Let us clear from the ground the metaphysical or general principles upon which, from time to time, laissez-faire has been founded. It is not true that individuals possess a prescriptive "natural liberty" in their economic activities. There is no "compact" conferring perpetual rights on those who Have or on those who Acquire. The world is not so governed from above that private and social interest always coincide. It is not so managed here below that in practice they coincide. It is not a correct deduction from the Principle of Economics that enlightened self-interest always operates in the public interest. Nor is it true that self-interest generally is enlightened; more often individuals acting separately to promote their own ends are too ignorant or too weak to attain even those. Experience does not show that individuals, when they make up a social unit, are always less clear-sighted than when they act separately.
John Maynard Keynes, "The End of Laissez-Faire" (1926)
Saturday, October 18, 2008
Friday, October 17, 2008
Roundup: October 17
Markets
Conditions in the interbank lending market are improving slightly. Overnight dollar Libor fell another 27bp, to 1.67%, with three-month money down 8bp to 4.42%. But consensus is growing that liquidity provision by central banks is having little effect on the situation. Fed data shows banks and primary dealers borrowed $437.5bn/day in the week to Oct 15, a record, and one not calculated to alleviate concerns that banks will become dependent on their national lifelines -- rather than restarting the interbank market, they may substitute for it.
Calculated Risk has highlights from the Capital One conference call -- auto loan originations for 2008 will be down 45% from 2007 and the company is reducing credit lines. Deflation, anyone?
Single family housing starts were at 544k in September, their lowest level since February 1982. Until housing construction slows, it will be impossible for prices to find a bottom -- the glut of existing house inventory (including houses in foreclosure which are having trouble finding buyers) needs to be cleared. The NYT's Economix carries a great chart of housing starts per household.
Uwe Reinhardt has a cutting and to the point criticism of Paulson's blind flailing for solutions to the economic crisis. Krugman is right to say that the real economy needs help and a fiscal policy response to the financial crisis is more important than a monetary. Meanwhile, Ambac and other bond insurers are preparing a proposal that would allow them to sell assets to the Treasury or receive some government backing. Moral hazard is a quaint and outdated notion.
Libyan investors have bought more than 4% of Italy's UniCredit and said they are considering taking a stake in Telecom Italia as well. Berlusconi knows very little, but he knows that taking a highly-publicized stand against foreign takeovers of Italian enterprise plays well with the unions -- European capital directives, the health of the Italian economy, and solutions other than statist be damned.
Germany has cut its 2009 GDP growth forecast to 0.2%, from April's forecast of 1.2%. With German growth stalled, a wide Eurozone recession is inevitable.
Russia's budget is under serious fire as oil pressure dipped below $70/barrel, the crucial price for Russia to keep its budget balanced. Russia's foreign reserves have fallen $32bn in the last two weeks, or almost 10%, in a sign of the growing financial stress. And CDS on Russian sovereign debt are rising steadily. Separately, Rusal said thart 75% of aluminum producers are unprofitable at current aluminum prices. Nigeria has also announced major budget cuts in the face of falling oil prices.
Rogue traders at the French state-owned savings bank, the Caisses d'Epargne, lost EUR600mn betting against the market last week. January's rogue trader scandal at Societe Generale led to what were claimed to be meaningful changes in risk management at French banks -- clearly not.
Banks stuck with debt from the Chrysler LBO are pushing the company to do a deal with GM.
The Ukraine is seeking up to $14bn from the IMF to stabilize its financial system, even as government remains hamstrung by the breakdown of the ruling coalition.
The FT projects China will become the world's largest manufacturer next year, in value-added terms.
World
Even if the power-sharing deal in Zimbabwe hadn't stalled over cabinet posts, the new government was always unlikely to hold for very long, opines South Africa's Mail & Guardian. The MDC is asking for the UN to step in as a mediator in the discussions over the allocations of ministerial positions between it and ZANU-PF. This is long overdue.
The DOJ has created a new tautology. Apparently, the Uighur detainees whose release has been ordered by the US courts should not be released because their tenure at Guantanamo has rendered them dangerous. The brief filed notably fails to assert that they were dangerous in the first place.
The US and Iraq have drafted an accord formalizing the presence of US troops in Iraq in the near-future. No details have been released yet, but it will be interesting to see how contentious issues regarding immunity for U.S. soldiers and the role of military contractors have been dealt with.
A Kuwaiti newspaper reported that George Bush has offered to pressure Israel to surrender the Golan Heights if Syria promised to cut its relations with Iran.
HRW says Colombian President Alvaro Uribe has obstructed investigations into links between members of government and right-wing paramilitary groups.
The French police are investigating the possibility that Russian human rights lawyer Karinna Moskalenko, who has represented Mikhail Khodorkovsky and was to appear in the inquest into Anna Politkovskaya's death today in Moscow, may have been deliberately poisoned earlier this week by mercury placed in her car.
Michel Platini proves more sensible than Nicolas Sarkozy, even as Sarkozy plans to "refound capitalism" at Camp David this weekend. He also looks better jogging.
Science
Britain has formalized a target of cutting carbon emissions by 80% from 1990 levels by 2050. This is a very ambitious target that will be difficult to achieve without substantial regulatory overhaul, which, hopefully, there is sufficient political will to bring about.
