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, will keep gas prices elevated, which Powell notes is "particularly tough on the U.S." because we don't have nearly as high gasoline taxes as in Europe.
"So people here notice any shift in oil prices," he says. "It puts up the cost for businesses and the man on the street, which hits consumer spending."

If the unrest spreads to Saudi Arabia then "all bets are off," Powell says, suggesting crude could "easily" rise above $150 per barrel in such a scenario.

Click "more" to read the rest of the post and embed the video.

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 ago.

"In 1960, we spent 7.5 cents from even dollar in income on oil. Right now we spend 5 cents," he writes at Forbes. "So, in that math, it appears we can absorb at least a 50% move higher in oil. But that's not the entire picture. In 1960, we spent 5 cents of every dollar of income on healthcare and today we spend 17 cents of every dollar on healthcare. So an important point here is that rising healthcare has never tipped us into an economic depression so not sure how oil going from 5 cents to 10 cents of our income will tip us over either."

Rather than come to a screeching halt because of higher energy prices, "the economy will shift on its axis," Altucher says, suggesting. "No one wants to spend more buying gas at the pump [but] spending is spending."

In other words, money spent on gas instead of, say, dinner at a restaurant, still circulates through the economy. "The energy sector will definitely grow...and the thousands of companies related to energy infrastructure will prosper," he says.

On his blog, Altucher recommends Exxon, Plains Exploration and Noble Energy as top picks in the sector.

In the accompanying video, he recommends CVS because of its leadership position in the growing field of retail-run health-care clinics.

For American consumers, the most direct impact from Japan is being felt in oil prices, which have fallen sharply since Friday, when the quake hit. Crude futures briefly fell below $100 per barrel early Monday, before rebounding amid reports of violent protests in Bahrain, which borders Saudi Arabia.

Japan is the world's third-largest importer of oil, behind only the U.S. and China. With economic activity ground to a halt, its power-production crippled and the nation's major oil refineries shut down or damaged, Japan's demand for oil is expected to fall sharply -- at least in the near term.

Crude prices have now fallen 6% in the past five trading days and hit a two-week low Monday. But don't expect any relief at the pump, where the average price for a gallon of regular was $3.54 on Friday.

As everybody knows, gas prices don't track oil prices nearly as closely when crude is falling versus when it's rising. Furthermore, even if Japan's demand for crude falls, its need for gasoline and other "distilled" products is expected to rise because of the damage done to the nation's refineries. "That is going to drive up the market price for everything from diesel and gasoline to jet fuel," James DiGeorgia, editor of the Gold & Energy Advisor, tells The LA Times.

Furthermore, the drop in oil prices is expected to be short-lived unless Japan's disaster tips the world economy back into recession, an unlikely scenario barring a total nuclear meltdown. Japan will need plenty of energy for its rebuilding effort, and if the accident at Fukushima prompts a backlash against nuclear power, in Japan or elsewhere, that will only mean more demand for "conventional" sources, most notably oil. (See: Japan's Nuclear Meltdown Has Congress Questioning Nuclear Energy)

Made in Japan, Costs More Here

The massive earthquake and resulting tsunami struck the nation's industrial heartland and triggered the worst nuclear accident since Chernobyl -- and one with a highly uncertain outcome. The areas affected by the disaster, including Tokyo and eight prefectures, account for 40% of Japan's GDP.

Here's a rundown of other consumer areas affected by the disaster:

Autos: Expect the price of Japanese cars to rise in the coming months after Toyota, Honda and Nissan Motors each closed plants hit by the earthquake, tsunami and resulting power outages. Japanese automakers have manufacturing plants all over the world, including here in the U.S., so scarcity should not be a problem -- save for certain models such as the Toyota Prius and Honda Fit, which are literally and figuratively "made in Japan."

Consumer Electronics: The home of Sony, Toshiba and Hitachi, Japan produces some of the world's best consumer gadgets and the components that power them. Prices of memory chips and liquid crystal displays have surged since the quake, The WSJ reports, amid fears of shortages and supply disruption.

