Category Archives: Front Page

Trillion Dollar Deficits For Years To Come

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From Naked Capitalism…

Paul Krugman has analyzed the stimulus plan as it now stands, using accepted techniques (various multipliers for various types of spending) and finds it falls well short of its objectives. Given the determination of the Obama crowd to jolt the economy into some semblance of life, this strongly suggests that towards the end of the year, more stimulus measures will be on the table, with large dollar figures attached to them.

The post also contains a link to a Bloomberg article with this quote….

A “trillion dollar deficit will be here before we even start the next budget,” Obama said after meeting in Washington with his economic advisers, including Peter Orszag, who has been designated as director of the Office of Management and Budget. “Potentially we’ve got trillion-dollar deficits for years to come, even with the economic recovery we are working on.”

Who would have ever thought that it would be possible to talk about trillion dollar deficits as if they were no big deal?

You can't be accused of playing a double game if your honest

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Pakistan has a new director for its intelligence agency. He is supposed to put a new face agency and convince everyone that Pakistan is not supporting terrorists. But listen to what he has to say. From Spiegel….

Pasha is apparently adept at overcoming old divisions. However, it is worth listening closely when the general explains why he too is unwilling to apprehend the Taliban leadership, even though many claim that Taliban leader Mullah Omar, for example, is in Quetta, a city where Pasha lived until a few years ago. “Shouldn’t they be allowed to think and say what they please? They believe that jihad is their obligation. Isn’t that freedom of opinion?” he asks, defending extremist rabble-rousers, who are sending more and more Koran school students to Afghanistan to fight in the war there.

Such words from Pasha arouse the old suspicion that the ISI is playing a double game.

I don’t think you can accuse this dude of playing a double game. He flat out told you what his views were.

Edit: Wretchard has a good point…..

The US already knows the Pakistani government — if such an entity can be collectively referred to — was guilty of the Mumbai attacks. But since the “international community” can’t nerve itself to use force and Pakistan possesses nuclear weapons, the plan is to support the international community’s Pakistani guys fight al-Qaeda’s Pakistani guys. Because only Pakistanis are actually going to be allowed to act directly in this situation.

But they need help. To strengthen their political hand the US has conveniently slipped signals intelligence into the hands of the Indians, because although the al-Qaeda Pakistani guys know they have nothing to fear from the US, for reasons we must pass over here, they may still have something to fear from India next door. And that fear may give the international community’s Pakistani guys the edge in what comes next.

But what comes next?

Another Reason To Live Far From A Sewer Plant In New York State

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From the Press Connects….

Starting in February, the plant will be required to discharge two-thirds less nitrogen per liter of water — from 18 milliliters per gallon down to 6. To do that, the plant will have to use methanol, a chemical both volatile and expensive.

Of the $2.2 million budgeted for all chemicals in 2009, $1.3 million of it is for methanol — three times more than the $400,000 that was budgeted for chemicals in 2008. Overall, the plant is looking at a $1.8 million increase for chemicals.

Instead of saying “volatile” why don’t they just come right out and say that it is explosive? The average sanitation worker is not paid all that much. I don’t know how much I trust them to deal with something that is “volatile.”

For Crying Out Loud

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From the Belmont Club….

The New York Times lays the groundwork for a campaign that’s just waiting to happen. The new menace is Third Hand Smoke, a danger so great that you instinctively fear it even if you’ve never heard of it.

I say we declare smoking a crime publishable by death and let the smokers choose how they will die as long as they pay for it themselves. I reckon that most of them will chose death by cigarettes.

A Marriage Made In Hell

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From Spiegel…..

Motorcycle gangs have long kept the police busy with violence and drug trafficking. But now investigators are alarmed by a new threat: Militant neo-Nazis are rising through the ranks of the Hells Angels in Germany.

To a certain extent, neo-Nazis in Germany always get more press than they warrant due to the nation’s past. But there does seem to be some real social degradation going on.

All across Europe, organized groups willing to use violence are growing in strength and popularity. Meanwhile, the states that make up Europe seem to lack the will to tackle thugs with a cause effectively. If they keep up that lack of will long enough, pretty soon they won’t have the means regardless of the will.

Auto Makers In A Death Spiral

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From the Wall Street Journal…

GM, the nation’s largest auto maker, said it sold 220,030 light vehicles in December, down 31% from a year earlier. Car sales dropped 25% while light-truck sales dropped 35%. There were 26 selling days in the month, the same as a year earlier.

And from later in the article….

Ford, the No. 3 U.S. auto maker by sales behind GM and Toyota, said it sold 138,325 light vehicles in December, down 32%.

Also from later in the article…..

At Toyota, December sales fell 37% to 141,949, the eighth-straight month of sales drops for the No. 2 seller in the U.S., which earlier had defied the negative sales trends that have slammed Detroit.

Toyota’s sales fell by more than GM or Ford in percentage terms? What a shocker.

Its probably a combination of the fact that Toyota sales started falling later and the fact that Toyota is more popular in the housing boom areas then GM and Ford were (Think Florida and California). Those who don’t like change will be comforted by the fact that nobody did worse in percentage terms than Chrysler. This from Market Watch….

Chrysler LLC said Monday that U.S. December sales fell 53% to 89,813 vehicles from 191,423 a year ago.

Tell me again how the government loaning money to the Auto makers is going to help them when consumers don’t have the money to buy cars. Especially when the loans to people looking buy cars are becoming more expensive. This from Felix Salmon…..

Yes, despite the falling interest rate environment, 95% of banks have increased the cost of their loans. Sounds like a credit crunch to me — and sounds, too, like the stated aim of the government buying equity stakes in banks simply isn’t working.

Is Russia's real target the EU?

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From the Telegraph…

As temperatures dropped below zero across much of Europe, the Russian prime minister instructed the head of Gazprom: “Cut it – starting today.”

I am starting to wonder if Russia is not using the current spat with Ukraine as an excuse to extract a higher price out of the EU. As long as Russia is sending any gas through the pipeline, Ukraine will be able to take what it needs. So by cutting the gas that Russia is sending down the line, it does not really put anymore pressure on Ukraine. But it does put more pressure on the EU.

Since Russia is getting killed by falling oil prices, it must be desperate to do whatever it can to keep natural gas prices as high as possible. A fight with Ukraine is as good as excuse for undertaking actions towards that end as any other.

As far as Ukraine goes, it simply can’t afford to pay the higher prices that Russia wants no matter what the rights and wrongs of the matter are. This from the Economist…..

For Ukraine, the weakening of its currency presents an additional problem. For several years the hryvnya has been worth around HRN5:US$1 yet since December it has been trading at HRN8:US$1 or weaker. Even if the US dollar import price for gas were to remain unchanged in 2008, this translates into a rise in the import bill for Naftohaz on constant volumes to HRN80bn from HRN50bn in 2008. Even a doubling of transit fees, which currently bring Naftohaz around US$2bn in revenue, would not cover the increase.

In other words, even if Ukraine could somehow convince Russia to hold prices steady in dollars terms (which is how Russia prices its gas to the Ukraine as I understand it), it still would result in a huge effective price increase for Ukraine. Just think of how much worse it would be for Ukraine if they had to pay an even higher dollar price for their gas.

And this on top of all their other problems.