"There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved."
- Ludwig von Mises

Monday, August 8, 2011

Trichet's Got A Gun

And he just used it.  The gun reference, for those not familiar with it, is from former US Treasury Secretary Hank Paulson (under Bush II).  Paulson, seeing that the stock and bond markets were in full panic mode in 2008, said that he needed a large amount of money to be used to provide liquidity to the markets.  His view that this large and accessible amount of money, that gave him cart blanche, would be a bazooka.  That is, both a defensive and offensive weapon to ward of bond vigilantes and short sellers.  He even said that merely possessing this bazooka could be enough to stem the market carnage that was taking place in 2008.

Well,  ECB President Trichet just fired his own bazooka - he started "cranking up" the printing presses to buy Spanish and Italian bonds that the market started deeming to expensive due to increased risk of sovereign default.

This represents an interesting development for the EU.  The EU is far from a federation, and thus only the larger member countries have control over EU policy - France and Germany.  But even these two countries need to answer to their electorates, so arriving at a sensible (if it even exists anymore) EU monetary and financial policy, is extremely difficult.  Enter Trichet with his bazooka...

From Bloomberg this morning:
The ECB bought Italian and Spanish bonds this morning, according to five people with knowledge of the transactions, driving their 10-year yields down to 5.39 percent and 5.3 percent respectively from above 6 percent on Friday. Both reached euro-era records last week. Italy has 1.8 trillion euros ($2.6 trillion) in outstanding debt. 
European stocks erased losses, led by a rebound in banks, with the benchmark Stoxx Europe 600 Index up 0.5 percent to 240.04 at 8:25 a.m. in London. U.S. futures on the Standard & Poor’s 500 Index slid 0.8 percent after earlier being down as much as 3.1 percent.
Hyperinflationists will see this as excessive money printing, and they are right, to a degree. The reality is, that when central banks engage in such an action, they attempt to "sterilize" or as I like to put it "cancel out" the inflationary affects of such actions.  How do they do this? They increase the amount of term deposits banks have with the Central Bank.  It's a cancelling out of sorts of money in the economy.  It's parked.  It's basically a balance sheet exercise of shifting around numbers on a ledger.

But it also defies the laws of capitalism.  Without negative economic consequences, economies become distorted and malinvestments are not flushed out of the system.  Those that disagree with this point counter that to do nothing could collapse the system.  They are correct.  However, the same political influence that leads to debt monetization - banks that have an undue influence on governments and central banks - also controls the regulation of banks.  The banks that hold this poisonous debt are not tamed.  There is no governmental regulation strong enough to punish the banks, the type of punishment the darwinistic aspect of Capitalism dishes out to bad investors - banks included.

And so, yes, for today, a free lunch has been provided.  Pain has been avoided - today.  But the imbalances of trade between member EU countries still exist, there is no guarantee that the ECB can sterilize everything that may be needed in the future, and the Banks continue business as usual.

Yes, Trichet has successfully impacted Italian and Spanish bond yields - let's call it what it is - he successfuly manipulated the market.  But there is one asset that doesn't buy all this balance sheet/ledger shifting of poisonous debt.  You know what that asset is?


I have been saying for years now.  Watch gold, it is the barometer of the world economy and the current debt based fiat monetary system.  As more temporary band aids are applied to this systemic band aid, gold's value will only increase.

Furthermore, as banks are saved with liquidity and sovereigns are starved of liquidity, austerity will collapse economies, and thus collapse tax revenues, leading to very little change in deficit and debt to gdp targets.  The EU's goals for implementing austerity - to lower deficit and debt to gdp numbers will also fail.  It's been failing in Greece every few quarters.  I'm in Greece now, and it is full blown debt deflation.  When the economy shrinks, when salaries fall, tax revenues fall, and the debts?  They remain the same or even grow.  A country can only lower its debt to gdp if its economy grows and its debts get paid off.  None of that is happening under austerity.

There is no solution in my opinion.  As Michael Hudson has put it:  "debts that can't be paid, won't be paid."  Trichet may carry the game on a little longer, but eventually, one of two things will happen.  The currency collapses, or the economy collapses.  Or both.

Monday, July 18, 2011

Update on Future Posts

I will be posting again on a somewhat regular basis - a few times a week at least.  I have been busy lately with personal and business matters.  But I want to mention that my main beliefs discussed on this blog - those of  peak oil, the inevitable terminal end of credit based monetary systems, and a return to a gold standard, as well as the likelihood of an increase in resource wars are ideas that I still hold as inevitable.  And mind you, these ideas are based on a gradual systemic change that is going on in the world around us.  These ideas are based on an ongoing process that is happening right now.  It's not that these things will suddenly happen.  They are happening, at various stages, right now.