There have been no reports of shortages yet, but Sony alone has halted production at six factories in northern Japan. And I don't want to incite concern among Apple's rabid supporters, but it's worth noting that Toshiba supplies NAND flash memory for use in Apple's hugely popular iPhones and iPads.

Research firm IHS iSuppli is predicting "some disruption in semiconductor supplies from Japan during the next two weeks," and it's unlikely U.S. consumers will see any big change in electronic prices before then. But any prolonged snags in the complex production supply chain will almost certainly be felt by Easter, so expect fewer and smaller discounts from electronics retailers this spring. 

Hello Kitty, Goodbye Mochi: In response to the disaster, the Bank of Japan has flooded its economy with money, while Japanese corporations and ex-pats have repatriated assets back to their home country. That has resulted in strength in the yen vs. the dollar, already under pressure because of the Fed's easy money and Uncle Sam's huge deficits. Further and sustained weakness in the dollar will drive up the price Americans pay for all Japanese imports, everything from Sony TVs to Toyotas to Mochi ice cream balls and Sanrio's Hello Kitty paraphernalia.

The Worst Crisis

The silver lining in Japan's disaster is that the quake and resulting tsunami struck in the northeast region of the country, which is not a heavily populated area. The loss of life, while certain to rise from the current official tally of 1,500, was further mitigated by Japan's sophisticated earthquake-resistant buildings, as well as nationwide preparedness drills.

Still, "the earthquake, tsunami and the situation at our nuclear reactors makes up the worst crisis in the 65 years since the war," as Prime Minister Naoto Kan said.

Financial markets and the global economy will recover sooner or later, but many Japanese communities and families will never be the same again. If there's any good that can come from this, it's only if such a disaster helps the rest of us come to appreciate the blessings we have and remember what's "really" important.

For those interested in sending help to Japan, the U.S. Agency for International Development refers visitors to InterAction.org's list of "appropriate disaster relief."

Aaron Task is the host of Tech Ticker. You can follow him on Twitter at @atask or email him at altask@yahoo.com

Crisis may create opportunity, but Congress completely flubbed its opportunity to enact meaningful financial reform in the aftermath of the worst crisis since the Great Depression, says the former chairman of the FDIC, Bill Isaac.

The Dodd-Frank reform bill--the one major piece of legislation to emerge since the financial crisis--is mostly meaningless, says Isaac, who is also the chairman of regional bank Fifth Third.  Dodd-Frank does nothing to address the root causes of the financial crisis, Isaac says, and it won't prevent the next one.

Specifically, Dodd-Frank will just create more bureaucracy and red tape. Meanwhile, our biggest banks are still "Too Big To Fail." Our commercial banks are still allowed to take way too much risk. Our regulators are still balkanized and political. And we still haven't addressed Fannie Mae and Freddie Mac.

Isaac suggests the solution may be to re-implement the Glass-Steagall Act which separated commercial and investment banking. But, at this stage of the game, that's not likely, considering the size and scope of the bank lobby in Washington.

In other words, it's fair to say that Wall Street won the financial crisis.

And it's no mystery who lost.

The standoff between Wisconsin Gov. Scott Walker and public-sector employees comes to a head today as the Governor’s ultimatum runs out for the 14 state senate democrats who fled to Illinois to avoid a budget vote .

If the Senators do not return home and vote on Walker's budget -- which includes ending public unions' right to bargain collectively on pension and health-care benefits -- the state will face dire consequences.

Elizabeth Warren, special adviser to the Consumer Financial Protection Bureau and fervent supporter of America’s middle class, agrees.

When Tech Ticker’s Aaron Task sat down with Warren in Washington last week, he asked about our recent interview with the president of the International Fire Fighters’ Association Harold Schaitberger. The union chief finds it galling that some Wall Street “single-year bonuses exceed the average life time benefits” of the average firefighter and paramedic.  (See: "This is All About the Money": Pension Fund 'Crisis' a Red Herring, Union Chief Says)

Her response: “The middle class has been under assault now, really, for a generation.”

