Monthly Archives: January 2009

For Real?

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From the Telegraph….

The protests, which began on Dec 14, rapidly took on a political hue and Mr Putin, who is intolerant of dissent, ordered the Kremlin’s top officials in the far east to use force next time. But senior adminstrators refused to intervene and a week later the government was forced to send a special detachment of riot police from Moscow to break up a second protest in Valdivostok.

Furious that he had again been disobeyed, Mr Putin directed Vladislav Surkov, his top ideologue, to sack the newly appointed head of internal affairs in Primorye, the region surrounding Vladivostok.

But the official, Maj Gen Andrei Nikolayev, flatly refused to leave his post. Sources say he threatened to expose corruption linked to the Kremln in the Russian far east if Mr Putin pressed ahead.

Such a gesture of defiance is almost unheard of in Russia. Gen Nikolayev was supposed to be the man entrusted by the Kremlin to keep regional officials under control.

But he quickly found a powerful champion in the form of President Dmitry Medvedev, who is said to have countermanded his dismissal. “The fight between Medvedev and Putin started over this issue and has been getting worse ever since,” the source close to the Kremlin said.

If this is true I don’t think that Medvedev has long to live. I am pretty sure that the men who know how to kill are still loyal Putin.

Odds and Ends

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From the New York Post…

Buried deep inside the massive spending orgy that Democrats jammed through the House this week lie five words that could drastically undo two decades of welfare reforms.

The very heart of the widely applauded Welfare Reform Act of 1996 is a cap on the amount of federal cash that can be sent to states each year for welfare payments.

But, thanks to the simple phrase slipped into the legislation, the new “stimulus” bill abolishes the limits on the amount of federal money for the so-called Emergency Fund, which ships welfare cash to states.

From The Times…..

Wildcat strikes spread to power stations across Britain today with more than 2,000 workers at 17 different sites walking out in protest against the use of foreign contractors.

Around 700 staff walked out of the Grangemouth oil refinery in Scotland and 400 more staged an unofficial strike at a refinery in Teesside as workers lent their support to a three-day strike at Total’s Lindsey oil refinery near Grimsby.

The wave of renegade strikes has also hit power stations including Longannet in Scotland, where 500 mechanical contractors have downed tools. At least 17 sites have seen strike action thus far and talks about further walkouts are ongoing at other installations, including the Sellafield nuclear plant.

From Reuters…..

Resource-poor Japan just discovered a new source of mineral wealth — sewage.

A sewage treatment facility in central Japan has recorded a higher gold yield from sludge than can be found at some of the world’s best mines. An official in Nagano prefecture, northwest of Tokyo, said the high percentage of gold found at the Suwa facility was probably due to the large number of precision equipment manufacturers in the vicinity that use the yellow metal. The facility recently recorded finding 1,890 grammes of gold per tonne of ash from incinerated sludge.

News From Pakistan And Mexico

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From Bloomberg…..

The steepest decline in Mexico’s peso in 13 years blindsided everyone from UBS AG economists to Gustavo Huitron, the local marketing manager for Mercedes-Benz.

After weakening 20 percent last year, the currency fell to a record low of 14.4484 per dollar today. RBS Greenwich Capital Markets in Greenwich, Connecticut, now predicts another 3.8 percent drop by June 30. The peso’s worst performance since 1995’s so-called Tequila Crisis is being driven by the U.S. recession and falling oil prices, which are cutting Mexican exports and government revenue.

And from pakwatan.com….

Pakistan Electric Power Company (Pepco) is under enormous miseries, facing a shortage of 10,000 tones a day supply of fuel oil to its power producing units as the consignments of Pakistan State Oil (PSO) remained stuck up at the port.

The situation is accordingly resulting into a power shortage of about 600 MW in the system and no turn around in the situation is possible before Monday, February 2, 2009 when the PSO would get its consignments cleared at the port in Karachi.

The destruction of the rain forests is a myth

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From the New York Times…

These new “secondary” forests are emerging in Latin America, Asia and other tropical regions at such a fast pace that the trend has set off a serious debate about whether saving primeval rain forest — an iconic environmental cause — may be less urgent than once thought. By one estimate, for every acre of rain forest cut down each year, more than 50 acres of new forest are growing in the tropics on land that was once farmed, logged or ravaged by natural disaster.

“There is far more forest here than there was 30 years ago,” said Ms. Ortega de Wing, 64, who remembers fields of mango trees and banana plants.

