Wednesday, November 19, 2008

Roundup: November 19


The automakers are now pitching their bailout as a "bridge loan." Joshua Rauh and Luigi Zingales suggest Chapter 11 with debtor-in-possession financing is the way forwards. Senator Shelby from Alabama added his voice to the calls for the ouster of senior management at the Big Three if they receive federal aid.

The Japanese have suggested that the US issue yen-denominated debt. Steen Jakobsen of Saxobank suggest that the renminbi could ultimately be a hard currency in its own right. Taiwan is to distribute $100 per capita in shopping coupons as an attempt at fiscal stimulus.

Cars and corrugated cardboard are piling up in Long Beach as inventories rise and demand falls. Eco89 maps French factory closings. Major condo projects in North America may be halted as credit conditions worsen; two major commercial mortgages were reported close to default yesterday.

Kommersant reports Russian prosecutors are looking into media coverage of banks in order to combat "information attacks." The World Bank says the ruble will likely be devalued further. The regular stops in trading on MICEX, another one today, are scaring investors to London and threaten the structure of the Russian financial markest.

The SEC and the Federal Reserve Bank of New York are considering requiring banks and insurers to disclose information on bespoke CDS.

Pessimistic Bank of England minutes show that November's 150bp rate cut was unanimous and that the Monetary Policy Committee considered an even deeper cut.

US housing starts were at their all-time lows in October. Calculated Risk points out the AIA Architecture Billings Index is at its all time low. CPI was down by 1% in October, the largest decline in 61 years, since publication of seasonally-adjusted changes in CPI began, led by energy prices. Delinquency rates are rising, with American Express reporting defaults up over 6%.

Accrued Interest points out that levered hedge funds were often the marginal buyer in fixed income markets -- dislocations in those markets are likely to take longer to equilibrate without hedge money.

Sumitomo Mitsui may raise JPY400bn by selling preferreds, Bloomberg reports. Mitsubishi UFJ has confirmed plans to sell shares. Hong Kong markets interpreted Bank of America's exercise of its call option on over 8% of China Construction Bank as a preliminary step for it to sell some of its existing 10.75% stake.

Does anyone know who controls AIG?


Reports of a mass incident in Gansu are spreading -- some thousands of residents are said to have rioted outside a Communist Party office. Taxi drivers in Shenzhen and Chongqing have been on strike this week. China Beat looks at changes in official coverage of mass incidents.

Ted Stevens lost his Alaska Senate seat on his 85th birthday. Elsewhere in hubris: NY Attorney General Andrew Cuomo has reportedly invited Wall Street executives whose bonuses he is attacking to his multi-thousand-dollar-a-plate birthday dinner-cum-fundraiser.

The FT reports that Obama is in negotiations with Robert Gates to keep him on as Secretary of Defense into his first presidential term. Rumor has it that Eric Holder is the likely Obama administration Attorney General appointee and Peter Orszag is the likely Office of Management and Budget director. (Orszag writes a blog in his current position as director of the Congressional Budget Office.) Tom Daschle is to be Secretary of Health and Human Services.

President Medvedev has publicly acknowledged the scale of the economic crisis facing his country, and he has pledged a minimum of $186bn in various efforts to support the economy. In an overlooked statement, he also reiterated his commitment not to resort to protectionist measures, as promised at hte G-20 summit, contradicting Putin's remarks earlier this week that the auto industry could still be supported by tariffs. Micex again suspended trading for an hour today. The World Bank issued grim predictions for Russia in 2009. Separately, the Anna Politkovskaya murder trial will, in fact, be closed to the public, on the pretense that jury members were made uneasy by the presence of the press.

Zimbabwe's cholera epidemic has begun to spread over the border into South Africa, with four confirmed dead and 72 infected. Elsewhere, five senior members of Zanu-PF have left the party to reform the dormant Zapu party, which merged with Zanu-PF in the 1990s. Doctors and nurses were violently beaten by police in a march in Harare protesting the collapse of the medical system.

Somali pirates seized a Hong Kong-flag container ship carrying thousands of tons of wheat in the Gulf of Aden.

Small Wars Journal has an unclassified version of the ISAF (International Security Assistance Force, the military force in Afghanistan) campaign plan for future operations. A very interesting read.


U.S. Fuel demand fell by over 5% in the first ten months of the year, the largest drop since 1981.

China Daily announced yesterday that a Chinese fuel tax of as much as 25% is in the works and can be expected shortly.

The Governors of California, Illinois, and Wisconsin signed a pact with the Indonesian province of Aceh to regularize the purchase of carbon credits by these states to prevent deforestation in the Indonesian rainforest. Transactions of the VERs (Verified Emissions Reductions) currently take place on a bilateral basis across the world, but a new scheme to integrate the enforcement of these reductions and their eligibility for carbon-reductions across the world must come soon, according to a lobby of 40 rainforested nations.

The new USGBC LEED-NC rules for 2009 have been largely determined, and they bring a necessary and much-welcomed new focus on energy use. Previously energy-related credits accounted for 17% of the total available; now they will account for 25%.

The EPA has issued a rules proposal for large construction sites, who would be required to implement a construction runoff management system to reduce the impact of construction waste on water quality across the nation.

The USDA has issued draft rules that would require cows that give milk labeled as organic spend 120 days on pasture.

WalMart has given $250,000 to an oversight body in Texas to work on the restoration of the Colorado River watershed as part of its plan to offset its impact on the world.

Daewoo Logistics has signed a deal to farm in Madagascar -- an area about half the size of Belgium -- for 99 years to grow corn and palm oil for South Korea. Daewoo says it expects not to pay for the deal but says Madagascar may see spillover benefits from the project.

What happens to big box buildings after the stores inside shut down and leave town?

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