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02/16/12

The Greek bailout is moving along slower than Greece would like, but looks to be approved next week according to reports this morning.  Eurozone Finance Ministers held a conference call yesterday.  Luxembourg’s Prime Minister Jean-Claude Junker chairs the meetings.  After the call, he emailed a statement that “further considerations are necessary regarding the specific mechanisms to strengthen the surveillance of program implementation.”

In other words, the finance ministers do not trust Greece to follow through after they get the money.  Greek Finance Minister Evangelos Venizelos told Reuters that Greece outlined additional savings of 325 million euros to replace the pension cuts that the government did not make and political party leaders signed written pledges not to backslide on the budget cuts.

Finland and the Netherlands suggested an interim loan for Greece to make March payments, with a new program delayed until after April elections.  This would require the newly elected government to sign documents to complete the second wave of funding to bail-out the government.

Crude oil is continuing the rally that began two weeks ago.  Iran has threatened to cut off exports to six European countries in response to the European Union embargo engineered by the United States.  Prices spiked on a report that supplies had already been cut.

Iran is continuing to ship oil, but said it had notified diplomats that it was setting new conditions on oil sales.  The Iranian government wants the governments to disregard the embargo and relinquish the contractual right to stop payments in case of war.

In an ironic twist to the Iranian embargo story, guess who the biggest European buyers of Iranian oil are?  Europe buys approximately 25% of Iran’s oil, three of the PIIGS countries; Italy, Greece and Spain buy 75% of Iranian oil exports to Europe.

The Christian Science Monitor quotes Harry Tchilinguirian, a senior oil market analyst at BNP Paribas, “Iran’s role in the sanctions regime is to offset potential losses from decreased sales to Europe, so it wouldn’t be surprising to have more saber-rattling that allows prices to rise.  Any geopolitical tension involving Iran will prompt market reactions based on the headlines.  We are going to see more of these, rather than fewer.”

Yesterday, Iran announced they had made major advances in nuclear technology.  President Mahmoud Ahmadinejad (Achoo) was shown on TV at a nuclear research reactor loading Iranian produced fuel rods.  Achoo also announced increased uranium exploration in Iran and a new yellowcake processing factory would be pre-launched next month.

The Republicans in congress have capitulated and agreed to social security tax cuts, extended unemployment and maintaining Medicare payments to doctors (doc fix) for the remainder of the year.  All the goodies without any offsets to pay for the lost revenue and increased spending.

So much for fiscal responsibility.  All the hopes of electing conservatives to the house in 2010 seem to be lost.  As they continue to spend our country into Greek status, my brother asked about buying physical silver this morning.

Quote:
Two things are infinite: the universe and human stupidity; and I'm not sure about the universe. -Albert Einstein

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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