Don’t believe the hype. The economy is not “bouncing back” any time soon. At least not according to Nouriel Roubini’s analysis:

NOURIEL ROUBINI’S RGE MONITOR: IT AIN’T OVER

Is the credit crisis over? Or are we just in the eye of the storm? There seems to be a growing sentiment among analysts that the worst of the credit crunch has passed and financial markets are slowly recovering. Unfortunately the troubles in the real estate finance sector are far from over. In addition, the spillover to other parts of the credit markets – auto loans, student loans and credit cards – and as a consequence to the engine of the U.S. economy – the U.S. consumer – could be just at the beginning. The labor market can be considered effectively in a recession and personal consumption is consistently reducing its contribution to GDP growth. It might, therefore, be too early to declare the end of financial turmoil and of its effects on the real economy. And a negative feedback loop from a contracting real economy to worsening financial markets cannot be ruled out.

NC: Ohio (Effectively) Halts Payday Lending

Ken Funnell at Bank Lawyer’s Blog tells us that Ohio is about to put legislation into effect that will kill payday lending:

The new Ohio law would limit borrowers to four short-term loans a year and cap annual interest rates at 28 percent. The bill also would limit loan amounts to $500 per loan, or 25 percent of a consumer’s base monthly pay, whichever is less.

Funnell is a proponent of the view that payday lenders offer consumers a useful choice and are preferable to loan sharks. Other defenders of payday loans argue that the cost of an advance is less than a bounced check fee.

ROBERT REICH’S SOLUTION TO THE RECESSION: The Cure for America’s Chronic Recession

The biggest issue in the general election will be the economy. And despite what corporate cheerleaders and Wall Street optimists say, the economy is not reviving any time soon. We’re in a chronic recession, or worse. What to do?

….So what’s the answer? We’ve got to go back to fiscal policy — big time. The tiny checks the Treasury just sent out are barely enough to pay our rising fuel bills. We need a stimulus package that’s truly up to the job of restoring aggregate demand.

The best and easiest candidate for the large-scale stimulus that’s needed is spending on the nation’s crumbling infrastructure. America has deferred billions of dollars of maintenance on bridges, sewers, water systems, levees, and dams. That’s already cost the nation dearly.

Problem is, the public doesn’t trust the government to spend money on infrastructure wisely. Why should it, when so many earmarks go to dumb infrastructure projects like “bridges to nowhere”?

So here’s the deal: The next president should establish a national capital budget that lists infrastructure projects in priority order, for the nation as a whole. No more earmarks. The capital budget will reflect the nation’s true infrastructure needs.

AT LAST THE TRUTH IS OUT: RATINGS AGENCY FALSELY RATED SUBPRIME SECURITIES

Moody’s error said to inflate ratings

Moody gave incorrect ratings to billions of dollars’ worth of debt products, according to the Financial Times.

There will be an investigation: Charles Schumer, the powerful New York senator, called on Wednesday for the Securities and Exchange Commission to investigate revelations that Moody’s awarded incorrect ratings to billions of dollars of complex debt because of a bug in its computer.

ON THE PRICE OF OIL-Naked Capitalism

2016 Oil Futures Rise 14% to $140 in Three Days

I must note in all these discussions, no one talks much (at all?) about Iraq. Now I admit that Iraq will not solve a long term “we’re running out of oil” problem. But depending on which source you consult, Iraq has the second or third biggest oil reserves in the world. In fact, Iraq recently claimed improved surveying makes it number one:

The Iraqi Deputy Prime Minister told The Times that new exploration showed that his country has the world’s largest proven oil reserves, with as much as 350 billion barrels. The figure is triple the country’s present proven reserves and exceeds that of Saudi Arabia’s estimated 264 billion barrels of oil. Barham Salih said that the new estimate had been based on recent geological surveys and seismic data compiled by “reputable, international oil companies . .

This is a serious figure from credible sources.”

This bit of news sounds awfully convenient. However, as of 2002, Iraq had substantial unexplored regions, and given the instability of the country, there hasn’t been much exploration since then. Only 2000 wells had been drilled, versus one million in Texas alone. Nevertheless, I’ll believe the factoid about Iraq’s newly-discovered reserves when I hear it confirmed by third parties.

