GM says Peugeot just one step in Opel fix

GENEVA (Reuters) – General Motors Co’s (NYS:GM) alliance with French peer PSA Peugeot Citroen (PAR:UG) is just one part of GM’s plan to fix its loss-making Opel unit, Vice Chairman Steve Girsky said, though he declined to say what would come next in the plan.

Girsky, a former Wall Street banker, told reporters at the Geneva Auto Show on Tuesday he knew investors, consumers and Opel workers did not like uncertainty but they just had to believe him when he said GM had a viable plan for Europe.

He said the alliance GM signed last week with Peugeot was “an additional tool to the toolkit in Europe.”

GM agreed to pay 304 million euros for a 7 percent stake in Peugeot, the French carmaker said on Tuesday, as part of an alliance designed to save the companies at least $2 billion over the next five years.

GM had previously valued the purchase at approximately 320 million euros based on earlier market prices.

“We can’t tell you what our play is in Europe,” said Girsky. “We will tell you when it plays out over the next period of months and years … I don’t see the play in Europe showing up in one big bang.”

Girsky declined to say when the next step would be made in the overall GM profit plan for Europe, where production capacity is estimated to be at least 20 percent higher than needed to keep companies profitable in a tight and weakening market.

“Excess capacity is not a GM issue, it’s an industry issue,” Girsky said.

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The news is very straightforward. China will cut its target for economic growth this year to 7.5% from the 8% goal that’s been in place since 2005, Premier Wen Jiabao told the annual meeting of the National People’s Congress today.

But what does it mean?

Financial markets have decided that a lower-growth target means China’s leadership is forecasting lower growth. That conclusion is one reason that stock markets were down around the world Monday — from a 1.4% drop in Hong Kong’s Hang Seng Index to a 0.8% decline in the German DAX to a 0.6% slide in the S&P 500 ($INX -0.39%) Monday afternoon. (China’s GDP climbed by 8.9% in the fourth quarter of 2011 and by 9.2% for the full year. That was down from the 10.4% growth in 2010.)

But I think the market’s conclusion doesn’t fit well with all the other policy statements that accompanied the setting of a lower growth target.

First, Wen did not change any of the previous language about economic and monetary policy. The government will maintain a “proactive” budget policy and a “prudent” monetary policy. Nothing there to indicate any change in course tied to the 7.5% target.

Second, the government’s announced growth policies were actually slightly less pro-growth than expected. The money supply target was set at 14% — slightly below the median forecast of 15% among economists surveyed by Bloomberg. The growth target for fixed-asset investment was set at 16%. That’s below the 18% forecast by economists. Coming in with targets for less stimulus than forecast certainly isn’t what you’d expect if China’s leaders were indeed worried about a hard landing for the country’s economy.

Third, the heads of China’s big state-controlled banks are still talking about growth in new loans similar for 2012 to that in 2011 and about further reductions in the bank reserve ratio by the People’s Bank. Here again this is business as usual.

Maybe the big banks haven’t read the memo sent down from Beijing.

Or maybe the change in the target doesn’t mean what the markets have decided it means.

I can think of two alternative explanations.

Alternative explanation #1: Cutting the growth target to 7.5% is an insurance policy for the new leaders that will start taking over the reins in October. Hey, if after setting the growth target at 7.5%, it comes in at 8% or 8.5%, then the new leadership takes office riding a wave of economic success. Think of the new target, then, as an attempt to lower expectations.

Alternative explanation #2: The lower target has nothing to do with any actual forecast for China’s economic growth in 2012. Instead it’s a sign to local leaders that they have more leeway to implement needed economic reforms without getting a black mark on their records if growth doesn’t meet the previous 8% target.

China’s leaders — or apparently a majority of the current nine-man Politburo at least — have spent the last year talking about the need to rebalance China’s economy. The goal would be an economy less dependent on exports and spending on fixed assets such as real estate and infrastructure and more dependent on growth in the consumer sector.

The big problem with that plan — especially if you’re a local leader accustomed to being graded on hitting Beijing’s growth target — is that implementing the new plan is risky. Local leaders know how to generate numbers under the current economic model that show 8% or better growth. But hit the target while shifting to model based on growth in consumer spending? Exactly how do you do that?

By lowering the goal to 7.5%, Beijing gives local leaders more room for error — and that should encourage them, the thinking in Beijing might go, to implement the new policies.

How do investors decide which of these three explanations is correct?