Science presents a paper on methods of converting carbohydrates to liquid fuels, instead of hydrocarbons.
Conditions in the interbank lending market are improving slightly. Overnight dollar Libor fell another 27bp, to 1.67%, with three-month money down 8bp to 4.42%. But consensus is growing that liquidity provision by central banks is having little effect on the situation. Fed data shows banks and primary dealers borrowed $437.5bn/day in the week to Oct 15, a record, and one not calculated to alleviate concerns that banks will become dependent on their national lifelines -- rather than restarting the interbank market, they may substitute for it.
Calculated Risk has highlights from the Capital One conference call -- auto loan originations for 2008 will be down 45% from 2007 and the company is reducing credit lines. Deflation, anyone?
Single family housing starts were at 544k in September, their lowest level since February 1982. Until housing construction slows, it will be impossible for prices to find a bottom -- the glut of existing house inventory (including houses in foreclosure which are having trouble finding buyers) needs to be cleared. The NYT's Economix carries a great chart of housing starts per household.
Uwe Reinhardt has a cutting and to the point criticism of Paulson's blind flailing for solutions to the economic crisis. Krugman is right to say that the real economy needs help and a fiscal policy response to the financial crisis is more important than a monetary. Meanwhile, Ambac and other bond insurers are preparing a proposal that would allow them to sell assets to the Treasury or receive some government backing. Moral hazard is a quaint and outdated notion.
Libyan investors have bought more than 4% of Italy's UniCredit and said they are considering taking a stake in Telecom Italia as well. Berlusconi knows very little, but he knows that taking a highly-publicized stand against foreign takeovers of Italian enterprise plays well with the unions -- European capital directives, the health of the Italian economy, and solutions other than statist be damned.
Germany has cut its 2009 GDP growth forecast to 0.2%, from April's forecast of 1.2%. With German growth stalled, a wide Eurozone recession is inevitable.
Russia's budget is under serious fire as oil pressure dipped below $70/barrel, the crucial price for Russia to keep its budget balanced. Russia's foreign reserves have fallen $32bn in the last two weeks, or almost 10%, in a sign of the growing financial stress. And CDS on Russian sovereign debt are rising steadily. Separately, Rusal said thart 75% of aluminum producers are unprofitable at current aluminum prices. Nigeria has also announced major budget cuts in the face of falling oil prices.
Rogue traders at the French state-owned savings bank, the Caisses d'Epargne, lost EUR600mn betting against the market last week. January's rogue trader scandal at Societe Generale led to what were claimed to be meaningful changes in risk management at French banks -- clearly not.
Banks stuck with debt from the Chrysler LBO are pushing the company to do a deal with GM.
The Ukraine is seeking up to $14bn from the IMF to stabilize its financial system, even as government remains hamstrung by the breakdown of the ruling coalition.
The FT projects China will become the world's largest manufacturer next year, in value-added terms.
World
Even if the power-sharing deal in Zimbabwe hadn't stalled over cabinet posts, the new government was always unlikely to hold for very long, opines South Africa's Mail & Guardian. The MDC is asking for the UN to step in as a mediator in the discussions over the allocations of ministerial positions between it and ZANU-PF. This is long overdue.
The DOJ has created a new tautology. Apparently, the Uighur detainees whose release has been ordered by the US courts should not be released because their tenure at Guantanamo has rendered them dangerous. The brief filed notably fails to assert that they were dangerous in the first place.
The US and Iraq have drafted an accord formalizing the presence of US troops in Iraq in the near-future. No details have been released yet, but it will be interesting to see how contentious issues regarding immunity for U.S. soldiers and the role of military contractors have been dealt with.
A Kuwaiti newspaper reported that George Bush has offered to pressure Israel to surrender the Golan Heights if Syria promised to cut its relations with Iran.
HRW says Colombian President Alvaro Uribe has obstructed investigations into links between members of government and right-wing paramilitary groups.
The French police are investigating the possibility that Russian human rights lawyer Karinna Moskalenko, who has represented Mikhail Khodorkovsky and was to appear in the inquest into Anna Politkovskaya's death today in Moscow, may have been deliberately poisoned earlier this week by mercury placed in her car.
Michel Platini proves more sensible than Nicolas Sarkozy, even as Sarkozy plans to "refound capitalism" at Camp David this weekend. He also looks better jogging.
Science
Britain has formalized a target of cutting carbon emissions by 80% from 1990 levels by 2050. This is a very ambitious target that will be difficult to achieve without substantial regulatory overhaul, which, hopefully, there is sufficient political will to bring about.
Science presents a paper on methods of converting carbohydrates to liquid fuels, instead of hydrocarbons.