The new forests, the scientists argue, could blunt the effects of rain forest destruction by absorbing carbon dioxide, the leading heat-trapping gas linked to global warming, one crucial role that rain forests play. They could also, to a lesser extent, provide habitat for endangered species.

Naturally, lot of people would still argue that this new forest can never be as good as the old forest and the New York Times article gives plenty of space to their arguments. But they don’t seem very convincing to me.

Japan in more trouble than America

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From the Times….

The depth of the downturn in Japan, the world’s second-largest economy, emerged yesterday with industrial production showing a record 9.6 per cent decline last month and unemployment up by 0.5 per cent to a three-year high of 4.4 per cent.

Output fell at its fastest pace since records began in 1953 and it was considerably worse than the 9 per cent consensus forecasts expected by the market and up from a previous record of 8.5 per cent a month earlier. It is particularly worrying for a country that relies heavily on global exports of cars, electronics and machinery.

Needless to say, this is a lot worse then what America is experiencing even if you account for the build up in inventories. An almost 10% drop in one quarter is a 40% annualized drop. I don’t really think it will keep dropping at the current rate, but even if all it did was level out that would still be a heck of drop.

Don't Eat Ice Cream and Drive

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From UPI.com….

Prosecutors inquired why the machine had registered a “fail,” which prevents the car from starting, despite the man’s claims that he had not been drinking.

The man claimed the alcohol reading was the result of eating a Bubble O’ Bill ice cream treat and Magistrate Rod Crisp ordered a test to be performed to back up the claim. Police recorded the man’s blood alcohol content as 0.00 and performed the test a second time after he took a few bites of Bubble O’ Bill, yielding a 0.018 reading.

Crisp granted the man’s request to remove the breath testing device from his car.

GDP Drop Not As Bad As Expected But….

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The good news….

While the US economy declined at the fastest rate for 26 years, the fall was less severe than many on Wall Street had expected, with some economists forecasting a 5.9 per cent drop.

Now the bad news…

In a short-term sweet but probably long-term bitter turn, inventories rose at the end of 2008. The inventory increase was troubling because it was likely unintended — the result of companies getting stuck with unwanted merchandise because demand has tailed off in the recession. Excess inventory will have to be worked off down the road and that signals production cuts, which in turn could mean layoffs that hamstring the economy even more.

“With inventory investment jumping in (the fourth quarter), there will be inventory liquidation in (the first quarter),” Insight Economics analyst Steven Wood said. “This suggests that (first-quarter) GDP will also contract, probably more sharply than it did in (the fourth quarter).”

Inventories increased by $6.2 billion in the fourth quarter, after going down $29.6 billion in the third quarter and $50.6 billion in the second quarter. The climb added 1.32 percentage points to GDP. Real final sales of domestic product, which is GDP less the change in private inventories, decreased 5.1% in the fourth quarter, after falling by 1.3% in the third quarter.

“Obviously, with final demand declining at a 5.1% annualized rate, an increase in inventories is hardly good news for future economic conditions,” MFR Inc. analyst Joshua Shapiro said. “It signals that businesses were unable to reduce inventories to desired levels as demand evaporated. This means that orders and production will sink even more as inventory control and final demand both weigh on activity.”

In other words, GDP only dropped by 3.8% but demand dropped by 5.1%. The difference is made up by the fact that inventories increased. No wonder factories are cutting production so sharply.

Edit: LA Times puts some numbers on on the inventory build up….

Swonk and other economists who analyzed the underlying data noted that about 1.3% of the economy’s output went into inventory — showing that companies produced more than their customers were purchasing.

A petty police state

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From the Telegraph….

Mrs Devers, 64, was last year found guilty of eight charges under the Weights and Measurements Act.

She had refused to replace imperial weighing scales on her fruit and vegetable stall at Ridley Road Market in Dalston, east London.

The market trader, from Wanstead, east London, was given a two-year conditional discharge and ordered to pay £5,000 costs following the case, which was brought by Hackney Council.

I could almost see it if this was a big chain. But they are going after a stall in a farmer’s market for selling things by the pound. Is that really such a big crime?

What a surprise

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From Bloomberg….

Treasuries plunged as the government sold a record $30 billion of five-year notes at a higher yield than forecast, indicating weak demand.

The auction, which caps a week when the Treasury raised $78 billion in notes and bonds, may signal investors will have trouble absorbing the as-much-as $2.5 trillion in debt the U.S. is likely to issue this year to pay for a $1 trillion budget deficit and programs to spur the economy. The Federal Reserve’s failure to provide a timetable for possible purchases of Treasuries yesterday also weighed on prices.

Don’t worry. The Fed will take up the slack.