I think we’ll get a good indicator when China announces consumer price inflation for February. Along with cutting the growth target for 2012 to 7.5% from 8.0%, the government also kept its inflation target for 2012 set at 4%.

On the surface, keeping that target at 4% would seem to tie the hands of the People’s Bank on further reductions in the bank-reserve ratio and a first cut in its benchmark interest rate. After all, inflation climbed back to 4.5% in January, putting a halt to months of steady decline from the July peak at 6.5%. If inflation is headed back up, or even if it’s stuck at 4.5%, the central bank won’t be able to do very much to stimulate the economy. You’d think, then, that if China’s leaders were worried about economic growth in 2012 that they’d have cut the bank some slack by raising the inflation target.

But many economists have noted that the January inflation number was distorted by the early Lunar New Year holiday. They’re expecting that the official data to be released on Friday will show that inflation has dropped back in February to 3.4% or so. That would give the People’s Bank plenty of room to stimulate the economy even with a 4% inflation target.

Of course, Beijing’s leaders already know what Friday’s announcement will say. If the inflation number comes in significantly below January’s 4.5% — and especially if it comes in below 4% — I think that’s a sign that China’s leaders think they’ve got plenty of tools for making sure that growth doesn’t slow more than they desire. And that the 7.5% target isn’t a signal of a hard landing in China but of confidence that the country’s economy has enough momentum to tackle the rebalancing that it needs for the long run.

NEW YORK (Reuters) – Stocks fell on Monday for the second straight session and the third in the last four trading days, led lower by basic materials shares after China trimmed its growth target for 2012.

The S&P 500 index opened lower and data showing the U.S. services sector expanded in February at its fastest pace in a year did little to stem the decline.

The benchmark S&P 500 is up 8.5 percent so far this year on investor expectations for a recovery in the U.S. economy, a containment of the euro zone’s debt crisis and the belief that China will avoid a hard landing in its current economic cycle.

China, the world’s second-largest economy, lowered its 2012 growth target to an eight-year low of 7.5 percent and made expanding consumer demand its top priority, as Beijing looks to shrink the economy’s reliance on external spending and foreign capital.

“That spooked everybody this morning. It started over in Asia, flowed right to Europe and flowed right over here,” said Ken Polcari, managing director at ICAP Equities in New York.

“The fact is they are guiding a little bit lower to control their inflation. It is not necessarily the end of the world, but it gave people a reason to take some money off the table.”

Materials shares, sensitive to signs of slowing in China’s commodity-hungry economy, dropped and were the biggest drag on Wall Street. The S&P materials sector index (REU:GSPMI) fell 1.6 percent, with Freeport McMoRan Copper & Gold Inc (NYS:FCX) off 3.8 percent at $40.45.

The Dow Jones industrial average (DJI:DJI) shed 14.76 points, or 0.11 percent, to 12,962.81 at the close. The Standard & Poor’s 500 Index (MXP:SPX) dipped 5.30 points, or 0.39 percent, to 1,364.33. The Nasdaq Composite Index (NAS:COMP) lost 25.71 points, or 0.86 percent, to close at 2,950.48.

During the session, the S&P 500 briefly dipped below its 14-day moving average – a line it has held for the last 50 sessions in an impressive run.

BALTIMORE – Maryland residents do not have to provide a “good and substantial reason” to legally own a handgun, a federal judge ruled Monday, striking down as unconstitutional the state’s requirements for getting a permit.

U.S. District Judge Benson Everett Legg wrote that states are allowed some leeway in deciding the way residents exercise their Second Amendment right to bear arms, but Maryland’s objective was to limit the number of firearms that individuals could carry, effectively creating a rationing system that rewarded those who provided the right answer for wanting to own a gun.

“A citizen may not be required to offer a ‘good and substantial reason’ why he should be permitted to exercise his rights,” Legg wrote. “The right’s existence is all the reason he needs.”

Plaintiff Raymond Woollard obtained a handgun permit after fighting with an intruder in his Hampstead home in 2002, but was denied a renewal in 2009 because he could not show he had been subject to “threats occurring beyond his residence.”

Woollard appealed, but his appeal was rejected by the review board, which found he hadn’t demonstrated a “good and substantial reason” to carry a handgun as a reasonable precaution. The suit filed in 2010 claimed that Maryland didn’t have a reason to deny the renewal and wrongly put the burden on Woollard to show why he still needed to carry a gun.