The 1-2 Punch

The middle class got hit by a "one-two punch" of rising daily living expenses plus flat wages, Warren tells Aaron in the accompanying clip. The world became a “far more dangerous” for American families when Congress “deregulated credit and turned the lender loose," starting in the 1990s, she continues. 

As more people turned to buying the necessities with plastic -- including health-care, college tuition and groceries -- Americans became inundated with debt and “more of them started falling over the cliff financially,” she says. “We’ve got a middle class that is under assault from multiple directions.” 

Union critics blame the public-sector for ballooning state deficits and lack of jobs. But, Warren says those arguments are simply not supported by the facts. 

Click "more" to view the rest of the post and embed or share the video.» More

Editor's Note:  This is an interview Tech Ticker conducted with "Inside Job" filmmaker Charles Ferguson in October.  In honor of the film's best documentary Oscar, we've decided to play it for you again.  Enjoy!

The collapse of Lehman Brothers in September 2008 sparked a global financial crisis that pushed the U.S. economy into the worst recession since the Great Depression. Two years later, billions upon billions of taxpayers’ dollars have been spent on government bailouts to save the banks that started the contagion, yet not one person has been held accountable or slapped with criminal contempt.

In his new documentary Inside Job, filmmaker Charles Ferguson spoke to some of the biggest names from Wall Street to Washington to academia to get a first hand account of what caused the 2008 financial meltdown and how the financial system reach its breaking point.

Ferguson points to 20 years of deregulation, rampant greed (a la Gordon Gekko) and cronyism. This cronyism is in large part due to a revolving door between not only Wall Street and Washington, but also the incestuous relationship between Wall Street, Washington and academia.

The conflicts of interest that arise when academics take on roles outside of education are largely unspoken, but a very big problem. “The academic economics discipline has been very heavily penetrated by the financial services industry,” Ferguson tells Aaron in the accompanying clip. “Many prominent academics now actually make the majority of their money from the financial services industry, not from teaching or research. [This fact] has definitely compromised the research work and the policy advice that we get from academia.”

Example after example of this revolving door between Academia and Wall Street and academia and Washington are brought to light in Inside Job. Ferguson showcases this unspoken problem by actually interviewing a number of academics with ties to the government and/or financial sector.

To wit:

Martin Feldstein is currently the George F. Baker Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research. While holding advisory positions in both the Reagan and GWB administration he also served on the board of both AIG and AIG Financial Products from 1988-2009.

Glenn Hubbard is currently the Dean of the Columbia Business School. Hubbard was Chief Economic Advisor during the Bush Administration, currently on the board of Met Life and previously on the board of Capmark.

Frederic Mishkin is currently a professor of finance and economics at the Columbia Business School. From 2006-2008 he was a member of the Federal Reserve Board. Also in 2006, he was paid $124,000 by the Icelandic Chamber of Commerce to write a report on Iceland’s financial sector.

Academics at 20 Paces
This last example is probably the most notable in Inside Job. Mishkin became combative and seemingly uncomfortable at some of Ferguson’s questions – especially regarding the report commissioned by Iceland’s Chamber of Commerce.

After the premiere of the film this month, Mishkin wrote a piece in the Financial Times accusing Ferguson of ambush journalism. “In July 2009, I agreed to be interviewed on camera for a film that was presented to me as a thoughtful examination of the factors leading up to the 2008 global economic collapse," Mishkin writes. "About five minutes after the microphone was clipped to my lapel, however, it became clear that my role in the film was predetermined - and I would not be wearing a white hat.”

Feguson tells Aaron there is little truth to what Mishkin contends. “I conducted an interview with professor Mishkin that lasted over an hour and touched on many subjects. I certainly did ask him his views on the crisis, but it did turn out that professor Mishkin did have a number of things to conceal and he became very uncomfortable during the interview.”

Since our interview, Ferguson wrote a response to Mishkin in the FT. “Professor Frederic Mishkin misrepresents both his own activities, including his interview for my film, and the widespread conflicts of interest which have distorted academic economics and its role in the financial crisis,” Ferguson writes. “The only reason we now know of Prof Mishkin’s payment for the Iceland report is that he was later forced to disclose it when he was appointed to the U.S. Federal Reserve Board.”

