The Dow climbed 160 points on Thursday closing at 12,732. The increase, according to the Wall Street Journal, was due to the belief that talks regarding raising the debt ceiling were moving forward in Washington as well as preliminary agreements between EU leaders on settling the Greek bail-out.
EU leaders come to initial agreements over Greek debt crisis
Both Asian and European markets are up on Friday due to the initial agreement over the Greek debt crisis. Further details will be finalized during a daylong conference today. According to the Financial Times the European leaders agreed to allow the Greeks to default on some of the bonds for a short time. Private investors will be responsible for picking up some of the cost while the Euro zone Financial Stability Facility was given greater funding and increased power to loan to countries prior to a bail-out. Interest on existing loans to Greece, Ireland and Portugal was lowered to 3.5% and terms were extended from 15 to 30 years. Today it will be determined how to specifically deal with the Greek bonds: rollover, re-issue or other scenarios.
Oil prices rise as crude climbs to almost $100 per barrel
Gas prices have reached a national average of $3.70 after falling to $3.54 in June. This is still below the May high of $3.98. Prices are a dollar higher than a year ago and fear increases that it will lower consumer spending. Announcements that the U.S. would tap its strategic oil reserve have done little to change oil prices. Oil closed at just below a $100 per barrel on Thursday, at $99 per barrel. USA Today reports that the Oil Price Information Source believes the country is on the "threshold of another major run-up". Additionally, the head of Merrill Lynch's commodity strategies predicts that gas will reach $5 in 2012.
Chrysler repays TARP money early
Chrysler repaid $560 million of TARP loans on Thursday effectively paying off the government six years early. While this was the last of the bail-out money given to Chrysler post-bankruptcy, it is unlikely that the taxpayer will receive any repayment of the $1.3 billion given to the pre-bankruptcy Chrysler.
Consumer Financial Protection Bureau opens for business...sort of
According to the Washington Post the Consumer Financial Protection Bureau opened its doors for business on Thursday with 400 employees and 2 complaints already posted on its internet board. This is despite the fact that the House passed a bill on Thursday to strengthen the power of the Financial Stability Oversight Committee to veto actions of the CFBC. The House stated that "sometimes financial stability trumps consumer protection". This bill has yet to be passed by the Senate which seems unlikely in the current environment. The purpose of the CFPB is to monitor transparency and disclosure of financial products and providers and to protect the consumer against unfair practices.
Oil spill in Yellowstone River highlights enforcement challenges
A recent spill of 1000 barrels of oil into the Yellowstone River in Montana due to the breakage of a pipe during flooding has highlighted a weakness in the information the government currently holds. The Wall Street Journal indicates that the U.S. Pipeline and Hazardous Material Safety Administration believes that pipelines cross rivers and streams about 35,000 times but does not have those locations specifically identified. The law requires the pipe to be at least 4 feet below the bottom of the river or creek, but many critics indicate the pipes should be buried more deeply. In the Yellowstone River incident, Exxon continued to leave the pipe operating despite floods while competitors closed down their pipelines during the flooding. With an increasing number of pipelines being proposed, these issues are becoming more critical, with critics insisting that river and stream crossing be officially identified and monitored. Last year, an Enbridge, Inc. pipeline spilled 800,000 barrels of oil into the Kalamazoo River in Michigan.