surgeons of the 20th Century some of DeBakey's patients were prominent like film diva Marlene Dietrich, former US president Lyndon Johnson and Russia's former president Boris Yeltsin.

"Dr DeBakey's reputation brought many people into this institution, and he treated them all: heads of state, entertainers, businessmen and presidents, as well as people with no titles and no means," said Ron Girotto, president of The Methodist Hospital System.

"He always said that Methodist is a hospital with a soul and for more than 50 years, Dr DeBakey has been the heart and soul of Methodist."

DeBakey worked at the hospital since 1949.

Perhaps the most important innovation medicine owes to DeBakey was his bypass operation, which he first accomplished in 1964. He replaced calcified coronary arteries with healthy veins, which he took from the leg - today the procedure is a common, often life-saving operation for heart-disease patients.

"He has improved the human condition and touched the lives of generations to come," Girotto said. "We will greatly miss him."

DeBakey performed more than 60,000 operations during his career.

Married to German film actress Katrin Fehlhaber, DeBakey got to know Frank Sinatra and two years ago he narrowly escaped death from a torn aorta. He was saved by the operation that he himself had invented.

In April US President George W. Bush presented the pioneer of cardiovascular medicine the Congressional Gold Medal, the nations highest civilian honour.

Spain: Boat migrants die, bodies cast into sea

(CNN) -- The Spanish Interior Ministry says the death toll among migrants found packed aboard a boat trying to reach one of Spain's Canary Islands has risen to at least six.

Survivors from the boat recuperate on the foreshore after making port in Playa de Santiago.

The boat was spotted off the island of La Gomera with 59 persons from sub-Saharan Africa crumpled into its narrow hull. Four of them were dead.

Harrowing pictures from the scene show people piled on top of each other in an unfeasibly small space.

An Interior Ministry spokeswoman said Saturday that one other person died on arrival at the port of Playa de Santiago on Friday. Four seriously ill people were transferred by helicopter to hospitals on the island of Tenerife where one of them died.

National broadcaster RNE said survivors had acknowledged throwing bodies overboard after they got lost at sea.

Earlier this week the Spanish coastguard rescued 23 Nigerian immigrants off the coast near Malaga but 14 others could not be found.

Thousands of Africans are believed to have died attempting sea crossings to Spain in recent years, most of them trying to reach the Canary Islands in search of jobs.

The flood of migrants has prompted Spain's Socialist government to toughen up its policies on illegal immigrants, who now face repatriation to their home countries.