TEHRAN, Iran (AP) — Iran, OPEC’s second-largest producer, has stopped conducting oil transactions in U.S. dollars, a top Oil Ministry official said Wednesday, in a concerted attempt to reduce reliance on Washington at a time of tension over Tehran’s nuclear program and suspected involvement in Iraq.

Iran has dramatically reduced dependence on the dollar over the past year in the face of increasing U.S. pressure on its financial system and the fall in the value of the American currency.

Oil is priced in dollars on the world market, and the currency’s depreciation has concerned producers because it has contributed to rising crude prices and eroded the value of their dollar reserves.

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OPEC President Chakib Khelil does not rule out oil prices reaching $200 a barrel, even though supply is adequate, because the market is driven by the dollar’s slide, Algerian government newspaper El Moudjahid reported on Monday.

“Questioned about a possible rise which would go to $200, the minister did not rule out this eventuality, explaining that this rise is indexed from now on to the fall in the dollar or to the rise in the dollar,” El Moudjahid reported.

“In terms of fundamentals, stocks are high, demand is easing, supply is satisfactory. Therefore normally, without geo-political problems and the fall of the dollar, the prices of oil would not be at this level,” he was quoted as saying.

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The dollar sunk to a record low Tuesday against the euro, which crossed $1.60 after a pair of European Central Bank governors said high inflation may cause the bank to raise interest rates. The U.S. currency also fell against the Japanese yen and the British pound.

The euro rose as high as $1.6018, more than a penny above the $1.5916 it bought late Monday. The euro has risen 20 cents against the dollar in just five months and 10 cents in just two months. Read more »

NEW ORLEANS — President Bush’s final meeting with the leaders of Mexico and Canada on Monday has the intended twist of giving an economic and symbolic boost to New Orleans, which is recovering with uneven success from the most brutal natural disaster in U.S. history. Ahead of the day’s events, the Bush administration tried to frame New Orleans’ turnaround from Hurricane Katrina in upbeat terms. Paul Conway, chief of staff for the federal government’s recovery effort, said elected and volunteer leaders in the city are demanding and getting results. Read more »

U.S.A. — AS THE VALUE OF THE U.S. dollar declines, investing in U.S. defense firms becomes more attractive to foreign companies. That worries Rep. Duncan Hunter, R-Calf., who fears more foreign ownership will mean more pilfered defense technology secrets.

“We’ve got people with lots of cash” in the rest of the world and American companies “that are desperate for cash.” The increase of foreign entities buying U.S. defense companies “is going to be a problem for years to come,” Hunter said.

It’s not as bad as it was two years ago, said Kathy Watson, director of the DEFENSE SECURITY SERVICE. But improvements are coming slowly. The DSS is a little-known agency within the Defense Department that determines which companies qualify for access to classified information. It awards clearances to company officials and evaluates “foreign ownership, control or influence over U.S. defense companies. SOURCE>>>>>>>

The world economy will slow sharply this year, according to an International Monetary Fund forecast, with the United States sliding into a recession amid housing, credit and financial slumps.

The IMF, in a World Economic Outlook released Wednesday, slashed growth projections for the United States — the epicenter of the woes — and the global economy as a whole.

Economic growth in the United States is expected to slow to a crawl of just 0.5 percent this year, which would mark the worst pace in 17 years, when the country last suffered through a recession, the IMF said. The United States won’t fare much better next year; the IMF projected the U.S. economy will grow by a feeble 0.6 percent in 2009. Read more »

The White House Thursday welcomed moves by US lawmakers to triple funding to combat HIV and AIDS worldwide to some 50 billion dollars, saying it could help save millions of lives.

President George W. Bush wanted to “thank the members of Congress who supported this legislation,” the White House said in a statement.

The bill, which boosts an existing program first launched by Bush in 2003, was overwhelmingly approved by 306 votes to 116 on Wednesday by the House of Representatives in a bipartisan effort. It is set to sail through the Senate. Read more »

Flagging economic growth in the US and the strong euro have dented German exports to the US, Germany’s biggest export partner outside Europe, the Federal Statistics Office reported this week.

German exports to the United States last year dipped by 5.9 percent to 73.4 billion euros ($115 billion), the country’s federal statistics office revealed this week.

The fall has been attributed to a sagging US economy, which experts say is facing a sharp slowdown, and a soaring euro.

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With over 260 billion barrels of proven oil reserves, a quarter of the world’s total, Saudi Arabia is not only the top foreign supplier to the United States - the world’s largest energy consumer - but also essentially the sole source of liquidity in the oil market. According to the Department of Energy’s Energy Information Administration (EIA), the world will become more dependent on Arabian oil in the next two decades. To meet global demand for oil, Saudi Arabia will need to produce 13.6 million barrels a day (mbd) by 2010 and 19.5 mbd by 2020. Both the International Energy Agency and EIA assume Saudi oil output will double over the next 15 to 20 years. In a new study soon to be released, Matthew R. Simmons, president of Simmons and Company International, a specialized energy investment banking firm, contends that this is not likely to happen. He argues that Saudi Arabia’s oil fields now are in decline, that the country will not be able to satisfy the world’s thirst for oil in coming years and that its capacity will not climb much higher than its current capacity of 10mbd. Considering the growth in demand, this could easily spark a global energy crisis.  Continued>>>

And you thought that I had a gloomy outlook on the economy. Now the bad news pops up everywhere.

Harry Koza in the Globe and Mail quotes Bernard Connelly, the global strategist at Banque AIG in London, who claims that the likelihood of a Great Depression is growing by the day.