“People have the right to carry a gun for self-defense and don’t have to prove that there’s a special reason for them to seek the permit,” said his attorney Alan Gura, who has challenged handgun bans in the District of Columbia and Chicago as an attorney with the Second Amendment Foundation. “We’re not against the idea of a permit process, but the licensing system has to acknowledge that there’s a right to bear arms.”

In his ruling, Legg wrote that Second Amendment protections aren’t limited to the household.

NICOSIA (Reuters) – The euro zone sovereign debt crisis has eased in recent weeks, ECB Governing Council member Athanasios Orphanides said on Saturday, adding more needed to be done to convince markets the euro zone had an effective crisis handling mechanism in place.

“We have seen a very substantial improvement if you look at where we were in November and where we are now in terms of risk for example of France, Belgium, Italy and Spain,” Orphanides told a conference in Cyprus.

“But you realize we have not solved the problem yet, because the risk is a lot greater than the risk we started off with two years ago.”

He said a defining moment for the euro zone was when Europe’s leaders abandoned the concept of private sector involvement (PSI) as a means of handling debt crises, leaving it in place only in the case of indebted Greece.

Orphanides, governor of the Central Bank of Cyprus, has frequently argued that the PSI, which imposed a writedown in the value of Greek sovereign debt held by creditors, triggered contagion throughout the euro zone.

“By abandoning the PSI (concept) in December, essentially we improved the framework up to a point,” he said. “Unfortunately it didn’t reverse the haircut on Greece, so we had them (European leaders) on the one hand saying “we won’t do it again” but on Greece, imposing a loss.

“We had a situation where declarations were not consistent with deeds and that is one reason why, in my view, European leaders did not manage to fully restore the confidence of the markets,” he said.

A “fiscal compact” enforcing more financial discipline on euro zone states which was agreed to by Europe’s leaders in December was an important step forward in building a mechanism to fight future crises, Orphanides said.

ATHENS (Reuters) – The chief negotiator for the body representing private sector holders of Greek bonds expressed confidence on Saturday that a bond swap deal which is a key part of Greece’s bailout program would be completed successfully next week.

“We can sense in our discussions with investors that momentum is building,” Charles Dallara, managing director of the International Institute of Finance (IIF), told Greece’s Antenna television in an interview.

“I’m quite optimistic that the participation levels will be quite high,” he said, but he declined to predict a figure.

Bondholders have until March 8 to sign up to the agreement under which they will exchange their existing Greek government bonds for new paper in a swap deal that will see the nominal value of their holdings cut by 53.5 percent.

Failure to secure a deal with private sector creditors would threaten the 130-billion-euro bailout package agreed last month with the European Central Bank, the European Union and the International Monetary Fund.

Greece has said it would not be obliged to go through with the arrangement unless it gets 90 percent participation. If participation is below 90 percent but above 75 percent, it would consult with its public sector creditors.

Assuming a sufficient number of investors accept the deal, European leaders should give final approval to the bailout in a teleconference on March 9.

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In the early going, Stephen A. Wynn, the Las Vegas magnate with a thousand-watt smile, was on the rebound after his casino and resorts empire, Mirage Resorts, fell prey to a hostile takeover in 2000.

To bankroll his comeback, he turned to a Japanese billionaire, Kazuo Okada, who had made much of his fortune manufacturing gaming machines for Japan’s notorious pachinko parlors — and who was adept at the wild ways of the mushrooming Asian gambling industry.

Together they formed Wynn Resorts, with Mr. Okada eventually becoming the company’s biggest shareholder.

“I love Kazuo Okada as much as any man that I’ve ever met in my life,” Mr. Wynn effused during an earnings conference call in May 2008.

The love affair is over. Mr. Wynn and Mr. Okada are now embroiled in a nasty corporate divorce, in one of the most rancorous public feuds the international gambling industry has ever seen.

With each side accusing the other of questionable payments to public officials in Asia, many gambling executives fear collateral damage. They worry that the accusations could prompt government investigations into any number of ethically questionable business practices in gambling, where Asian regulators have often looked the other way.

“It’s like two gunslingers shooting it out,” said a longtime industry official, who insisted on anonymity because he knew both men and wanted to protect the relationships. “And what I’m wondering is whether they’ll both kill each other.”

