Wednesday News Roundup

A growing global power crisis looks to be greater economic and political danger than oil

Lost in all the attention oil is receiving, reports from around the world indicate that 100 or more countries may be suffering, many acutely, from shortages of electricity. Given who is in trouble, both the economic and the political danger of this growing global power crisis are starting to look greater than oil’s. China and India, two of the biggest engines of economic growth, look to be in serious trouble. Pakistan and Afghanistan, hotbeds of terrorism, are routinely plunged into darkness. South Africa’s mining industry is vexed. Even some countries that can afford high oil prices don’t have sufficient electricity to run refineries.

While not facing shortages, many developed countries on whose consumers the world economy depends are increasingly facing what is called “fuel poverty,” a combination of rising electricity and home heating oil costs. The problem is already acute in Great Britain and is starting to take hold in the United States.

Crude oil plunge good for China economy

The "price fall of crude oil will help China to tame inflation, which is one of the country's biggest pressures currently," said Tang Min, the China Development Research Foundation deputy secretary general.

Because of booming economic development and severe natural disasters this year, the country's consumer price index (CPI), a main gauge of inflation, rose 7.9 percent in the first half over the same period last year.

China's oil imports increased sharply amid a booming economy and surging demand. Last year, the nation imported 163 million tonnes of crude, up 12.4 percent over the previous year. This accounted for nearly 50 percent of the oil consumed nationwide, according to China Customs figures.

Chinese Banks Cut Fannie, Freddie Debt

Amid jitters about the future of Fannie Mae and Freddie Mac, China's four biggest listed banks have pared back their holdings in debt related to the two U.S. mortgage giants. At the end of June, the four banks held a combined $23.28 billion of debt issued or guaranteed by Fannie and Freddie. That's a small fraction of the trillions of dollars outstanding, but the reductions attracted interest as a possible gauge of broader sentiment toward such securities.

European Investment, Consumer Spending Drop as Economy Shrinks
European consumer spending, company investment and exports declined in the second quarter, dragging the economy into a 0.2 percent contraction and pushing it to the brink of a recession.

Commodity hedge fund collapses

The hedge fund manager Ospraie Management has said that it will close its flagship fund after it plunged 27 percent in August on losses in energy, mining and natural resources equity holdings, in one of the biggest ever closures of a commodities-focused hedge fund.

Australian gold production's slump

Preliminary figures show that Australian gold production fell 7% to a 19 year low in the year to June.

India's August Gold Imports Rise 56% as Price Drop Lures Buyers

India, the world's biggest buyer of bullion, increased gold imports in August for the first time in 11 months as a decline in prices boosted jewelry demand.

Purchases were about 98-100 metric tons, compared with 64 tons in the year-ago month, according to provisional data from the Bombay Bullion Association Ltd., a grouping of 230 traders.

Check out my new gold and energy blog at MoneyAndMarkets.com