This is very interesting: Kevin G. Hall of McClatchy reports on some Wikileaks cables that show the Saudis telling the Bush administration in 2008 that speculators were to blame for the megaspike in oil prices.
Prince Abdulazziz was “extremely worried” that high prices would destroy the demand for oil, according to the May 7, 2008, account of his meeting with embassy officials.
“Aramco is trying to sell more, but frankly there are no buyers,” the cable quoted him as saying, referring to the Saudi state oil company. “We are discounting crudes.”
Another confidential document from the embassy in Riyadh, dated Feb. 14, 2007, indicates that Saudi officials had concluded years ago that speculation played at least as big a role in setting oil prices as traditional issues of supply and demand did…
Indeed, the cable noted, “As the oil futures markets play an increasingly large role in setting world oil prices, (Mufti) remarked his team was now obtaining better insights into prospective oil prices from banks than from those working in the real oil sector, such as refiners.”
I’d like to read more about this one.
— David Lazarus of the Los Angeles Times misses in describing how much more American products cost compared to ones overseas.
He writes about a nonprofit trying to get consumers to buy stuff that’s made in America. But this in the third paragraph is no good:
Good intentions aside, though, the knock on Bloome is that buying American can be a challenge. And it’s unlikely most consumers will pay as much as five or six times more for an American-made product just to demonstrate their economic patriotism.
Of course, almost no consumer is going to pay five or six times as much for something made in America. But most things made in America don’t cost anywhere near five or six times as much as things made in China or wherever.
Then there’s this, which isn’t true:
“When was the last time you tried to buy a pair of socks made in the United States?” Ohanian asked. “You’re just not going to find any. They’re all now from Vietnam and China.”
How about these guys?
Lazarus seems to be referring to a single anecdote about an air purifier for his “five or six times” more figure. But that’s twenty-two paragraphs down from the original mention, which implied that an average American product costs five or six times more. It doesn’t.
— The Journal is good to report on how accident victims of Chrysler and GM got hosed in their bankruptcies.
It leads the page-one story with Chrysler getting out of a $2.2 million wrongful-death verdict after it filed for bankruptcy.
The reason: The company’s restructuring allowed it to wash away legal responsibility for car-accident victims who had won damages or had pending lawsuits before its bankruptcy filing. The same holds true for General Motors Co., which discarded the liabilities as part of its own $50 billion bailout and restructuring.
In rescuing the car makers, the U.S. government prevented a potential meltdown of the auto industry and further shocks to the economy. But in the process, it created a wide universe of relative winners and losers. The U.S. Treasury received large ownerships stakes in the restructured auto makers, as did union retiree trusts. Chrysler’s banks got some, not all, of their loans repaid in cash, and GM’s lenders were fully repaid. On the other side, thousands of dealers, asbestos victims and other creditors received little to no recompense.
Among the creditors who suffered most, car-accident victims represent a distinct mold. Unlike banks and bondholders, this group didn’t choose to extend credit to the auto makers. As consumers, they became creditors only after suffering injuries in vehicles they purchased.
I particularly like that last line. It’s pretty egregious that even a company’s victims have to fall in line behind its bondholders for compensation. Surely they ought to have at least some priority in a restructuring.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.