Is it too embarrassing for oil analysts to discuss how the deteriorating security situation has reduced output? (Although now note the Iraq Oil MInistry is targeting daily output of 3 milllion barrels by year end, up from 1.9 million in March. Note the pre-war peak production was 3.5 million b/d).

Again, inclusion of Iraq may not make much difference. But when analysts are considering the impact of production in Brazil, the use of very heavy (read nasty) crude from Venezuela and Iran, and even upon occasion Canada’s tar sands, the absence of Iraq from mention seems a considerable, peculiar omission.

INDONESIA: Indonesia: Workers, poor reject petrol price rises imposed `on behalf of the poor’

May 15, 2008 — “Let’s seek the opportunity out of the world’s crisis. In responding to the increase in global food prices, let us improve productivity. Amidst the oil crisis and price rises, let’s be thrifty. Let’s develop the energy resources.'’ — Indonesian President, Susilo Bambang Yudoyono, May 1, 2008.

The poor will benefit from the increase in fuel prices rise, he said on May 7, 2008.

Meanwhile vice-president Yusuf Kalla said that so far the fuel subsidy has been benefiting the rich. He added “The protesters who oppose this policy mean that they are helping the poor.'’

Acting as if they are doing it “on behalf of the poor'’, the Indonesian government plans to impose a 30% rise on petroleum prices. It will be the third oil price rise under the Susilo Bambang Yudoyono government. To help the poor survive this unpopular policy, the government is granting direct cash transfers amounting 100,000 rupiah per month per family. The direct cash transfer “gift'’ was also implemented with the oil price rise in 2005.

DARFUR: SUDAN DUMPS CEASE FIRE, ESCALATES WAR

Sudanese President ‘Umar Hassan Al-Bashir announced Tuesday that his government was no longer bound by the Darfur cease-fire. Al-Bashir made his announcement less then two weeks after a failed coup of the Darfuri Justice and Equality Movement (JEM).

Al-Bashir further warned that his army would “deal swiftly” with the rebel groups in Darfur, and ordered his security forces to arrest all JEM members in Darfur and in Sudan at large.

Human rights organizations have reported that the Sudanese security forces arrested more than 100 people in Khartoum since the May 10 attack, describing the arrests as “ethnic persecution against Darfuris.”

IRAN: KUCINICH CALLS FOR NORMALIZATION OF RELATIONS

In an interview with a Iranian newspaper, the Congressman said:

….. relations should be normalized between the US and Iran. It’s quite unfortunate that the United States has not made diplomatic initiatives or has ignored diplomatic initiatives that were made by Iran in the last four years. The people of Iran have had a longstanding respect for and love for the American people. And the people of Iran have been forgiving of America’s illegal interventions in the internal affairs of Iran going back to the days of Mossadegh when the CIA helped overthrow his government. So people have a capacity for forgiveness even though they don’t forget it. We have to understand that we have much in common with Iran. Our people have aspirations of freedom. Our people have a desire for economic progress. Our people have aspirations for security and peaceful relations with neighbors. Iran can be a very important partner with the United States in creating a new peace in the Middle East.

YOU HEARD IT HERE FIRST: WATCH FOR A JOINT STATEMENT BY DENNIS KUCINICH AND RON PAUL CALLING FOR US WITHDRAWAL FROM THE INTERNATIONAL MONETARY FUND.

VIOLENCE CONTINUES IN SOUTH AFRICA

The South African government is under growing pressure to send troops into Johannesburg’s townships for the first time since the apartheid era as African immigrants continued to flee a wave of killings and violence against foreigners.

Several people were killed overnight including two men, believed to be Mozambican miners, who were beaten to death as mobs moved through townships and squatter camps in search of immigrants they accuse of taking jobs and houses, or being responsible for rampant crime.

Another person was hacked to death and two others were badly injured on Tuesday in the Joe Slovo camp in East Rand. Shacks were set on fire and hundreds of immigrants fled to a community centre.

It was also revealed that on Monday a South African businessman was burned alive in his home in Actonville after a mob accused him of hiring foreign workers.

At least 25 people have been murdered in recent days. Nearly 300 people have been arrested over the attacks and related crimes such as rape and looting.

M&G REPORTS DANGER OF MILITARY COUP IN ZIMBABWE