Readings: Hume (1)
"So great dupes are the generality of mankind, that, notwithstanding such a violent shock to public credit, as a voluntary bankruptcy in England would occasion, it would not probably be long ere credit would again revive in as flourishing a condition as before. The present King of France, during the late war, borrowed money at lower interest than ever his grandfather did; and as low as the British parliament, comparing the natural rate of interest in both kingdoms. And though men are commonly more governed by what they have seen, than by what they foresee, with whatever certainty; yet promises, protestations, fair appearances, with the allurements of present interest, have such powerful influence as few are able to resist. Mankind are, in all ages, caught by the same baits: The same tricks, played over and over again, still trepan them. The heights of popularity and patriotism are still the beaten road to power and tyranny; flattery to treachery; standing armies to arbitrary government; and the glory of God to the temporal interest of the clergy. The fear of an everlasting destruction of credit, allowing it to be an evil, is a needless bugbear. A prudent man, in reality, would rather lend to the public immediately after we had taken a spunge to our debts, than at present; as much as an opulent knave, even though one could not force him to pay, is a preferable debtor to an honest bankrupt: For the former, in order to carry on business, may find it his interest to discharge his debts, where they are not exorbitant: The latter has it not in his power. The reasoning of Tacitus, as it is eternally true, is very applicable to our present case. Sed vulgus ad magnitudinem beneficiorum aderat: Stultissimus quisque pecuniis mercabatur: Apud sapientes cassa habebantur, quæ neque dari neque accipi, salva republica, poterant. The public is a debtor, whom no man can oblige to pay. The only check which the creditors have upon her, is the interest of preserving credit; an interest, which may easily be overbalanced by a great debt, and by a difficult and extraordinary emergence, even supposing that credit irrecoverable. Not to mention, that a present necessity often forces states into measures, which are, strictly speaking, against their interest."
David Hume, "Of Public Credit" (1752)
David Hume, "Of Public Credit" (1752)
Thursday, October 16, 2008
Simple Sustainability
Did you know?
A Kilowatt-hour (kWh) is the standard measure of energy consumption for electricity in the U.S. and throughout the world. One kWh is the amount of energy needed to power a one kW device for an hour, or the energy needed to power 10 100-watt lightbulbs for an hour. Don't confuse this with electrical generation capacity, which is measured in the peak power that can be produced, in units of kW or MW (million watts). In general, for a gas or coal-fired power plant, one kW of generation capacity will produce between 6 and 8 MWh (6-8000 kWh) in a year's time.
A Kilowatt-hour (kWh) is the standard measure of energy consumption for electricity in the U.S. and throughout the world. One kWh is the amount of energy needed to power a one kW device for an hour, or the energy needed to power 10 100-watt lightbulbs for an hour. Don't confuse this with electrical generation capacity, which is measured in the peak power that can be produced, in units of kW or MW (million watts). In general, for a gas or coal-fired power plant, one kW of generation capacity will produce between 6 and 8 MWh (6-8000 kWh) in a year's time.
Roundup: October 16
Markets
Switzerland has taken a CHF6bn stake in UBS through convertible preferreds; UBS will use its new capital to partially capitalize a bad bank to be run by the SNB, which will hold up to $60bn of illiquid US assets currently at UBS. FT Alphaville speculates that the toxicity of the assets is due less to their structure or likelihood of default -- though the mix includes some nasty stuff (student loans and ARS) -- and more to UBS's need to delever. UBS will retain the right to buy back equity interests in the bad bank for $1bn plus half the equity value over $1bn. Credit Suisse has raised CHF10bn by selling common stock, convertible bonds, and preferred shares to private investors and the Qatar Investment Authority. The Swiss authorities have moved decisively and intelligently throughout the unfolding of the credit crisis -- understandably enough, since the Swiss value the prosperity their banking system brings them and understand how important it is to their continued independence that the rest of the world trust their bankers. The SNB hasn't been afraid to dismiss top management at major Swiss banks, to instruct management to dramatically scale back operations (especially in investment banking), and to dilute shareholders, when the national interest was at stake. The UBS bad bank operation announced today is a model both for recapitalization operations and for taxpayer protection.
Hank Paulson has promised a "first-rate transition" when he steps down as Treasury Secretary in January. No word yet whether Tsar of All the Markets Neel Kashkari will follow him (presumably, back to a board seat and eternal sinecure at Goldman Sachs First National).
As usual, Gordon Brown's government is quickly backpedaling after failing to sort its measures out before announcing them: this time over the dividend prohibition at Her Majesty's Banks -- RBS and Lloyds-HBOS. Meanwhile, Greece has announced a EUR28bn bailout package, and the ECB has extended a EUR5bn credit line to the Hungarian National Bank.
OPEC is set to hold an emergency meeting next week in Vienna at which it will consider production cuts.
Accrued Interest runs a primer on credit market indicators.
GMAC has "limited if any access to funding" for mortgage and auto lending. It's now clear why they are no longer making loans to people with FICO scores below 700: as the size of the loan pool shrinks, so too do the incentives to extend credit to any but the best customers.
S&P has placed $280bn of Alt-A mortgage debt under review for downgrade.
US September industrial production came in -2.8%, worse than consensus of -0.8%, and the largest fall since December 1974, exacerbated by Hurricanes Gustav and Ike and a strike at Boeing. The Philadelphia Fed indicators showed their largest one-month decline ever, with a large decline in new orders. CPI was unchanged in September, and inital jobless claims were down (!) to 461k. Libor continued to ease slightly yesterday. US real estate prices remain elevated compared to the historical record.
Iceland's newly nationalized Glitnir bank has defaulted on a $750mn bond maturing yesterday. The Russian bank Globex has frozen some withdrawals from its term deposit accounts, in a sign Russia's bailouts have not gotten her banks out of hot water yet. CDS on Russian sovereign debt were trading as high as 575/595 today.