Martin Wolf, celebrated columnist of the U.K.-based Financial Times, cites Dr. Nouriel Roubini of the New York University’s Stern School of Business, who, in 12 steps, outlines how the losses of the American financial system will grow to more than $1 trillion - that’s one million times $1 million. That amount is equal to all the assets of all American banks. Read more »

Years ago on Newsnet14 we talked about how the Iraq war costs would run into the trillions for the US.

THE Iraq war has cost the US 50-60 times more than the Bush administration predicted and was a central cause of the sub-prime banking crisis threatening the world economy, according to Nobel Prize-winning economist Joseph Stiglitz.

The former World Bank vice-president yesterday said the war had, so far, cost the US something like $US3trillion ($3.3 trillion) compared with the $US50-$US60-billion predicted in 2003. Read more »

Were you aware that remittances sent from Mexicans living in the U.S. is Mexico’s second largest source of national income?

Mexicans living abroad sent fewer dollars home in January, reflecting the impact of a slowing U.S. economy and the crackdown on illegal immigration.

Mexicans sent home $1.65 billion in the first month of the year, down 6 percent from the $1.76 billion in remittances in January 2007, the country’s central bank reported Wednesday.

Remittances are one of Mexico’s main sources of foreign currency inflows, behind oil but ahead of tourism. Read more »

FBI wiretaps used in undercover investigations, including those aimed at deterring terrorist attacks and foreign intelligence threats, have been cut off by telephone companies because of the bureau’s repeated failure to pay its phone bills on time, a government audit said Jan. 10.
The Justice Department’s Office of Inspector General said a review of 990 telecommunication surveillance payments made by five FBI field divisions found that more than half of them were not made on time, and that late payments resulted in the phone lines established to deliver surveillance results to the FBI being disconnected. Read more »

HINSDALE, Illinois (Reuters) - A house in this wealthy Chicago suburb is far beyond the reach of most Americans.  Unfortunately, Hinsdale may also now be too expensive for some of the people who already live here.  “There is a section of the population here that over-extended themselves to buy here and then keep up the facade of wealth,” said Sharon Sodikoff, a broker associate at local real estate agency Prudential Homelife Realty. “In the next year or so they’ll be forced out in dribs and drabs.”      Read more »

Since it began to give credit ratings to nations in 1917, Moody’s has rated the United States triple-A. U.S. Treasury bonds have been seen as the most secure investment on earth. When crises erupt, nervous money seeks out the world’s great safe harbor, the United States. That reputation is now in peril.

Last week, Moody’s warned that if the United States fails to rein in the soaring cost of Social Security, Medicare and Medicaid, the nation’s credit rating will be down-graded within a decade. Read more »

Citigroup is putting the final touches to its second big capital-raising effort in as many months, seeking up to $14bn from Chinese, Kuwaiti and public market investors.

Under the proposal being discussed, the bulk of the money – roughly $9bn – would be most likely to come from China, people familiar with the negotiations say. The Kuwait Investment Authority would contribute about $1bn, while $2bn to $4bn would be raised through a public placement of shares. Read more »

The firefighting system in the massive $736 million embassy complex in Baghdad has potential safety problems that top U.S. officials dismissed in their rush to declare construction largely completed last year.

Some officials assert that the push to complete the long-delayed project, potentially life-threatening problems have been left untouched. “This is a serious enough to get someone killed,” said a State Department official, who spoke on the condition of anonymity because he feared retaliation. “The fire systems are the tip of the ice berg. That is the most visible. But no one has ever inspected the electrical system, the power plant” and other parts of the embassy complex, which will house more than 1,000 people and is vulnerable to mortar attacks. FULL STORY>>>

LIVING standards in Britain are set to rise above those in America for the first time since the 19th century, according to a report by the respected Oxford Economics consultancy.

The calculations suggest that, measured by gross domestic product per capita, Britain can now hold its head up high in the economic stakes after more than a century of playing second fiddle to the Americans.  Read more »

For the first time, oil prices have nosed above $100 a barrel. Gasoline is higher by 73 cents a gallon from a year ago. In past decades, such price jumps brought a knee-jerk reaction to conserve or to find more oil. The world has done both. Yet prices continue to rise. So what’s left to do?

Congress tried to mandate more conservation last month when it insisted on better fuel efficiency in automobiles (from 25 to 35 miles per gallon by 2020). But some evidence suggests that better gas mileage creates an incentive for people to drive more, or even faster.

Consumers have also seen fuel prices go down for long stretches – just nine years ago, oil was at $10.35 a barrel. Making expensive investments in conservation or alternative transportation makes little sense to many. Ever since the oil shocks of the 1970s that saw prices rise to levels well above costs of production, Saudi Arabia has often jerked around prices to keep the world addicted to oil. Read more »

Every day it is looking more and more like we are entering the next great depression as our fears become reality.

We saw the Real Estate market devastated after years of growth.  Many Americans cannot afford to pay their mortgages, foreclosures  are becoming very common, and the real estate taxes continue to rise.  Many markets are flooded with houses for sale and new building is rapidly slowing down.  The amount of foreclosures has created massive losses for the banks which gave out the real estate loans. 

Many major corporations are seeing sales and profits decline greatly as well.  The US automotive industry is performing extremely poorly and even major retailers saw a decline in sales this holiday season versus previous years. Read more »

NEW YORK (AP) — Oil futures retreated from a new record over $100 a barrel set Thursday after the government reported a larger-than-expected decline in crude oil inventories and an unexpected increase in heating oil supplies.

One day after oil prices briefly touched $100 for the first time, the Energy Department’s Energy Information Administration said crude inventories fell by 4 million barrels last week, much more than the 1.7 million barrel decline analysts surveyed by Dow Jones Newswires, on average, had expected. Read more »