I am very pessimistic to say the least.  In early 2007, I believed that the architecture of international trade and finance was breaking apart.  Despite temporary solutions that only serve(d) to delay the inevitable, an end game still exists - it is unavoidable.  There are times that I fear that an investment strategy may be pointless, and the hide-in-the-bunker crowd/the end is nigh may be on to something.

Regardless, we are going through some severe structural changes in the global economy.  A de-globalization, if you will.  Such a process is an unwind of a previous system based on expansionary (cheap) credit and easy access to cheap energy and cheap labor.  The reversal of such a process carries many political and social and economic implications for a world based on hypercomplexity.  As US historian Joseph Tainter has said: "Collapse is the rapid simplification of society."

What does that mean?  It depends on where you live, I guess.  Increased gang warfare in Mexico and the central urban areas of US cities, massive protests in North Africa, shutdowns and strikes in Greece (which I witness firsthand), etc...  These disruptions are happening in different places, in different ways, at different times.  But all the "events" are symptoms that will lead to a greater end game.  They are not independent happenings.

It is not a Greek crisis.  It is not an EU crisis.  It is not a Northern Africa/Middle East crisis.  It is not a Wall Street crisis.

It is something more.  It is the end of a world we once knew, and the uncertain beginnings of a new world that is emerging.

Thursday, April 14, 2011

Jim Grant: US Fiscal Crisis To Be Resolved With US Dollar - Gold Convertibility

I have speculated many times in the past that the current debt based system that was created in 1971 with the end of Bretton Woods would ultimately end with the restoration of a gold standard.  Mind you, governments will be extremely reluctant to do this.  But in the face of a breakdown in the global financial system, there is nowhere else to go when your system is merely based on easily keystroked electronic digits.

When a virtual system, like the system we have today, expires, only a tangible system can replace it.  And by tangible, I mean real, something you can hold in your hands.  Something that has no nationality.  Something that Central Banks around the world have been increasingly hoarding and accumulating.  That something is gold.

Eric King of King World News recently interviewed Jim Grant.  Here are snippets from his blog. The audio portion of the interview will be posted shortly.
When asked about the Great Recession and how it has left its mark Grant replied, “It is notable. Not so many months passed from the depths of our sorrows in 2008 and 2009 before people seemed to be reverting to much the same kind of financial conduct that was much in evidence in 2005, 2006, 2007. The cycles are getting shorter. Then again the government is now in the business of, so it declares, of restoring financial prosperity through main force. 
So, after the Great Depression there was nothing like the policy that Ben Bernanke and company have been implementing now. I don’t think that human beings are much different than they were way back when, but certainly the government’s response to crises is vastly different.” 
When asked about gold specifically Grant stated, “To me the gold price takes the form of a very uncomplicated formula, and all you have to do is divide one by ‘n.’ And ‘n’, I’m glad you ask, ‘n’ is the world’s trust in the institution of paper money and in the capacity of people like Ben Bernanke to manage it. So the smaller ‘n’, the bigger the price. One divided by a receding number is the definition of a bull market.

You’ll notice that this had nothing to do with security analysis. This is conceptualizing, brainstorming, nothing to do with price/earnings ratios, other valuation methods like cash flows. It is a proposition or a hypothesis on what is driving the gold market. So the gold market is necessarily a speculative piece of business. It’s not to be confused with the kind of investment that Ben Graham wrote about. Anyway, I happen to be bullish on it, but not for reasons that I can readily defend before a member of the fraternity of chartered financial analysts.”

When asked how the United States will resolve its debt and deficit problems, Grant remarked, “Well, in my mind it will resolve them necessarily by undertaking the step of restoring the dollar to convertibility into gold.”
Jim Grant has become legendary for having one of the top financial publications in the world. This comment from the Financial Times points out one of the many reasons for Grant’s success, “If Grant could see what was happening this clearly,” wrote John Authors of the staff of the FT, “and warn of it in a well-circulated publication, how did the world’s financial regulators fail to avert the crisis before it became deadly, and how did the rest of us continue to make the irrational investing decisions that make Mr. Market behave the way he does?”


The question that comes to mind when I think of a gold standard restoration is: At What Price? I believe that the longer the current system is artificially propped up, the higher the ultimate price.