The Russian agricultural industry is lobbying for $34bn of bailouts. Electric utilities are also asking for substantial government aid. All this on the heels of the energy sector (Gazprom et al.) asking for vast sums in the last week. Nine Russian airlines will be grounded this week because of unpaid debts. Will they be the next to ask for a bailout?
Failed deals today: EDF has abandoned its bid for Constellation Energy Group because of difficulties getting financing; Rio Tinto has postponed $10bn of asset sales; TUI said it wouldn't buy out TUI Travel; EnCana is postponing its spin-off; Grupo Modelo has filed a notice of arbitration against the Anheuser-Busch - InBev merger. Chinalco's 12% stake in Rio Tinto plc -- likely intended to give the Chinese government leverage over the possible consolidation of Rio Tinto and BHP Billiton, which would control more than 40% of world iron ore -- is frozen in a Lehman custodial account. Citigroup will cut 11k jobs and write down $4.4bn; Merrill will write down $9.5bn.
World
In a very hopeful sign, General Petraeus has launched a comprehensive strategic review for Afghanistan, Pakistan, Iran, and Iraq, with rumblings of emphasis on economic development and positive relations with neighboring countries, but warning that Afghanistan may well be "the longest campaign of the long war." NGOs are being forced to scale down operations in Afghanistan because of growing instability.
Meanwhile, Secretary of Defense Robert Gates has called for better NATO coordination in Afghanistan. Al Qaeda in Iraq's number 2, known as Abu Qaswarah or Abu Sarah, is dead, says the US military.
The Telegraph looks at internal Chinese Communist Party debates over the right response to the credit crisis. The outcome of the party plenum debates over land tenure reform remain uncertain, though it seems likely that ownership has been at least somewhat liberalized.
The CDC ranks the United States 29th in the world for infant mortality, tied with Poland, Slovakia, and Hungary, and far behind rich countries like Singapore, Hong Kong, Japan, and the Nordic nations.
Pakistan and China have signed a series of cooperation agreements. This is PM Asif Ali Zardari's first official foreign visit and has been taken as an indicator that the new regime in Pakistan, rebuffed by the US after the US-India nuclear cooperation deal, is looking elsewhere for aid and support.
An unprecedented lawsuit has been filed in China against Sanlu, over wrongful death due to milk tainted with melamine.
The Tories and Lib Dems are opposing Labour's plans for a gigantic database of all mobile phone and internet traffic. UK citizens should know about NO2ID, the campaign against the database state.
North Korea is threatening to cut its ties with the South, in a bid for more aid.
Talks over the Zimbabwe power-sharing deal continue today, with a state newspaper reporting that a deal could be close. What is life like under hyperinflation and conditions of 80% unemployment? Goods are priced in three ways -- in Zimbabwe dollars, in hard currency, and in credit.
South Africa's large immigrant population faces xenophobia in its adopted country -- and, often, war and strife at home. Refugees from Zimbabwe are being arrested and deported by South African police even when they are legitimate asylum seekers, reports the Zimbabwe Times.
Science
Italy and Poland are threatening to veto the strengthened ETS guidelines that passed through committee last week, a particularly short-sighted failure of government. But Brussels is standing firm. Meanwhile, Deutsche Bank is projecting lower prices for EUAs (carbon credits on the ETS) because of the projected global recession in 2009. Berlusconi is also trying to cut funding to thousands of scientists in Italy -- this week's bullheaded, irresponsible posturing.
Lower worldwide prices for silicon in the face of a world recession could make the solar industry's plans for grid-parity by 2012 much more feasible, even with financing conditions in limbo for the foreseeable future. Several non-silicon thin-film companies have also projected grid-parity in certain major, sunny areas by 2012. A Florida utility has proposed a feed-in tariff for solar energy, the first of its kind in the U.S.
California has published a draft plan for meeting its ambitious carbon-reduction targets, but the plan lacks all the details needed to judge it.
Shanghai is following Beijing by adopting a milder version of the restrictions on traffic in the capital in order to reduce air pollution.
Royal Dutch Shell has quadrupled its budgeted spending on renewables for the next year.
The EPA has reduced its NAAQS (National Ambient Air Quality Standard) for lead by a factor of ten, but the new standard will only come into effect in 2017 -- even as the NAAQS enforcement sensor network has been weakened by neglected repairs, funding, and replacement.
A lack of regulation has allowed supposed e-waste recyclers in the US to simply ship computers overseas, where valuable parts can be sold off and toxic components indiscriminately dumped.
Nature: Climate Change reviews a new publication that consolidates the IPCC report to a simple handbook.
We link to the full version of a paper we discussed yesterday in Nature Geosciences that describes possible impacts of global warming on the carbon storage capacity of peat bogs.
Mobile phone use can cause dermatitis, thanks to nickel in the metal parts of phones.
Krugman tries to be modest about his Nobel and still explain why he deserves it.