The fight is playing out in Las Vegas, where Wynn Resorts is based, and here in Macao, the former Portuguese seaport colony now controlled by China, where annual gambling revenue is four times that of the Las Vegas Strip. Macao (often spelled Macau) was the source of all of Wynn Resorts’ $613.4 million in profit last year — more than offsetting its money-losing properties in the moribund Nevada economy.

Despite the partners’ joint success in playing the gambling game by Macao’s lax house rules, Mr. Wynn’s allies on the company’s board are now accusing Mr. Okada of violating American foreign-corruption laws.

These allegations of missteps include giving a visiting Philippine gambling regulator and his entourage free use of the Wynn Macau casino-resort’s Villa 81 — a 7,000-square-foot pleasure palace that normally rents for $6,000 a night and has amenities including his-and-hers bathrooms with showers built to accommodate six people at a time.

Mr. Okada’s camp, in turn, is questioning the propriety of a $135 million donation that Wynn Resorts made last year to the University of Macau — its chancellor is also the head of Macao’s government, with ultimate oversight of gambling. Mr. Okada’s litigation has prompted an inquiry by the United States.

Both sides deny wrongdoing. Mr. Wynn and Mr. Okada declined to be interviewed.

NEW YORK (Reuters) – Wall Street’s biggest banks are locked in an increasingly frantic struggle with the Federal Reserve over the right to retain the jewels of their commodity trading empires: warehouses, storage tanks and other hard assets worth billions of dollars.

While the battle over proprietary trading and new derivatives regulations has taken place largely in public view since the 2008 financial crisis, the fight by JPMorgan Chase, Morgan Stanley and Goldman Sachs to retain or expand their prized physical commodity operations – most acquired in only the past six years – has remained hidden.

The debate is nearing an inflection point: Within 18 months, the Fed will likely either allow banks more freedom to invest in the physical commodity world than ever; or force them to sell off the assets that many banks are counting on to buttress their trading books at a time when they are already vulnerable because of intensifying competition and new trading curbs.

The banks are now locked in deep debate with the Fed, multiple sources involved in the discussions told Reuters. Goldman and Morgan Stanley argue the right to own such assets is ‘grandfathered’ in from their lightly-regulated investment banking days, or that at least they should be allowed to retain them as “merchant banking” investments, kept segregated from the trading desks.

But regulators and lawmakers may not be in the mood to give way. Banks are under pressure to reduce risk on their balance sheet; as commodity prices rise again, they may face more allegations that they could use these assets to drive prices higher or lower, squeezing them for trading profits.

“The Fed’s not going to be terribly accommodating,” said Oliver Ireland, a former associate counsel to the U.S. Federal Reserve and a partner with law firm Morrison Foerster in Washington, D.C. “There doesn’t seem to be a lot of sentiment in this town for people doing new things and taking new risk.”

BRUSSELS (AP) — The leaders of 25 European countries on Friday signed a new treaty designed to limit government overspending, but their good intentions were immediately put to the test when Spain said it would miss deficit targets this year to spare itself from austerity overload.

By signing of the new treaty, known as the fiscal compact, the leaders hope to achieve closer political and economic integration and longer-term confidence in Europe’s finances. But the economic reality in the region — record unemployment and a slide back into recession — suggests the leaders need to reconsider their focus on austerity and seek ways to boost growth.

Hours after signing the new pact, Spanish Prime Minister Mariano Rajoy admitted his government’s deficit will be 5.8 percent of economic output this year instead of the 4.4 percent earlier promised to the EU.

The EU’s executive, the European Commission, will be forced to either back off its demands for deficit cuts or sanction Madrid.

The clash illustrates the bind Europe’s leaders are in — having to reduce the debts that created the crisis in the first place while at the same time needing to foster economic growth, without which debt reduction measures will be futile.

“I did not consult other European leaders and I will inform the Commission in April,” Rajoy said. “This is a sovereign decision by Spain.”

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The dark economic days of early 2009 — hundreds of thousands of jobs lost per month, the Dow sinking to 6,600, a sense of chaos — may now seem a distant memory. But the legacy of the deep downturn, and the economic policies forged in that crucible are still very much with us. And, so, too, are the debates over the response by the Federal Reserve and the Obama Administration. Was the stimulus too much or too little? Did the central bank exert itself excessively to aid Wall Street? And did the elite cadre of brilliant economic minds that flocked to Washington in 2009 accurately diagnose the situation and prescribe the appropriate cure?

In his timely, highly readable new book, The Escape Artist: How Obama’s Team Fumbled the Recovery, Noam Scheiber, a veteran Washington reporter with a solid background in economics, delves into these questions.

