Blog Posts by Aaron Task

It takes a lot these days to muscle the Mid-East or Japan off the front page, but Europe has done it with the latest chapter of its never-ending debt crisis story.

As European finance ministers began a meeting in Brussels Thursday, the focus was on Portugal, where Prime Minister Jose Socrates resigned after parliament rejected his austerity package. The political turmoil raises the prospect Portugal will need to tap the EU-IMF bailout fund, following the lead of Ireland and Greece. In response, yields on Portuguese debt widened to record levels vs. comparable German bonds.

The good news is most observers believe the EU bailout package, currently at $710 billion, will be sufficient to cover Portugal's needs, which analysts estimate may approach $100 billion, Bloomberg reports. The bad news is there's widespread concern the EU doesn't have enough money (or political will) to bail out Spain, whose debt yields also widened early Thursday after Moody's downgraded 30 of its regional banks. (See: Europe Catches Up to the Can: Spain's Downgrade Puts Crisis Back in Focus)

As if high unemployment, huge government deficits and the weak housing market weren't bad enough, now energy prices are surging because of unrest in the Middle East and global supply chains have been disrupted by the disaster in Japan, where an already-weak economy has suffered a devastating blow. Meanwhile, Europe's debt crisis shows no sign of being resolved anytime soon.

In The Daily Ticker's first video in our snazzy new studio, Dan, Henry and I discuss these issues. Since Dan is the newest (and most optimistic) member of our team, Henry and I put him on the spot a bit and address the $64 trillion question: Can the U.S. economy maintain its slow but steady growth rate in the face of all this global turmoil?

Wednesday brought additional fighting in Libya, protests in Syria and a state of emergency in Yemen as unrest continues to roil entrenched regimes across the Middle East and North Africa.

Having already toppled dictatorships in Tunisia and Egypt, the so-called Jasmine Revolution has "got a long way to go," says Robert Powell, Mid-East analyst for The Economist Intelligence Unit. "The aims of the protests are extremely difficult for entrenched regimes to meet; there's very little middle ground."

In the accompanying video, Powell and I discuss where the movement is likely to spread next, the U.S.'s inconsistent — and arguably hypocritical -- response, Iran's role in Bahrain as well as the current situation in Egypt.

We also discuss the potential for unrest in Saudi Arabia, the scenario about which Powell says "markets are terrified."

Crude prices pushed above $105 per barrel early Wednesday after U.S. Admiral Samuel Locklear said additional strikes on forces loyal to Libyan dictator Muammar Gadhafi will be launched in the "coming hours and days."

The BBC reports coalition forces launched new air strikes near Misrata, a rebel-held city in western Libya while Gaddafi loyalists "resumed their pounding of Zintan," near the Tunisian border. (See: Gadhafi Will "Probably Survive": Oil Up as U.S.-Led Coalition Starts to Fray)

With political unrest and military conflict spreading across the Mid-East and North Africa, oil prices have already risen 15% this year, and $100 appears to be the new floor.

"I'd loved to say it's the peak but it doesn't look like that," says Robert Powell, Middle East analyst at The Economist Intelligence Unit. "We don't expect the Middle East to settle down anytime soon [and] expect the price of oil to remain elevated for quite some time."

That, of course,

The crash of a U.S. military F-15 bomber Tuesday awoke many Americans to the startling realization that, yes, we are at war in Libya.

"Once you start dropping bombs on a place, you are at war," says Robert Powell, Mid-East analyst at The Economist Intelligence Unit. "You can't skirt around it with diplomatic language."

But clearly there's a difference between imposing a no-fly zone in Libya and all-out invasion of Iraq or Afghanistan. While limited military engagement lessens the possibility of casualties (fortunately, the crew of the F-15 were reportedly rescued, unharmed) it makes for a tougher diplomatic challenge for the U.S. and its NATO allies.

Now that the Arab League - which originally called for the no-fly zone - becoming "a bit squeamish" since the bombings started on Saturday, the coalition has been damaged, Powell notes. "It was hugely reassuring for countries involved to have Arab backing. Now that that Arab backing is wavering

Despite recent volatility, the market has held up pretty well this month and appears to have found its footing in the past three days. Clearly, the downturn could've been worse given the headlines coming from Japan, Libya and the Mid-East generally -- not to mention America's ongoing struggles with high unemployment and the bursting of the housing bubble.

Lest you lapse into a false sense of complacency, we bring you Gary Shilling's 5 Things to Worry About:

Japan: Looking beyond its horrific humanitarian and environmental disaster, Shilling sees Japan facing a problem financing its rebuilding effort. Currently, only about 6% of Japanese government bonds (JGBs) are owned by foreigners (vs. over 50% of U.S. Treasuries), which has enabled Japan to fund its deficit spending at extremely low rates: 10-year JGBs yield 200 basis points less than comparable Treasuries.

But Shilling expects Japan's trade credit account surpluses to dwindle in the coming

"On Sunday, disaster-response teams made progress toward taming the stricken nuclear reactor, restoring electrical power and preparing to restart crucial systems designed to cool the dangerously overheating nuclear material." -- The WSJ

Optimism this weekend about the crisis at the Fukushima Daiichi nuclear power plant appears to have been misplaced, or at least premature.

Monday was a day of setbacks at the plant as workers were forced to temporarily abandon efforts to spray water on the reactors after black smoke started rising from reactor no. 3 and white smoke (possibly radioactive steam) was spotted coming from reactor no. 2.

In addition, Japanese officials halted shipments of milk and spinach from four prefectures because radiation levels exceeded legal limits while the seawater near the plant is reported to have radioactive cesium 24.8 times higher than normal.

Meanwhile, residents of Iitate, about 30 miles from the plant,

Stocks are surging midday Monday but so are oil prices. Recent history suggests the combination of higher oil and higher stock prices is unlikely to persist for very long.

But a longer scan of history suggests higher oil prices are not as big a threat to the economy as you think, according to James Altucher, managing director of Formula Capital.

First, Altucher says the economy today is far stronger than it was in 2008, when a financial crisis and housing market implosion combined with surging crude prices to tip the global economy into recession.

"We couldn't quite handle $150 oil [in 2008] but now we're definitely able to," he says. "We don't have any of these crises and we have QE2 to buffer what happens. "

Second, he says oil prices can't maintain higher levels unless demand increases too.

Third, as painful as higher energy prices may be for American consumers, we spend less on energy today as a percentage of income vs. 50 years