Switzerland has taken a CHF6bn stake in UBS through convertible preferreds; UBS will use its new capital to partially capitalize a bad bank to be run by the SNB, which will hold up to $60bn of illiquid US assets currently at UBS. FT Alphaville speculates that the toxicity of the assets is due less to their structure or likelihood of default -- though the mix includes some nasty stuff (student loans and ARS) -- and more to UBS's need to delever. UBS will retain the right to buy back equity interests in the bad bank for $1bn plus half the equity value over $1bn. Credit Suisse has raised CHF10bn by selling common stock, convertible bonds, and preferred shares to private investors and the Qatar Investment Authority. The Swiss authorities have moved decisively and intelligently throughout the unfolding of the credit crisis -- understandably enough, since the Swiss value the prosperity their banking system brings them and understand how important it is to their continued independence that the rest of the world trust their bankers. The SNB hasn't been afraid to dismiss top management at major Swiss banks, to instruct management to dramatically scale back operations (especially in investment banking), and to dilute shareholders, when the national interest was at stake. The UBS bad bank operation announced today is a model both for recapitalization operations and for taxpayer protection.
Hank Paulson has promised a "first-rate transition" when he steps down as Treasury Secretary in January. No word yet whether Tsar of All the Markets Neel Kashkari will follow him (presumably, back to a board seat and eternal sinecure at Goldman Sachs First National).
As usual, Gordon Brown's government is quickly backpedaling after failing to sort its measures out before announcing them: this time over the dividend prohibition at Her Majesty's Banks -- RBS and Lloyds-HBOS. Meanwhile, Greece has announced a EUR28bn bailout package, and the ECB has extended a EUR5bn credit line to the Hungarian National Bank.
OPEC is set to hold an emergency meeting next week in Vienna at which it will consider production cuts.
Accrued Interest runs a primer on credit market indicators.
GMAC has "limited if any access to funding" for mortgage and auto lending. It's now clear why they are no longer making loans to people with FICO scores below 700: as the size of the loan pool shrinks, so too do the incentives to extend credit to any but the best customers.
S&P has placed $280bn of Alt-A mortgage debt under review for downgrade.
US September industrial production came in -2.8%, worse than consensus of -0.8%, and the largest fall since December 1974, exacerbated by Hurricanes Gustav and Ike and a strike at Boeing. The Philadelphia Fed indicators showed their largest one-month decline ever, with a large decline in new orders. CPI was unchanged in September, and inital jobless claims were down (!) to 461k. Libor continued to ease slightly yesterday. US real estate prices remain elevated compared to the historical record.
Iceland's newly nationalized Glitnir bank has defaulted on a $750mn bond maturing yesterday. The Russian bank Globex has frozen some withdrawals from its term deposit accounts, in a sign Russia's bailouts have not gotten her banks out of hot water yet. CDS on Russian sovereign debt were trading as high as 575/595 today.
The Russian agricultural industry is lobbying for $34bn of bailouts. Electric utilities are also asking for substantial government aid. All this on the heels of the energy sector (Gazprom et al.) asking for vast sums in the last week. Nine Russian airlines will be grounded this week because of unpaid debts. Will they be the next to ask for a bailout?
Failed deals today: EDF has abandoned its bid for Constellation Energy Group because of difficulties getting financing; Rio Tinto has postponed $10bn of asset sales; TUI said it wouldn't buy out TUI Travel; EnCana is postponing its spin-off; Grupo Modelo has filed a notice of arbitration against the Anheuser-Busch - InBev merger. Chinalco's 12% stake in Rio Tinto plc -- likely intended to give the Chinese government leverage over the possible consolidation of Rio Tinto and BHP Billiton, which would control more than 40% of world iron ore -- is frozen in a Lehman custodial account. Citigroup will cut 11k jobs and write down $4.4bn; Merrill will write down $9.5bn.
World
In a very hopeful sign, General Petraeus has launched a comprehensive strategic review for Afghanistan, Pakistan, Iran, and Iraq, with rumblings of emphasis on economic development and positive relations with neighboring countries, but warning that Afghanistan may well be "the longest campaign of the long war." NGOs are being forced to scale down operations in Afghanistan because of growing instability.
Meanwhile, Secretary of Defense Robert Gates has called for better NATO coordination in Afghanistan. Al Qaeda in Iraq's number 2, known as Abu Qaswarah or Abu Sarah, is dead, says the US military.
The Telegraph looks at internal Chinese Communist Party debates over the right response to the credit crisis. The outcome of the party plenum debates over land tenure reform remain uncertain, though it seems likely that ownership has been at least somewhat liberalized.
The CDC ranks the United States 29th in the world for infant mortality, tied with Poland, Slovakia, and Hungary, and far behind rich countries like Singapore, Hong Kong, Japan, and the Nordic nations.
Pakistan and China have signed a series of cooperation agreements. This is PM Asif Ali Zardari's first official foreign visit and has been taken as an indicator that the new regime in Pakistan, rebuffed by the US after the US-India nuclear cooperation deal, is looking elsewhere for aid and support.
An unprecedented lawsuit has been filed in China against Sanlu, over wrongful death due to milk tainted with melamine.
The Tories and Lib Dems are opposing Labour's plans for a gigantic database of all mobile phone and internet traffic. UK citizens should know about NO2ID, the campaign against the database state.
North Korea is threatening to cut its ties with the South, in a bid for more aid.
Talks over the Zimbabwe power-sharing deal continue today, with a state newspaper reporting that a deal could be close. What is life like under hyperinflation and conditions of 80% unemployment? Goods are priced in three ways -- in Zimbabwe dollars, in hard currency, and in credit.
South Africa's large immigrant population faces xenophobia in its adopted country -- and, often, war and strife at home. Refugees from Zimbabwe are being arrested and deported by South African police even when they are legitimate asylum seekers, reports the Zimbabwe Times.