Friday, April 8, 2011

Paul Krugman On the Euro

I am not one that often agrees with New York Times columnist Paul Krugman, but recently he made some sense regarding the ECB's rate hike.  In the periphery countries of the EU, debt deflation is a serious risk.  Some would say that it is ongoing, despite the recent rise of the price of oil.

When the ECB raised its rate, it left me perplexed.  Mind you, I am not a Keynesian die hard, nor a Monetarist. But I understand those economic views, and I also believe that one should play the economic game as it is, not as you want it to be.  What I mean by that is, if the rest of the world is devaluing to make exports cheaper and debt repayments easier, why the hell would someone do the opposite?  There is no prize for being the first to crash your economy.  It's economic suicide.

Don't get me wrong, I believe the global fiat system is gradually imploding.  But why hurry things and try to protect your currency by sacrificing your economy?  Well, it looks like German fears of inflation may doom the periphery countries.

From Paul Krugman:
Why People Say “Eeh!” When They Learn About the ECB 
With all the craziness at home, I didn’t have time to comment on the European Central Bank’s decision to raise rates despite continuing very high unemployment. 
The first thing to say is that overall eurozone numbers look very much like US numbers: a blip in headline inflation due to commodity prices, but low core inflation, and no sign of a wage-price spiral. So the same arguments for continuing easy money at the Fed apply to the ECB. And the ECB is not making sense: it’s raising rates even as its official acknowledge that the rise in headline inflation is likely to be temporary.
He continues:
During the eurobubble years, there were huge capital flows to peripheral economies, leading to a sharp rise in their costs relative to Germany. Now the bubble has burst, and one way or another those relative costs need to be brought back in line. But should that take place via German inflation or Spanish deflation? 
From a pan-European view, the answer is surely some of both — and given that deflation is always and everywhere very costly, the bulk of the adjustment should in fact take the form of rising wages in Germany rather than falling wages in Spain. 
But what the ECB is in effect signaling is that no inflation in Germany will be tolerated, placing all of the burden of adjustment on deflation in the periphery. From the beginning, euroskeptics worried about one-size-fits-all monetary policy; but what we’re getting is worse: one-size-fits-one, Germany first and only. 
That’s a recipe for a prolonged, painful slump in the periphery; large defaults, almost surely; a great deal of bitterness; and a significantly increased probability of a euro crackup. 
Aside from that, it’s prudent, reasonable policy.

As I have said in my past post:  The Rise of the Fourth Reich, Germany is making decisions based around its own self interest, disregarding the long term consequences to the Euro, and the EU as a whole.  Nonetheless, I feel that it is a failed experiment anyway, that the periphery countries could never compete with Germany using the same currency.

Maybe Germany's "Germany First" policy will hasten the end of the Euro... and with it, the fiat experiment of the past 40 years.

Sunday, April 3, 2011

Once again we ask: QE, or not QE?

That is the question.  As June approaches, will the Fed end QE2 as promised?  Or will it immediately begin with the next program, to be likely dubbed QE3 by pundits?

I think a lot depends on other factors in the world.  The ECB wants to raise rates this month, just as the periphery countries, especially Greece, Portugal, and Ireland are becoming increasingly economically unstable.  Debt deflation and rising unemployment is common there, which will likely translate into political repercussions.

The US housing market is far from stabilizing, and that's one of the purported reasons for QE, right?  To stabilize the housing markets, keep interest rates low, and to push up asset values.

Oil too, is a major factor.  It has recently made a new high since the 2008 oil price spike deflated.  The Middle East situation is a major factor here, after all, an increasing price of oil is basically a tax that transfers money from industrial countries to the oil exporting countries. That's a huge drain of wealth.

Marc Faber makes some interesting points in this recent Bloomberg interview.  Others have their say in the first few minutes regarding the possibility and timing of QE3:

Thursday, March 31, 2011

The ECB Warns Ireland, and the Truth Comes Out... Who is really getting bailed out?

The Irish crisis differs from the Greek crisis, but the result, in my opinion, is the same.  The so-called bailouts are really bailouts of investors, to be ultimately paid for by the "little people" that reside in these "bailed out" countries.

In Ireland, the initial crisis was not that the government was overextended, but that its banking sector was.  As its banking sector imploded, the ECB and the IMF stepped in, and the debt is to be eventually taken on by the Irish government.  And rightly so, the Irish people are not too thrilled with it.  Recently Ireland had elections and the people are hopping mad.  They don't want to pay for the speculative losses incurred by outside investors.  They want the senior bondholders of Irish banks and Irish sovereign debt to share this pain.

