The Oil Drum

[UPDATE] JP Morgan agrees to buy Bear Stearns for $2 a share (Stock closed Friday at $30).
Also, Fed cuts rates (on Sunday) from 3.5% to 3.25%.

The WSJ has a decent article describing the current financial crisis and pulling no punches:

Debt Reckoning: U.S. Receives a Margin Call

The U.S. is at the receiving end of a massive margin call: Across the economy, wary lenders are demanding that borrowers put up more collateral or sell assets to reduce debts.

The unfolding financial crisis -- one that began with bad bets on securities backed by subprime mortgages, then sparked a tightening of credit between big banks -- appears to be broadening further. For years, the U.S. economy has been borrowing from cash-rich lenders from Asia to the Middle East. American firms and households have enjoyed readily available credit at easy terms, even for risky bets. No longer.

In the fields of finance and energy, there have been some remarkable developments this week, particularly with institutions that reverse their stated views, and probably their tactics and policies.

The IEA earlier released a report that said, though not in so many words, that peak oil is near. Then its CEO Claude Mandil gave an interview to Le Monde, in which he said Russia has peaked, and OPEC is not telling the truth about world oil supplies.

S&P and Moody's, Wall Street's preferred rating agencies, changed their approach to the ongoing mortgage malaise by downgrading, or threatening to downgrade, many mortgage-based investment grade bonds. This shift will be felt throughout the credit markets, and there may be much more to come. And the UK is now joining the mortgage mayhem crowd.

No such shift for NAR: they predict US home prices will rebound in 2008, though foreclosures rose 87% and a record number of ARM's will reset this fall.

Meanwhile in Canada, the sovereignty that our government seeks to defend in the Arctic is being undermined at an SPP meeting in Montebello, Quebec.

Canada flexes its muscles in scramble for the Arctic

Mr Harper's message, and the belligerent style in which it was delivered, are a sign that the Arctic, the vast ice-covered ocean around the North Pole, is hotting up - both literally, through global warming, and metaphorically as a political issue. With Canada, Denmark, Russia and the United States all having claims on the region, together with those of Iceland, Norway, Sweden and Finland, international tension in the region is mounting.

There was no dissembling in Mr Harper's speech. "The ongoing discovery of the north's resource riches, coupled with the potential impact of climate change, has made the region a growing area of interest and concern," he said. As the statement implies, two areas of international competition lie behind the Canadian prime minister's actions. The first is that the Arctic region is rich in natural resources. It is thought to hold up to a quarter of the world's undiscovered reserves of oil and gas, which as the established fields in the Middle East and elsewhere run dry will become increasingly valuable and sought after. There are also known to be major deposits of diamonds, silver, copper, zinc and, potentially, uranium. It also has rich fish stocks.

Desire to exploit these resources has led to tensions with the US over the offshore border between Alaska and Canada, an area known as the "wedge", where one day oil and gas exploration could prove to be lucrative.