Friday, December 19, 2008

Roundup: December 19

Markets

President Bush has announced an outrageous bailout of the auto industry, using the remaining funds from the first tranche of the TARP.
Here are the term sheets for Chrysler and GM. Does anyone remember what happened to that $700bn program to buy illiquid bank assets through reverse auctions? Cerberus will put $2bn into Chrysler and says it will put up its equity stake in Chrysler "as currency to facilitate the accommodations necessary to affect the restructuring."

The BOJ has cut interest rates to 0.1%. Japan will also buy up to $223bn (!!) of stock held by banks to boost their capital.

S&P has downgraded 11 major banks in the US and Europe. The FT says Deutsche Bank is facing a "buyers' strike" on its debt after it failed to call bonds which became callable this week.

Calculated Risk carries numbers indicating that mortgage equity withdrawals have stopped -- removing one prop of consumer spending. The Atlanta Fed's excellent Macroblog looks at changes in the labor force participation rate over the course of US recessions and concludes this recession is in line with historical precedent. A quarter of New Yorkers would not be able to buy groceries if fired; half could not go three months without a job. The 3rd Quarter of 2008 saw the most hedge fund closures of any quarter on record. YTD fund closures are up 70% on 2007.

Hu Jintao spoke yesterday and said preserving stability was the CCP's overriding task. China Media Project analyzes key words and says the speech was a nod to the left wing of the party. Danwei rounds up the Chinese headlines. B of A has reportedly canceled plans to sell a large stake in China Construction Bank after objections from Beijing.

A Palm Beach pawn shop is among the winners from Madoff's $50bn fraud. The WSJ has an online interactive graph of Madoff's closest and largest financial associates.


World

Morgan Tsvangirai has made an important statement on the situation in Zimbabwe, saying if Zanu-PF's abductions of opposition leaders do not cease and if the disappeared people are not released by January 1, he will ask the MDC to suspend all negotiations with Mugabe's regime. Mugabe and Zanu-PF leaders will eat their way through 124 head of cattle at their annual conference.

The World Bank has issued a warning on Russia -- if oil prices remain below $50 over the next two years, we may be facing a 'doomsday' scenario.

Numerous sources are reporting that the arrests of some 35 officials in the Iraqi government accused of supporting the Baath party and planning a coup may have been politically motivated; the question is, how far will Maliki go to stay in office? Missing links contextualizes these arrests in recent Iraqi history.

Ethiopia and the UN disagree on the pullout date for its troops from Somalia; not only has Ethiopia missed the widely reported deadline (yesterday), but it has built up a larger troop presence around the border area in recent weeks. Ethiopia claims that it will have its troops out by the end of the December, the "original" pullout deadline.

The NYT website is being blocked throughout China.

Mark Felt, a.k.a. Deep Throat, died yesterday at 95.


Science

Stephen Johnson, head of the EPA, ruled that the EPA need not consider the GHG output of new coal-fired power plants when deciding whether to approve them. This measure may ease the way for midnight approval of new coal plants, unlikely to be approved for the next four or eight years.

The UK shipping industry is proposing a form of cap-and-trade for large cargo ships, which account for around 3% of CO2e emissions worldwide, but this measure is likely designed to forestall international regulation under any new UN climate scheme.

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