Science
Italy and Poland are threatening to veto the strengthened ETS guidelines that passed through committee last week, a particularly short-sighted failure of government. But Brussels is standing firm. Meanwhile, Deutsche Bank is projecting lower prices for EUAs (carbon credits on the ETS) because of the projected global recession in 2009. Berlusconi is also trying to cut funding to thousands of scientists in Italy -- this week's bullheaded, irresponsible posturing.
Lower worldwide prices for silicon in the face of a world recession could make the solar industry's plans for grid-parity by 2012 much more feasible, even with financing conditions in limbo for the foreseeable future. Several non-silicon thin-film companies have also projected grid-parity in certain major, sunny areas by 2012. A Florida utility has proposed a feed-in tariff for solar energy, the first of its kind in the U.S.
California has published a draft plan for meeting its ambitious carbon-reduction targets, but the plan lacks all the details needed to judge it.
Shanghai is following Beijing by adopting a milder version of the restrictions on traffic in the capital in order to reduce air pollution.
Royal Dutch Shell has quadrupled its budgeted spending on renewables for the next year.
The EPA has reduced its NAAQS (National Ambient Air Quality Standard) for lead by a factor of ten, but the new standard will only come into effect in 2017 -- even as the NAAQS enforcement sensor network has been weakened by neglected repairs, funding, and replacement.
A lack of regulation has allowed supposed e-waste recyclers in the US to simply ship computers overseas, where valuable parts can be sold off and toxic components indiscriminately dumped.
Nature: Climate Change reviews a new publication that consolidates the IPCC report to a simple handbook.
We link to the full version of a paper we discussed yesterday in Nature Geosciences that describes possible impacts of global warming on the carbon storage capacity of peat bogs.
Mobile phone use can cause dermatitis, thanks to nickel in the metal parts of phones.
Krugman tries to be modest about his Nobel and still explain why he deserves it.
Readings: Soros
"This belief that everybody pursuing his self-interests will maximize the common interests or will take care of the common interests is a false idea. It's a suitable idea for those who are rich, who are successful, who are powerful. It suits them to justify you know, enjoying the fruits without paying taxes."
George Soros, October 10, 2008
George Soros, October 10, 2008
Wednesday, October 15, 2008
Roundup: October 15
Markets
Smaller banks are protesting the Bush administration's $250bn plan to buy equity stakes in banks -- understandably enough, as government anoints the large banks, consolidation, and central control of lending as the way forward, leaving community banks in the dust. Economists' View asks why the Treasury has opted to structure the bailout through preferred stock purchases rather than subordinated debt, and comes to the conclusion that the only reason to go for preferreds is to game capital requirements. Macroblog discusses options for auction design under the TARP for the purchase of stressed securities. Bernanke summarized central bank actions so far in a speech before the Economic Club of New York today.
The ECB has expanded the scope of its liquidity operations and is now accepting, for instance, subordinated debt as collateral for lending. Hong Kong has backed bank deposits through 2010.
Both Libor and the TED spread have proved unresponsive to the bailout plans of the last week, but at least they haven't worsened significantly. The situation is perhaps best characterized as extremely stressed-but-stable. The NY Fed's Empire State Manufacturing Survey and the Retail Sales numbers both plummeted in September. US August business inventories rose 0.3%, with sales falling 1.8%. The Beige Book warned of slowing economic activity across the country.
Ross McKibben in the LRB describes British economic history leading up to the current crisis and what David Cameron could do about it as a Tory, if elected. UK unemployment numbers today showed the largest one-month increase in joblessness in 17 years, with 1.79mn Britons now out of work.
The BBA is raising the specter of regulatory arbitrage, saying the prohibition on RBS, Lloyds, and HBOS paying dividends and the 12% payout on the preference shares bought by the UK government disadvantage the banks with respect to foreign banks whose bailout terms are more lenient -- like the American giants.
Calculated Risk takes a look at the best bits from this morning's JPMorgan earnings call -- and floats the idea that Jamie Dimon might be a candidate for Treasury Secretary in an Obama administration.
Angry Bear looks at the capital gains provision of the Mad Hatter economic stimulus plan offered by John McCain's camp. Only something so boneheaded makes Obama's face-saving irrelevancies look good.
Wells Fargo Q3 profits fell 25%; JPMorgan Q3 profits fell 84%. Failed deals today: Sterlite for Asarco (copper producers), Synacor IPO (Internet aggregation), and Linens 'n Things, which is owned by private equity, will liquidate. Daimler said it would cut production; InBev has delayed its rights issue Rio Tinto warned on Chinese growth. And auto workers may oppose an eventual merger of GM and Chrysler.
Iceland's negotiations with Russia for a bailout loan of as much as $15bn continue apace, as does speculation about considerations Moscow may receive in exchange for her generosity. Russia will also provide $9bn to its energy sector to help it weather the credit crisis and refinance outstanding debt.
GMAC has restricted the eligibility of 43% of U.S. borrowers for new car loans in a side effect of the credit crisis. This bodes poorly for GM's auto sales, which rely on the availability of cheap car loans for their ever-increasing numbers.
The Baltic Dry shipping index is at its three-year lows after falling 80% from its peak: the Chinese slowdown and frozen credit markets seem to be bringing international trade to a grinding halt.
