The Mortgage Man

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Archive for Crude Oil New High

The Pickens Plan – A Solution To The Energy Crisis

The Pickens Plan may be the most viable option to release our dependence on foreign oil.

Most of you know that this blog is primarily about mortgages and the real estate market.  But, I also have discussed at length recently the affect that oil has had on our economy and consequently the affect it has had on mortgage bonds which control mortgage rates.  Because of that, I feel this topic is still relevant to the blog.

I saw this guy on CNBC the other day named T. Boone Pickens.  i didn’t know who he was, but apparently he is a lifelong oil man from Texas, and a billionaire because of it.  He was discussing the country’s problem with oil, and I was busy so I barely paid attention.  Then this morning, I saw a commercial that he has paid for so I went to his website to learn more about his plan.

What i discovered on his site was a simple 5 minute video of exactly what is going on, how it will continue to affect us, and how we can fix it.  I have never seen it described in such a simplistic way, but it really is a simple supply and demand issue.  In addition, we are sitting on huge reserves of natural gas and an abundance of wind power in the middle of the country east of the Rocky Moutains.

Take a look at the site and watch the video to decide for yourself.  But, I believe that it will take visionaries in the private sector to come up with solutions like this.  To rely on government to fix it will lead to bigger problems and very likely no real solution.

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Tuesday May 20, 2008

Producer Price Index (PPI) Puts Pressure On Mortgage Bonds

Mortgage bonds are feeling pressure today from the Core Producer Price Index, a leading inflationary indicator, which came in at twice what was forecast.  The PPI for April came in at 0.2% which is half of the 0.4% projected, and significantly less than the 1.1% reported in March.  This is putting pressure on mortgage bonds in spite of the stock market remaining sluggish today.

Crude Oil prices set another all time high, AGAIN, last night at $127 per barrel.  This increase was likely “fueled” by OPEC’s refusal to increase oil production to meet increasing demands.  No more significant economic news is expected out today, so if the stock market continues to be sluggish, bonds will likely reap the benefits later in the trading day.