From the outset, Scheiber argues, the willingness of the Fed and Treasury to go all out to save the financial system was not matched by a similar desire by the administration to pitch big ideas to help the real economy. One of Scheiber’s big scoops was the unearthing of a memo written by Christina Romer, the head of the Council of Economic Advisers, in which she argued that a stimulus of $1.8 trillion would be needed to return employment to healthy levels by 2011. But the memo never reached the president’s desk, in part because the dominant political advisers believed a measure of that size was a non-starter. “I think they missed an opportunity out of the gate,” Scheiber says. While the stimulus worked and helped get the economy back on a track of growth, it ultimately was a half-measure that disappointed. “They were right about the shape but didn’t give it enough oomph to get escape velocity,” for the economy, Scheiber says. (In the accomanying video, Scheiber joins me and my colleague Aaron Task to discuss his book).

Scheiber also delves into the personalities, conflicts, and egos that made up Obama’s economic team: Office of Management and Budget Director Peter Orszag, Romner, National Economic Council Chairman Laurence Summers, Treasury Secretary Timothy Geithner, economic advisers Austen Goolsbee, Gene Sperling, and Jason Furman, and the political powerhouse of Chief of Staff Rahm Emanuel and advisers David Axelrod and David Plouffe. At times, this Dream Team of advisers turned out to be a Team of Rivals. Scheiber conducted hundreds of interviews with all the key players, unearthing details about their arguments, policy preferences, and tennis games. As a result, with its reconstruction of meetings The Escape Artists reads like a Bob Woodward book — albeit better written and informed by a more sophisticated understanding of economics and policymaking.

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U.S. oil reserves should be put into the market in order to stem recent price rises, Dan Weiss, director of climate strategy at the Center for American Progress, told CNBC. He blamed speculators for the recent rise in oil prices.

Nymex light sweet crude April futures locked in an almost 9 percent price gain for the month of February, while Brent crude saw its futures contract price jump by more than 14 percent last month.

“Speculators are driving up the price, taking advantage of fears about a supply disruption in the Persian Gulf which have not materialized yet.

Speculators are buying two thirds of futures contracts and end-users only one third, when it’s usually the reverse,” he said. “In the U.S., demand is down, and price increases are not demand driven.”

Meanwhile, the U.S. is producing “more oil than it has in years. The amount of reserve oil on hand is much higher than forecast,” he said.

Weiss said speculation can be curbed by bringing some of those reserves to the market in order to bring prices down.

“We’ve spoken about bursting the speculative bubble by having the President putting some reserve oil on the market. Every time that’s been done, it’s led to a decrease in oil and gas prices,” he said.

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Treasury Secretary Timothy Geithner should have done more to stop the financial crisis before it started, rather than try now to impose unnecessary reforms on the banking system, analyst Dick Bove said.

In a a much-discussed op-ed piece Friday for The Wall Street Journal, Geithner says a collective “amnesia” about what caused the crisis drives opposition to reform. He adds that “financial safeguards” during the crisis that exploded in 2008 “were tragically antiquated and weak.”

“Only four years after the financial crisis began to unfold, some people seem to be suffering from amnesia about how close America came to complete financial collapse under the outdated regulatory system we had before Wall Street reform,” he writes.

But Bove, who is vice president of equity research at Rochdale Securities, said the Treasury secretary’s memory may be a bit short as well.

Geithner, while at Treasury, supported the 1999 Gramm-Leach-Bliley law that helped unleash the too-big-to-fail institutions that required bailouts, and failed to flag any of the financial system excesses, particularly in the mortgage market, that drove the crisis, Bove said.

“Quite frankly, I find this article almost unbelievable in its lack of veracity in explaining the past, and even more outrageous in failing to understand what has been done to harm the future,” Bove wrote in an analysis.

When Geithner took over the New York Fed in 2003 he never protested excessive risk taking by banks, Bove said.

NEW YORK (Reuters) – A few dozen Occupy Wall Street protestors marched on the world headquarters of pharmaceutical giant Pfizer Inc. on Wednesday, a lukewarm kick off to a nationwide day of revival for the movement loosely organized around denouncing economic inequality.

Police on motorcycles escorted the peaceful but loud group of about 50 protestors marching from the park outside the New York Public Library to nearby Pfizer, close to Grand Central Terminal.