David Brooks yammers on and on but nobody seems to care. Robert Reich, however, gets his look at the root causes and future effects of the crisis and at the American middle class dead right.
Lehman's administrator will be making margin calls on securities frozen at the failed bank.
World
On 2008's Blog Action Day for poverty, This is Zimbabwe publishes a series of posts looking at the crushing poverty induced in that country by Mugabe's rule. Thabo Mbeki may be about to save the power-sharing deal between Mugabe and Tsvangirai. Zimbabwean generals' fears of prosecution over their role in the violent crackdown on MDC supporters in advance of the election may be holding the process back.
The Bush administration explicitly endorsed the waterboarding of suspects held at secret prisons in a pair of memos to the CIA in 2003 and 2004.
Stephen Harper and the Tories were reelected in Canada, probably signaling the end of hopes for a nationwide carbon tax in the near future.
A Russian human rights lawyer, Karinna Moskalenko, may have been poisoned by mercury placed in her car. She was to appear before a military court in Moscow today in the inquiry into the murder of Russian dissident journalist Anna Politkovskaya.
World Politics Review publishes a set of articles looking at doctrinal change in American warfighting, including the use of social scientists in nation-building operations in Iraq and Afghanistan, and the army's role in "winning the peace."
HRW reports on the biggest sellers of arms to Sudan, who include Iran and China. Time reports that the global arms trade has never been better.
The Asahi Shimbun says it is crucial that six-party talks with North Korea over denuclearization be reopened as a next step, after the Bush administration finally took the country off the list of state sponsors of terrorism.
Talks between Georgia and Russia in Geneva have "collapsed," say Georgian officials.
Aravind Adiga has won the Booker Prize for his novel The White Tiger, a bitter and sarcastic first-person account of inequality in the new India told from the perspective of a hired driver.
Afghanistan's defense minister said that foreign fighters are flowing from Iraq to Afghanistan.
Richard Weitz reviews the recent Russian military exercises at World Politics Review, saying the exercises show the limits of Russian power.
Thai and Cambodian troops exchanged fire on their mutual border.
Science
Japanese investors in a large Australian LNG project have warned that the Australian carbon trading system may make investment in that country uneconomic, underscoring the need for cross-border governance structures -- or activism in local capital markets of countries without carbon targets, something hard to imagine in Japan -- to impose hard carbon caps.
Rising temperatures may cause peat bogs to dry up and emit more carbon dioxide, a study in Nature Geoscience suggests -- warming renders yet another natural carbon sink ineffective.
The underwater pipelines which move Iraqi oil to tanker fueling terminals offshore are so corroded that they might burst at any time -- causing an ecological disaster and the collapse of the Iraqi economy.
CO2 may have played a greater role than the IPCC though in pre-industrial climate changes. Using measurements derived from preserved plants instead of from ice cores, the variation in CO2 concentrations in pre-industrial times suggests that, even then, CO2 concentration changes may have represented a first-order forcing.
Researchers at GE have developed a way of treating metals so that they become "super hydrophobic." By reducing the ability of water to stick to metals, these treated metals could be used to help aircraft wings withstand icing, or to decrease contaminant buildup in turbines, leading to better efficiency and less maintenance.
Particle formation in the Himalayas is not well enough understood, as changes to the atmospheric system in the South Asian area may represent one of the most important regional effects of climate change and air pollution, impacting the monsoon and the Himalaya glaciers.
Green Car Congress has a detailed look at the water intensity of various standard and alternative fuels, such as ethanol, electricity, diesel, gasoline, and other non-conventional fuels. This is an interesting look at an under-discussed aspect of the arguments over the environmental impacts of alternative fuels.
Brazil's deepwater subsalt oil reserves pose no challenge to the dominance of the Middle Eastern oil producers.
Smaller banks are protesting the Bush administration's $250bn plan to buy equity stakes in banks -- understandably enough, as government anoints the large banks, consolidation, and central control of lending as the way forward, leaving community banks in the dust. Economists' View asks why the Treasury has opted to structure the bailout through preferred stock purchases rather than subordinated debt, and comes to the conclusion that the only reason to go for preferreds is to game capital requirements. Macroblog discusses options for auction design under the TARP for the purchase of stressed securities. Bernanke summarized central bank actions so far in a speech before the Economic Club of New York today.
The ECB has expanded the scope of its liquidity operations and is now accepting, for instance, subordinated debt as collateral for lending. Hong Kong has backed bank deposits through 2010.
Both Libor and the TED spread have proved unresponsive to the bailout plans of the last week, but at least they haven't worsened significantly. The situation is perhaps best characterized as extremely stressed-but-stable. The NY Fed's Empire State Manufacturing Survey and the Retail Sales numbers both plummeted in September. US August business inventories rose 0.3%, with sales falling 1.8%. The Beige Book warned of slowing economic activity across the country.
Ross McKibben in the LRB describes British economic history leading up to the current crisis and what David Cameron could do about it as a Tory, if elected. UK unemployment numbers today showed the largest one-month increase in joblessness in 17 years, with 1.79mn Britons now out of work.
The BBA is raising the specter of regulatory arbitrage, saying the prohibition on RBS, Lloyds, and HBOS paying dividends and the 12% payout on the preference shares bought by the UK government disadvantage the banks with respect to foreign banks whose bailout terms are more lenient -- like the American giants.