Ferguson is astonished by the lack of regulation demanding financial disclosure of all academics and is now pushing for it. “At a minimum, federal law should require public disclosure of all outside income that is in any way related to professors’ publishing and policy advocacy,” he writes. “It may be desirable to go even further, and to limit the total size of outside income that potentially generates conflicts of interest.”

It should be noted that Ferguson himself has ties to academia. He spent many years as a visiting scholar at M.I.T. and U.C. Berkley.

The recent spike in crude, accompanied by the long-running rally in food prices, precious metals and other commodities, has economists, policymakers and consumers all over the world braced for inflation.

But despite said evidence to the contrary, Robert Prechter, president of Elliott Wave International, says deflation remains the primary problem, not inflation. (See: Deflation Is Coming and There's Nothing Bernanke Can Do About It, Says Robert Prechter)

The recent record high for gold prices, most notably, is the "final mania run toward the ‘inflation is going to drown us all'," psychology, he says. "When it's over and we head into the next decline and pessimism begins to build up again, people are going to stop focusing on...what they interpret as optimistic news, and start focusing on the fact real estate is making new lows and employment isn't responding."

From Prechter's perspective, gold is on track to form the latest of a series of major tops in financial assets starting with tech stocks in 2000, followed by real estate in 2006, the Dow in 2007 and commodities in 2008, as measured by the CRB Index.

Not even the Fed's extraordinary efforts to prop up the economy and markets can prevent the deflationary spiral, he says. "People have been talking about extreme inflation and QE2 and all these amazing things and yet, even thought gasoline is up, it's still not above its peak in 2008."

The recent push to restrain the Fed from conservative politicians and even some Fed governors, along with the bipartisan effort to cut government spending further reinforce the deflationary theme, Prechter says.

"I'm trying to see around the corner and say we're at an extreme [in optimistic sentiment] that's going to turn the markets down and the economy's going to follow that," he says. "I'm just opting for maximum safety, which is cash and cash equivalents."

U.S. investors returned from the long holiday weekend in a selling mode amid increased concern about developments in North Africa and the Middle East.

Global financial markets recoiled overnight as Libya appeared on the verge of civil war and continuing protests in Bahrain sent crude prices surging. After Brent crude futures approached $110 per barrel in London, benchmark West Texas Intermediate (WTI) surged above $91 per barrel in New York trading midday Tuesday.

Higher energy prices threaten the global economic recovery, on which much of the two-year rally in stocks has been based. Heading into this week, the S&P was up 100% from its March 2009 low, meaning both that continued growth is “priced into” stocks and there a lot of paper profits waiting to be booked.

In recent trading, the S&P was down 1.6% while the Dow was off 1.1% and the Nasdaq by more than 2%.

In addition to global equity prices the “risk off” trade was evidenced by strength in precious metals and widening default insurance on the debt of European sovereigns, most notably Portugal.

Financial markets have one eye on the fundamentals and one eye on unrest in the Arab world – and a finger ready to hit the “sell” button if developments worsen, says
Ashraf Laidi, chief market strategist at CMC Markets in London.

“Now there is the question mark what is going to happen next? Is there going to be a rise or escalation of an Islamic fundamentalist threat? ,” he asks. “In other words is there going to be chaos that will probably be against the strategic interest of the United States, probably worse than the devil that you knew?”

With the markets now facing up to the rising uncertainty in major oil producing countries, Laidi says there’s potential for oil prices to continue to climb back to the 2008 highs of $147 per barrel.  “Markets have a tendency to want to go back to where they were,” he says.

As to whether the markets are underestimating the threat of continued instability in the Middle East, Laidi notes: “It could be worse.” 

How much worse?

Iran could use the unrest to assert itself and encourage Hezbollah and other proxies to take advantage of the instability, which could provoke renewed conflict with Israel. And if that’s not scary enough, Laidi says the continued uprising of Shia Muslims in Bahrain, where the U.S. Navy’s Fifth Fleet is based, which could spur similar revolts in Saudi Arabia where there are already questions about King Abdullah's succession plans.