Wednesday, December 10, 2008

Roundup: December 9


CDS on US sovereign debt are trading at 65bp, higher than Campbell's Soup, as the Fed considers issuing its own debt to help fund its balance sheet. Neil Kashkari testified on oversight over the TARP before the House Financial Services Committee today. Goldman Sachs is recommending that investors hedge exposure to the municipal debt of New Jersey, California, Florida, and Wisconsin, saying that their forward budgets are unrealistic and the states are all at risk of default.

Chinese reported exports shrank 2.2% YoY in November, with imports falling by 18%, and has announced tax cuts and increases in spending to try to boost its economy. Chinese oil imports have fallen by 1.8% YoY in November and 18% from October, as crude stockpiles approach the storage capacity.

Reuters is reporting Saudi Arabia has informed customers of a "significant cut" in oil output for January. OPEC meets next week. Russia has changed its tone about output cuts, now saying that she will work with OPEC to cut output to prop up prices. Petrobras will continue to develop its pre-salt fields despite the fall in oil prices.

GMAC cannot meet the capital requirements to become a bank holding company and take advantage of the TARP. But Volkswagen is still seeking access to the German bank bailout. Barry Ritholz points out the mendacity of Cerberus and Chrysler in the current bailout negotiations. Of course, such conflicts of interest have been manifest across the board with these pseudo-nationalizations, from AIG to Citigroup.

The Guardian has reported that the BOE is considering quantitative easing of the money supply.

Rio Tinto will cut 14k jobs, decrease capital expenditures, and accelerate asset sales.

EconomPic has a fantastic chart of the disparities in umemployment inside California.


There is a 24-hour general strike in Greece; protesters threw fire bombs at police outside the country's parliament today. Foreign Policy is honest about the amazement with which the European conventional wisdom has received this news.

Pakistan has arrested "about 40" people in raids on militants, including leaders of Lashkar-e-Taiba, while the Indian police have a number of suspected plotters in custody already. President Bush must enjoy looking foolish; he responds to Pakistani President Zardari's balanced, thoughtful, and correct Op-Ed in the Times by threatening and justifying U.S. invasion in the tribal areas, exactly the action needed now to bring the best hope for Pakistani Democracy in twenty years down.

Human Rights in China says two signers of the "08 Charter," which calls for democratic reforms in China, were detained by police on December 8; Liu Xiabo remains in custody. The next NYRB carries a translation of the Charter.

The African Union has said "only dialogue between the Zimbabwean parties" can solve the crisis in that country and has rejected proposals that it send peacekeeping troops or attempt to remove Mugabe by force. Tsvangirai says that no progress can be achieved until a "legitimate" government is in place. The BBC carries maps of the Zimbabwe cholera epidemic, which may have infected some 60,000 people according to various NGOs, and which is spreading into Mozambique as well as South Africa.

Barack Obama has called for Governor Blagojevich, who stands accused of attempting to auction Mr. Obama's Senate seat to the highest bidder, to step down as Governor of Illinois.


The Poznan climate talks took an interesting turn today; a consortium of 133 primarily developing countries, including China, objected to $100bn in money destined for investment against climate change in these countries being placed in the hands of the World Bank. The World Bank's climate investment funds were called "irreparably flawed" and the statement also contained a proposal to shut them down.

The EU delegates at Poznan will meet and likely approve a pact to reduce CO2 emissions by 20% from 1990 levels by 2020. The exact terms will be crucial to the efficacy of this pact (as always), and certain countries, particularly Poland, are threatening to veto the pact unless concesssions are made. The current furor over a Japanese proposal about benchmarking emissions demonstrates how sensitive these pacts are to variations in the details of the implementation.

The largest certifier of the CDM, wherein developed countries in the Kyoto protocol can fund clean development and carbon reductions in developing countries in exchange for Kyoto credits, has had its accreditation suspended amid accusations of inadequate oversight and possibly corruption.

The New Scientist lists the top 10 environmental articles from the past year. It is not a comprehensive list, but it should give non-specialists an idea of many of the major issues currently facing the world.

The DoE recommended that the nuclear waste capacity of Yucca Mountain be increased by a factor of three to accomodate future needs. As Sen. Majority Leader Harry Reid vehemently opposes the expansion of Yucca Mountain, it seems more likely that this plan, which Bush has touted for years, will be mooted and something more similar to President-elect Obama's will be enacted. He envisions many smaller, shorter-term on-site repositories as the future of nuclear waste storage.

The EPA has launched a list of environmental fugitives; accused criminals whose whereabouts are unknown but have committed major environmental crimes.

UNEP publishes a fantastic graph of the world's available freshwater resources.

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