Calculated Risk takes a look at the best bits from this morning's JPMorgan earnings call -- and floats the idea that Jamie Dimon might be a candidate for Treasury Secretary in an Obama administration.
Angry Bear looks at the capital gains provision of the Mad Hatter economic stimulus plan offered by John McCain's camp. Only something so boneheaded makes Obama's face-saving irrelevancies look good.
Wells Fargo Q3 profits fell 25%; JPMorgan Q3 profits fell 84%. Failed deals today: Sterlite for Asarco (copper producers), Synacor IPO (Internet aggregation), and Linens 'n Things, which is owned by private equity, will liquidate. Daimler said it would cut production; InBev has delayed its rights issue Rio Tinto warned on Chinese growth. And auto workers may oppose an eventual merger of GM and Chrysler.
Iceland's negotiations with Russia for a bailout loan of as much as $15bn continue apace, as does speculation about considerations Moscow may receive in exchange for her generosity. Russia will also provide $9bn to its energy sector to help it weather the credit crisis and refinance outstanding debt.
GMAC has restricted the eligibility of 43% of U.S. borrowers for new car loans in a side effect of the credit crisis. This bodes poorly for GM's auto sales, which rely on the availability of cheap car loans for their ever-increasing numbers.
The Baltic Dry shipping index is at its three-year lows after falling 80% from its peak: the Chinese slowdown and frozen credit markets seem to be bringing international trade to a grinding halt.
David Brooks yammers on and on but nobody seems to care. Robert Reich, however, gets his look at the root causes and future effects of the crisis and at the American middle class dead right.
Lehman's administrator will be making margin calls on securities frozen at the failed bank.
World
On 2008's Blog Action Day for poverty, This is Zimbabwe publishes a series of posts looking at the crushing poverty induced in that country by Mugabe's rule. Thabo Mbeki may be about to save the power-sharing deal between Mugabe and Tsvangirai. Zimbabwean generals' fears of prosecution over their role in the violent crackdown on MDC supporters in advance of the election may be holding the process back.
The Bush administration explicitly endorsed the waterboarding of suspects held at secret prisons in a pair of memos to the CIA in 2003 and 2004.
Stephen Harper and the Tories were reelected in Canada, probably signaling the end of hopes for a nationwide carbon tax in the near future.
A Russian human rights lawyer, Karinna Moskalenko, may have been poisoned by mercury placed in her car. She was to appear before a military court in Moscow today in the inquiry into the murder of Russian dissident journalist Anna Politkovskaya.
World Politics Review publishes a set of articles looking at doctrinal change in American warfighting, including the use of social scientists in nation-building operations in Iraq and Afghanistan, and the army's role in "winning the peace."
HRW reports on the biggest sellers of arms to Sudan, who include Iran and China. Time reports that the global arms trade has never been better.
The Asahi Shimbun says it is crucial that six-party talks with North Korea over denuclearization be reopened as a next step, after the Bush administration finally took the country off the list of state sponsors of terrorism.
Talks between Georgia and Russia in Geneva have "collapsed," say Georgian officials.
Aravind Adiga has won the Booker Prize for his novel The White Tiger, a bitter and sarcastic first-person account of inequality in the new India told from the perspective of a hired driver.
Afghanistan's defense minister said that foreign fighters are flowing from Iraq to Afghanistan.
Richard Weitz reviews the recent Russian military exercises at World Politics Review, saying the exercises show the limits of Russian power.
Thai and Cambodian troops exchanged fire on their mutual border.
Science
Japanese investors in a large Australian LNG project have warned that the Australian carbon trading system may make investment in that country uneconomic, underscoring the need for cross-border governance structures -- or activism in local capital markets of countries without carbon targets, something hard to imagine in Japan -- to impose hard carbon caps.
Rising temperatures may cause peat bogs to dry up and emit more carbon dioxide, a study in Nature Geoscience suggests -- warming renders yet another natural carbon sink ineffective.
The underwater pipelines which move Iraqi oil to tanker fueling terminals offshore are so corroded that they might burst at any time -- causing an ecological disaster and the collapse of the Iraqi economy.
CO2 may have played a greater role than the IPCC though in pre-industrial climate changes. Using measurements derived from preserved plants instead of from ice cores, the variation in CO2 concentrations in pre-industrial times suggests that, even then, CO2 concentration changes may have represented a first-order forcing.
Researchers at GE have developed a way of treating metals so that they become "super hydrophobic." By reducing the ability of water to stick to metals, these treated metals could be used to help aircraft wings withstand icing, or to decrease contaminant buildup in turbines, leading to better efficiency and less maintenance.
Particle formation in the Himalayas is not well enough understood, as changes to the atmospheric system in the South Asian area may represent one of the most important regional effects of climate change and air pollution, impacting the monsoon and the Himalaya glaciers.
Green Car Congress has a detailed look at the water intensity of various standard and alternative fuels, such as ethanol, electricity, diesel, gasoline, and other non-conventional fuels. This is an interesting look at an under-discussed aspect of the arguments over the environmental impacts of alternative fuels.
Brazil's deepwater subsalt oil reserves pose no challenge to the dominance of the Middle Eastern oil producers.
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