“Shame on Pfizer! You’re a bunch of liars!” chanted the protestors as they milled around barricades in front of Pfizer, the world’s largest drug maker, and were watched by about 50 police officers.

Pfizer officials were not immediately available for comment.

Coast to coast demonstrations were slated for Wednesday to decry corporations that lobby for legislation to create tax breaks and other benefits for large businesses.

The actions were aimed at revving up the movement known as “Occupy,” which has been relatively quiet in the months since police cleared encampments in New York, Oakland and other major cities.

A rallying cry of the movement has been that 1 percent of the population has too much of the nation’s wealth and the remaining 99 percent is disadvantaged.

Pfizer was awarded a mock prize for “Excellence in Profiteering” by the group before it marched back in the rain to Bryant Park outside the library, carrying signs reading “People over profit” and “Healthcare is a human right” as well as “I’m a doctor for the 99 percent.”

Hoisting a sign reading “I can’t afford to get sick” was Jennifer Roberts, 44, a painter who lives in Jersey City, New Jersey.

“I’ve lived the bulk of my adult working life without insurance,” said Roberts, who is single and therefore not covered by a spouse’s health insurance either. “I feel it’s very important to pursue a single payer system for this country.”

Protestor Paul Layton, 59, a lawyer who lives in New York City, wore a yellow button reading “Healthcare for the 99 percent.”

“I have to make a choice between keeping my office open and keeping my health insurance,” said Layton who is also single and uninsured.

Moscow (CNN) — A plot to assassinate Russian Prime Minister Vladimir Putin has been foiled, Russia’s state-run Channel One TV reported Monday, less than a week before presidential elections that Putin is expected to win.

Citing unnamed sources, the report said a group of plotters was arrested in the Ukrainian city of Odessa in early January and, after weeks of questioning, confessed to planning to kill the Russian leader.

The TV report included what it said was a confession by Adam Osmayev, a fixer associated with the two men who were seized in Odessa.

“Our final goal was to come to Moscow and try to organize an attempt on Prime Minister Putin,” Osmayev said.

Putin promises military spending He said the plan involved using military-grade land mines to blow up vehicles.

Washington (CNN) – President Barack Obama holds double digit leads over the top two GOP presidential candidates, according to a new national survey.

A Politico/George Washington University Battleground Poll released Monday indicates Obama topping former Massachusetts Gov. Mitt Romney 53% to 43% in a hypothetical general election matchup, with the president leading former Sen. Rick Santorum of Pennsylvania 53% to 42%.

Matched up against a generic GOP opponent in the general election (an unnamed candidate who has not suffered negative attacks during the primary process), Obama has a five-point advantage (50%-45%), up from a dead heat back in November. It’s also telling that the president is at or above 50% in all three general election matchups.

A new national poll from USA Today/Gallup tells a different story. According to the survey, which was also released Monday, Obama and Romney are deadlocked at 47% in a hypothetical matchup, with Santorum holding a 49%-46% margin over the president.

Shocking, I know, but maybe we’ve just stumbled onto the real reason why that section of the world is such a gargantuan pile of shit.

KABUL, Afghanistan – A suicide car bomber rammed his vehicle into the gates of a NATO base and airport in eastern Afghanistan on Monday, triggering a blast that killed nine Afghans, officials said. The Taliban claimed the attack was revenge for U.S. troops burning copies of the Koran.

The bombing in the city of Jalalabad follows six days of deadly protests in the country over the disposal of Korans and other Islamic texts in a burn pit last week at a U.S. military base north of Kabul.

American officials have called the disposal of the books a mistake and have issued a series of apologies. Afghan President Hamid Karzai has urged calm, calling on his countrymen not to allow insurgents to capitalize on their indignation to spark violence.

About 40 people have been killed in protests and related attacks since the incident became known this past Tuesday, including four U.S. soldiers. NATO, France, Britain and the U.S. have pulled their advisers from Afghan ministries out of concern that the anti-foreigner anger might erupt again.

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Gas prices in the U.S. are nearing the freak-out point–the level at which Americans go from grumbling about getting gouged to actually reducing their gas consumption and demanding that their elected representatives start doing something to help.

And the Republican Presidential candidates have jumped all over that, suggesting that today’s high prices are Barack Obama and the Democrats’ fault.

Meanwhile, the Obama Administration is trying to preempt the criticism, saying that there’s “no silver bullet” that is going to knock gas prices back down to $2 a gallon.