So who are these senior bondholders? From the Irish Tribune, emphasis mine:
The chief buyers of Irish bonds are large European asset managers, particularly Germany, followed by France. Union Investment, one of the four largest asset management firms in Germany, is a significant buyer of Irish debt. Pioneer Asset Management, which has a large operation here, is also a substantial investor. It is a subsidiary of Italian bank UniCredit. 
Capital Research, part of the Capital Group Companies, is also an investor. This company has also taken stakes in a large number of Irish listed companies. Italian fund Fondaco is also an investor, as is Clerical Medical Investment Group, a division of Lloyds, which also bought up debt in recent years in Anglo Irish Bank. The rest of the buyers of Irish debt tend to be major European banks, such as Fortis and Deutsche Bank, which often purchases bonds through its DWS Investments arm. 
...As many have alleged, there is a lot of crossover between Irish government and bank debt. Put simply, large French and German asset managers invest in both. In the case of AIB, Pioneer Asset Management is a large investor, as is Deka International, a division of German Deka Bank. Fondaco is also an investor in AIB and government debt. Other investors in AIB with large bond holdings are Barclays, Aviva and Julius Baer, a Swiss wealth manager.

Will the Irish get their way, and like Iceland before them, tell these bondholders to suffer for their investments?  In comes the ECB with a stern warning to the people of Ireland, emphasis mine:
THE EUROPEAN Central Bank has warned Ireland against taking the “populist” step of forcing private bondholders to share the cost of the financial crisis. 
ECB chief economist Jürgen Stark said the time had come for the ECB to end emergency intervention in the money markets. In particular, Irish banks would have to be weaned off ECB liquidity. 
“It can’t be an ongoing thing,” he told the influential Frankfurter Allgemeine newspaper. “According to the parameters of the EU-IMF programme the recapitalisation of Irish banks should have ended last February, but the last Irish government didn’t want to take on that responsibility.” 
Asked if he supported the idea of Ireland sharing the cost of its crisis with bondholders, he said: “That would be a populist move, but one has to think of the consequences. The ECB is worried that in Europe and in other parts of the world that it would come to a new wave of insecurity.” 
“Therefore we are warning the Irish Government in case it wants to solve its problems at the cost of bondholders.”

The ECB is not mincing words here.  But it's not like everything will be fine if the senior bondholders feel the pain as well.  Contagion is the word here.  What if Greece does this?  Or Portugal, or worse yet, Spain?  And is it really that unavoidable?  How can one country choose to stiff its creditors, and another country, equally burdened by debt, just sit by?  I think that the austerity measures will slowly crush these periphery economies and tremendous political turmoil will result.  One way or another, there will be a sharing of pain, and with it, a new view of sovereign debt will emerge.

Europe has many problems that have not been addressed at all.  Nothing has been done about the trade imbalances within the Eurozone that have contributed to the subsequent debt imbalances.  This will be the ultimate test of the Euro.

Wednesday, March 30, 2011

Could Peak Oil Reverse Globalization?

Yes, there are many alternative sources of energy, however, when it comes to transportation, either by truck, ship, or airplane, petroleum is still King.  It is used well over 90% in the transportation of products in the global economy.  Windmills and solar panels are not going to be pushing cargo ships across the Pacific anytime soon.

Oil, as the largest component of global energy, also supports our monetary system.  Think of oil as we think of interest rates.  Low interest rates spur investments, just as cheap oil spurs economic growth.  But it is not just the price that matters, but the direction of the trend.  Just as a rising interest rate environment diverts money into non productive uses - the servicing of increased debt loads, so too do increasingly higher energy costs divert money to non productive uses.  Higher oil also diverts money from industrialized nations to resource exporting nations.  But it is also a very strategic resource that gives strength to the US Dollar, as the world's reserve currency.

The use of oil is not going away anytime soon.  However, the sources of cheap oil are diminishing.  There is still plenty of oil out there - but it is located in the tar sands of Canada, or deepwater offshore.  This oil is much more expensive to extract and process.  And as political instability in the Middle East increases, so too does the price of the easy oil - conventional oil that does not need as much processing and literally gushes out of the ground like a fountain.

