Monday, December 1, 2008

Roundup: December 1


The National Bureau for Economic Research has finally certified that a recession began sometime in December 2007 in the United States. Merriam-Webster, separately, certified "bailout" as the 2008 word of the year.

Both China and India are beginning to cut price controls originally put in place to limit inflation in their high-growth economies, as deflation looms large on the near-term global horizon. China's manufacturing index fell steeply last month. The U.S. ISM Manufacturing index fell yet again, as well.

OPEC's Secretary General, Abdall el-Badri, has announced that the cartel will cut output when it meets next month and that he expects Russia, the biggest non-OPEC producer, to follow suit. Medvedev reiterated over the weekend that the short-term focus for Russia's energy sector is still to increase output as quickly as possible. We see the real power of Saudi Arabia in OPEC at times like these; whatever the management flaws, the Saudis have the cheapest and msot abundant fields in the world, and the excess capacity and wide margins enable them to dominate quota discussions in any sort of difficulty, unlike members who find it difficult to fund their countries at prices two to three times higher than Saudi Arabia's break-even point.

Willem Buiter destroys the argument put forth at the Fed and elsewhere that disclosure of participating banks in various bailouts, auctions, and swap agreements would undermine confidence in the banks. A must-read.

Barry Ritholtz looks at Black Friday numbers and explains why we should not pay attention to any of the ones published yet this week.

Rumors abound that Great Britain may join the Euro.

Robert Amsterdam has excellent commentary on the brouhaha surrounding any proposed Repsol-Lukoil merger.

Hedge funds, as feared, are facing massive redemption requests; some commentators think that total assets under management may shrink by a third across the sector.


Hugo Chavez is trying again to remove term limits from the Venezuela Constitution. A similar measure failed to pass a national referendum as part of a package of reforms last year, and this proposal would also have to pass a referendum. His current term expires in 2013.

Army soldiers in Zimbabwe are looting and rioting through the streets of Harare, after a band of soldiers became enraged at difficulties withdrawing cash. Police are engaging in battle with the soldiers, who are mostly low-level privates, to control the rioting. Separately, most sections of Zimbabwe did not receive any water supply yesterday, as shortage of a key purification compound led the utilities to shut down, as cholera threatens to spread out of control. $225mn American dollars were seized form Pakistani smugglers at the Mozambique border; no one yet knows where in Zimbabwe this money was going. Thabo Mbeki has written a public letter polemicizing against Biti, Tsvangirai, and the MDC.

The frightening attacks in India, now quelled after leaving over 300 dead, may have succeeded in undermining the warming trend in India-Pakistan relations. Singh has not been clear to indicate that the government in Pakistan had nothing to do with these (at least not according to any evidence yet to come to light), and the group who seems to have been behind the attack is a Kashmiri group whose central goal has been driving a wedge between the countries for years. Pakistan has denounced the attackers, and state support for these attacks is very unlikely (although some people suspect that a splinter group of the ISI may have been involved) given the policy actions of Zardari and his followers from the past six months. India's intelligence minister has resigned in the aftermath. Pakistan is warning that it may pull troops currently deployed in the tribal regions near the Afghan border and put them in range of the Indian border, if India makes any military move.

The Council for Foreign Relations has an excellent and detailed overview of policies the nominee for Secretary of State, Hilary Clinton, has supported over the years.

The Pentagon will train and place 20,000 troops at the ready in the United States to deal with emergencies such as natural disasters and terrorist attacks. One more little step toward the erosion of Posse Comitatus, but at least this one has a purpose.

The NYT profile of General McAffrey, a retired general turned major military consultant and lobbyist, is worth reading in its entirety. Impressive work by the Times.

The Taliban has become a one-party worldwide opium cartel.


The amount of rainforest deforestation in Brazil ticked up slightly in 2007 from 2008 but remained at less than half the level of 2004, the worst year on record. The long-term trend remains positive for controlling deforestation through aggressive enforcement and clever incentives.

Saturday's Nature has a paper which asserts that convective flow in the North Atlantic has resumed after nearly ten years of stagnation. Many climate scientists fear that a warming climate will lead to more and more permanent stagnation of this vital flow, which is in part responsible (through a chain effect linked to the MOC) for keeping Europe warm, among other things.

A paper in Nature Geoscience examines the vulnerability of certain carbon compounds stored in soils to decay under higher temperatures, going to Canadian forests to measure the susceptibility of these stores of carbon to decay and release. Lignin-based debris was quite vulnerable, but cutin-based matter was surprisingly resistant to decay.

An important decision about regulating power plant water intakes under the Clean Water Act goes before the Supreme Court soon. Here is an overview.

Beijing is showing substantial progress toward improving air quality in the city this year, cutting particulate matter concentrations by almost 20% and sulfer dioxide concentrations by over 20%.

The overproduction and inefficiency of grain farms under the Soviet Union depleted carbon stocks in the soil to such a degree that these lands currently represent a major carbon sink.

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