And there is almost certainly no silver bullet that is going to do that, short of a global economic depression.

Gas prices are rising, in part, because oil prices are rising, and oil prices are rising because of steady changes in supply and demand.

With the growth of China, India, and other developing markets, the demand for oil is outstripping new supply, so there’s nowhere for prices to go but up.

Obviously, new sources of supply will help, but it’s highly unlikely that they’ll take gas prices back down to the level that most Americans consider reasonable. Even analysts who think that today’s oil and gas prices are inflated by speculation now put the “fair price” of a barrel of oil at $75-$80, as compared to $20 a barrel a decade ago.

So, who’s to blame and what should be done?

Well, one entity that is to blame is the one doing everything it can to put the blame on someone else–the U.S. government. In the 40 years since the first oil crisis, in the early 1970s, Congress has done nothing to develop a comprehensive U.S. energy policy, one that would develop not only additional sources of oil but also leverage natural gas and renewable energy.

LONDON/NEW ORLEANS (Reuters) – The trial to decide who should pay for the 2010 Gulf of Mexico oil spill has been delayed by a week, to allow BP Plc to try to cut a deal with tens of thousands of businesses and individuals affected by the disaster.

Less than 24 hours before the case was set to start in a New Orleans federal court, U.S. District Judge Carl Barbier pushed back the date to March 5 from February 27.

The delay allows further talks between BP and the Plaintiffs’ Steering Committee (PSC), which represents condominium owners, fishermen, hoteliers, restaurateurs and others who say their livelihoods were damaged by the April 20, 2010, explosion of the Deepwater Horizon drilling rig and subsequent oil spill.

Eleven people were killed, and 4.9 million barrels of oil spewed from the mile-deep Macondo oil well, in by far the worst offshore U.S. oil spill.

“BP and the PSC are working to reach agreement to fairly compensate people and businesses affected by the Deepwater Horizon accident and oil spill,” BP said in a statement.

The London-based oil company said there was no assurance that the talks would lead to a settlement.

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By now it’s no secret that Silver has wildly outperformed the major indexes and it’s fully-precious big brother, Gold, so far in 2012. The question, naturally, is whether or not it’s too late to get on board.

In the attached clip Jon Najarian and I discuss how the “smart money” is playing silver and what it means for individual investors trading in the pits or at home via the wildly popular iShares Silver Trust etf (SLV).

In addition to the industrial function of silver making the metal a semi-appropriate way to play an economic recovery Najarian says the metal represents, “a cheaper way to play the flood into precious metals.” Regardless of silver’s 27% run year-to-date and positioning near heavy resistance at $35 an ounce, Najarian still “likes silver a lot.”

In no small part what the TradeMonster.com co-founder is seeing are notoriously short-term thinkers in the options pits buying the $35 calls out to June, a stunningly long view for the quick-trigger set.

Also supporting the notion of options players’ bullish stance on silver, at least according to Najarian, is the trading activity in a lesser known Proshares UltraShort Silver (ZSL) –a double-inverse trading vehicle designed to move $2 higher for every $1 drop in silver.

“If you thought silver was going to break (lower) people would start buying ZSL calls,” Najarian says.

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The World Bank and a Chinese think tank have a stern warning for China’s government: transition to a freer market system, or else face an economic crisis.

The “China 2030” report, released by the World Bank on Monday, recommends China enact reforms promoting a freer economy. Those reforms include a major overhaul turning China’s powerful state-owned companies into commercial enterprises.

“China could postpone reforms and risk the possibility of an economic crisis in the future — or it could implement reforms proactively. Clearly, the latter approach is preferable,” the report said.

The report is compiled by the World Bank and the Development Research Center, a research group that reports directly to China’s State Council. It encourages China to promote innovation, competition and entrepreneurship as means of economic growth, rather than allowing growth to be primarily government engineered.

The world’s second-largest economy has been rising rapidly, averaging around 10% growth a year for the last three decades. Much of that momentum has come as China’s rural population moves into the cities and as the government has funded massive infrastructure projects and retained a powerful influence over the country’s biggest companies.

State-owned companies dominate China’s banking, energy, telecom, health care and technology sectors. Overall, they account for about 40% of the country’s gross domestic product, according to Andrew Szamosszegi and Cole Kyle, who have researched the topic for the U.S.-China Economic and Security Review Commission.

Their latest report to the commission puts it bluntly: The Chinese government has not “expressed an interest in becoming a bastion of free market capitalism.”