Economist Jeff Rubin gave a speech to ASPO (Association for the Study of Peak Oil and Gas) last October. In it, he predicted triple digit oil prices within 10 months.  Was he right for the wrong reasons?  After all, he attributes the rising cost to diminished production of cheap conventional oil.  I guess we'll know in another ten months?

Nonetheless, he ends his speech on a rather optimistic note, very unlike many peak oil adherents.  He sees an economic revival occurring in the US as it imports less and produces more for itself.  However, he still warns us that an alternative transportation policy needs to be developed.

Here is the presentation, the link that follows contains the transcript of the speech for those that prefer to read it.

And an interesting quote on Oil costs and domestic industry, particularly the Steel Industry:
Take the steel industry, for example. Just before the recent recession, some very curious things were happening in the US market. When oil prices got to be over $100 barrel, all of the sudden, Chinese steel exports to the US fell at double-digit rates. And all of the sudden, US steel production was up. And all of the sudden, US Steel Corp., which was one of the biggest dogs in the market, all of the sudden its share price doubled. 
What was going on? I’ll tell you what was going on. For the first time in 20 years, it was cheaper to make steel in the United States than to import it from China. Why? Consider what China has to do to send you steel. First, it has to ship iron ore from Brazil, across the Pacific Ocean, turn it into steel, which is itself a very energy-intensive process, then ship it back, across the Pacific Ocean, to you. At $20 barrel, that works. At $100 barrel, that doesn’t work.

Transcript HERE

Thursday, March 24, 2011

The Rise of the Fourth Reich

Let's not kid ourselves.  Most of EU policy, especially EU monetary policy, is heavily influenced by Germany.  There's a reason the ECB is located in Germany;  from the get-go Germany had the greatest influence in Europe.

So where does that leave us today?  The Portugal crisis is flaring up again with the recent dissolution of its government.  It is only a matter of time when Portugal goes to the ECB and IMF.

So the next question is - will Europe converge or diverge?  Will the EU evolve into a United States of Europe - closer to the system the US has?  Or will it slowly break apart with members leaving the EU as they see debt deflation/depression slowly rip apart their economies?  Who wants to sign up for that scenario?  I just don't see peripheral countries staying in the EU if the transition to fiscal and political union is that destructive to their economies.  Unlike Americans, Europeans have a habit of taking to the streets en masse and reminding their governments of who they serve.

And so, political and fiscal union all depends on the rest of the countries' willingness to belong to the Fourth Reich.  Let's not kid ourselves, the EU is a German-run shop.

The so called sovereign "bailouts" are really banking bailouts, and disproportionately, German ones at that.  The banks get fed, while the southern sovereigns plus Ireland and their subjects get "disciplined."  When the German banks, the highest leveraged in the EU banking system get disciplined, then I'll change my mind. But so far - they are the only ones that are being maintained "as-is" without experiencing any discipline or failure on the horizon.

This is how I see things playing out in Europe.  There will be debt deflation/depression in the periphery, followed by fire market sales to the benefit of German companies financed by German banks that enjoy re-capitalization via sovereign "bailouts."  France too, will be jumping in on the game.

It is unavoidable.  The periphery countries can not cut government spending, belong to an expensive Euro, and expect to somehow manage their ballooning existing debts as their GDP plummets.  With a strong Euro, they can not export their way out of debt, and they can not devalue either.  The US is playing this game, the smaller EU countries - which soon, by the way, will include Belgium, can not play this game.  They gave up their sovereign rights to control their currency.

I fear that Germany has not changed.  Dreams of a German Europe only faded away temporarily after WWII.  History repeats.  Yet if history is any guide, the Germans will once again fail spectacularly in their endeavor to conquer Europe by economic means.

But there is one more recent development that sheds light on a future political union in Europe - it's the Libyan Conflict.  What a disaster.  France and Germany are at odds with each other on how to handle this crisis.  It is a political crisis for the Libyans, and an energy crisis for the Europeans.  If Europe can't agree on how to handle the Libyan turmoil, how can it transition to a United States of Europe?

There's no leadership structure.  And when there is no leadership structure that looks after Europe as a whole, there is only conflict.  What leadership exists is narrow in scope, and one nation needs to have an advantage to use that leadership.  Right now, the only leadership in Europe is in the economic/monetary sphere.  And that would be Germany.

But is Germany formulating an economic and monetary policy that will benefit all of Europe, or is Germany formulating a policy of Deutschland über alles?  The imbalances in Europe need to be addressed, not re-enforced.

Otherwise, the grand EU experiment will end in failure, along with the Euro.

