From the BBC….

Japan posted a trade deficit of $2.5bn (£1.7bn) in November as exports fell at their fastest-ever rate, the ministry of finance has said.

Japan has gone from a surplus nation to a deficit nation. How the world has changed. (This is actually the second quarter in a row that it is running a trade deficit, so this is not a fluke)

From Bloomberg……

Crude oil tumbled, capping the biggest weekly drop since the Persian Gulf War in 1991, as rising stockpiles at Cushing, Oklahoma, leave little room to store supplies for delivery next year.

Supplies at Cushing, where oil that’s traded in New York is stored, rose 21 percent to 27.5 million barrels last week, the highest since May 2007, the Energy Department said on Dec. 17. OPEC’s biggest output cut in more than a decade this week failed to stop a price drop as the recession sapped demand.

“At this stage it’s not what OPEC is doing that moves the market; instead it’s the big builds at Cushing,” said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA Inc. in New York.

Crude oil for January delivery fell $2.35, or 6.5 percent, to $33.87 a barrel at 2:46 p.m. on the New York Mercantile Exchange, the lowest settlement since Feb. 10, 2004. Futures declined 27 percent since Dec. 12, the biggest weekly drop since January 1991. Prices have fallen 77 percent from the record $147.27 a barrel reached on July 11.

From Bloomberg….

California Governor Arnold Schwarzenegger today ordered all state workers to take two days of unpaid leave each month to conserve money amid a record budget deficit and a legislative impasse over how to fix it.

The furloughs will begin in February and will last through June 2010, Schwarzenegger said in an executive order. He also ordered all departments to cut 10 percent of their workforce costs, through firings if necessary.

“Every California family and business has been forced to cut back during these difficult economic times, and state government cannot be exempt from similar belt tightening,” Schwarzenegger said in a letter to state workers.

The unions do not like this. They argue (proably correctly) that it violates collective bargaining agreements and they plan to sue. If they are correct, this order to should be overturned. A contract is a contract and rule of law is our most important resource. That goes out the window, and nobody will have anything for long.

The flip side of this is that Governor would be 100% within his rights to lay people off. That would mean cutting back on services, but he could do it.

But would the unions really rather 10% of the workforce laid off as opposed to everyone taking a 10% effective pay cut? The sad answer is yes.

Unions exist to serve the interests of people who have jobs. The 10% who lose their jobs will not be union members for very long. The 90% who keep their jobs will not have lost anything. From the stand point of a Union official there is no contest. They might protest long and hard against lay offs. But when push comes to shove, they always seem to go for layoffs as opposed to any other type of cut in payroll costs.

And that is one of the biggest problems with unions in a nutshell. Unions generally don’t have a problem with high rates of unemployment as long as their members are well paid and well treated.

From the Wall Street Journal….

The Bush administration’s plan to provide up to $17.4 billion in loans to GM and Chrysler will keep the two companies in business but pushes the problem on to President-elect Barack Obama and the next Congress, Mr. Jackson said.

“This is a punt. The congress punted to the president and the president punted it to Obama. But at least we got something. Without it [a bailout], it’s lights out for these companies.”

The difficulty of getting auto loans is a big reason auto sales have fallen so dramatically in the last two months and pushed GM and Chrysler into such deep financial holes, Mr. Jackson said. Many dealers around the country confirmed they are losing sales because even consumers with good credit aren’t being approved for loans.

As I have said before; if the consumers have money, the automotive industry will survive even if the Big Three go bankrupt. But the flip side of this is also true. If consumers don’t have the money to buy cars, it does not matter how much money is spent bailing out the Big Three.