Wednesday, March 16, 2011

The Heroes of Fukushima

I wanted to write about something that doesn't deal with economics today.  But I didn't just want to focus on the tragedy unfolding in Japan.  Yes, it is a human catastrophe, and could get even worse at any moment.  While people are leaving Tokyo and other areas of Japan, in all that chaos, there is a team of people that are working in the midst of a nuclear plant that could meltdown at any moment.

Just imagine what is going on in their minds.  The weight of the world lies on their shoulders. They are fighting to save millions of lives, people they will never know, all the while knowing that they could die at any minute.

They are the remaining workers at the Fukushima Nuclear Plant that decided to stay and finish the job. From CBS Evening News:
Since the disaster struck in Japan, about 800 workers have been evacuated from the damaged nuclear complex in Fukushima. The radiation danger is that great. 
However, CBS News correspondent Jim Axelrod reports that a handful have stayed on the job, risking their lives, to try to save the lives of countless people they don't even know. The exact number of workers is unclear and has been reported to be anywhere from 50 to 180. 
Although communication with the workers inside the nuclear plant is nearly impossible, a CBS News consultant spoke to a Japanese official who made contact with one of the workers inside the control center. 
The official said that his friend told him that he was not afraid to die, that that was his job.
Cham Dallas, who led teams responding to the Chernobyl disaster, said that kind of response is not out of the normal for some workers in the nuclear energy sector.
"(In) my experience of people in the action area of nuclear power is much like that," Dallas said. 
The workers are doing so amid decreasing but still dangerously high levels of radiation. On Wednesday, Japanese officials raised the legal limit on radiation for the workers from 100 millisieverts to 250. 
"The longer they stay the more dangerous it becomes for them," said expert Margaret Harding. "I think it is a testament to their guts for them to say, 'We'll stay and if that means we go, we go.'"
Full article HERE

I think it is important that more people are aware of these heroic individuals.  My thoughts are with the Japanese people, and especially this handful of individuals that are knowingly placing themselves in danger so that others may be saved.  

May they succeed and be unharmed.

Tuesday, March 15, 2011

International Energy Agency: Libyan Oil Exports Halted

As the world focuses on the Nuclear disaster in Japan, another crisis is far from resolved. Actually, it is intensifying.  The issue is Libyan oil production: according to the IEA, it has ground to a halt.  From the Associated Press:
CAIRO — The International Energy Agency says Libyan oil exports have "ground to a halt" because of the fighting between rebels and forces loyal to Libyan leader Moammar Gadhafi. 
The Paris-based group said Tuesday in its latest oil market report that production from the North African nation appeared to have "slowed to a trickle" as the fighting and mounting unrest prompted an exodus of foreign oil workers and led international companies to halt their operations. 
Analysts have said they believe that oil production and exports from the OPEC member are sharply down because of the unrest. 
The violence had driven oil prices as high as almost $107 per barrel last week before they cooled quickly following the massive earthquake in Japan.

However, according to Reuters Africa:
TOBRUK, Libya (Reuters) - Agoco, an oil firm based in rebel areas, said on Tuesday it was now only pumping oil to Tobruk in the far east of Libya after Muammar Gaddafi's forces retook Ras Lanuf, where it has facilities. 
Arabian Gulf Oil Co (Agoco) management board member Hassan Bulifa also told Reuters that output from the firm's fields was holding steady at one-third of its normal production levels. 
Agoco had previously said it was producing about 130,000 barrels per day (bpd), compared to about 400,000 bpd before a rebellion against Gaddafi's rule erupted in mid-February. 
"We stopped pumping oil to Ras Lanuf. Production at our fields is still about one-third of normal output but now all the oil is being pumped to Tobruk," he said. "We have a tank farm, a storage facility, there." 
Bulifa said it would take about three weeks to fill up the storage available at the current rates of production. On March 10, he had said storage could be filled in two or three weeks.

Either way, this is another issues the markets need to contend with.  Will Saudi Arabia, as it deals with Bahrain, and will other OPEC members be able to fill the void?  The Japanese Nuclear disaster may have pushed oil down as the market fears a drop in demand.  But if we are to have a sustained global recovery, oil can not continue to rise.

Not only do we have the human catastrophe in Japan to be concerned about, but we still have the Euro crisis, as well as the political turmoil in the Middle East to contend with. The Federal Reserve meets today.  It will be interesting to see what they have to say.  The issue of QE2 ending in June is high on the list.  Wall Street is looking kind of nervous right now.