Daily Sources 8/29

1. Saskia Scholtes and James Politi report in the Financial Times that China's largest commercial bank--the Bank of China (3988:HKG)--has cut its holdings of government sponsored enterprise (GSE) like Fannie Mae and Mac debt by $4.6 billion, or about 25%. Analysts are reporting that Asian investors have become net sellers of GSE debt. Yves Smith at Naked Capitalism points out that although Bank of China went public in 2006, the PRC government still holds a majority stake--so this may be a harbinger of future Chinese government thinking on holding US govt-backed assets. The Group of Twenty is meeting this weekend and there is speculation that US Treasury officials will use the meeting as an opportunity to encourage foreign GSE creditors not to cut their holdings.

2. Yves Smith at Naked Capitalism says that yesterday's GDP growth revision upward is pure nonsense.

3. Felicity Barringer of The New York Times reports that a measure to encourage housing close to job sites and public transportation infrastructure has passed the California State Assembly in Sacramento and looks like it just might be passed in the State Senate. Very encouraging. Gov. Schwartzeneggar has not indicated whether or not he would sign the bill. Not so encouraging.

4. Marcin Grajewski at Reuters reports that a survey conducted by TNS Opinion for Friends of Earth show that 87% of Europeans surveyed in Britain, France, Germany, Italy and Spain support measures currently being debated in Brussels which would cut the legal fuel consumption of new cars by a quarter. A committee is set to vote on the proposal this coming Monday.

5. Madeline Chambers and Vera Eckert at Reuters write that Germany is considering establishing a 90 day national natural gas reserve analogous to their strategic petroleum reserve to guard against potential disruptions. Redundancies always make a lot of sense in strategic commodities, IMO.

6. Denis Dyomkin and Tanya Mosolova of Reuters write that Russian officials have publicly stated that they will not cut off energy supplies to Europe in response to sanctions Europe is currently considering.

7. ConocoPhillips and Lukoil announce that production at the Yuzhno Khylchuyu (YK) field has begun. The field holds light and sweet crude with an API of 35.5 and sulfur content of at 0.71%wt. The field production level is designed to reach 150kb/d by 2009.

8. Clifford Levy reports for The New York Times that Prime Minister Vladimir Putin in a CNN interview suggested that the US orchestrated Saakashvili's attack in South Ossetia in order to shore up Sen. McCain's chances of being elected come December.

9. Dan Senor reminds us in the Wall Street Journal's op-ed page about Sen. Joe Biden's old plan to partition Iraq into an Iraqi Sunnistan, Shiastan, and Kurdistan. The plan, with which Biden went so public in 2006, has been quietly dropped.

10. Praful Bidwai of the Inter Press Service writes in the Asia Times that the dissenters in the Nuclear Suppliers Group look ready to put the kibosh on the US-negotiated nuclear deal with India which would include the country--a non-signatory to the non-proliferation treaty--in the global nucler supply system. Evidently Indian diplomats figured on bluster getting it through.

11. The BBC reports that Iran has entered a nuclear technology sharing agreement with Nigeria.

12. Emma Amaize of the Nigerian Vanguard reports that the former Commonwealth Secretary-General, Chief Emeka Anyaoku, said in a speech on Wednesday that the situation in the Niger Delta constituted a national crisis for the country. He urged the establishment of two anti-insurgency military units as part of the solution.

13. Stephanie McCrummen of The Washington Post writes a very interesting piece of analysis on Western investors being lured to Sub-Saharan Africa by high returns, government reforms, and Chinese, Indian, and Middle Eastern interest in the region.

14. Cary O'Reilly at Bloomberg reports that a US Judge has denied a motion by ExxonMobil to dismiss a case brought before him by Indonesian villagers which argues that the company contributed to human rights violations by government security forces. The US Supreme Court has refused to take on the case, leaving it to the lower court. Next month Chevron faces a trial in a San Francisco court for similar charges brought by Nigerians of the Delta region.

15. Michiyo Nakamoto reports in the Financial Times that the Japanese government has unveiled a economic stimulus package of $105.8 billion (¥11.5 trillion) which includes fuel subsidies, as well as income tax cuts and monies for new medium and small business loans. h/t to Free Exchange.

16. Nick Snow at the Oil & Gas Journal reports that a Senate Bill which would open more of the Outer Continental Shelf to drilling has garnered six more co-sponsors, bringing the total to 16. Apparently Kent Conrad (D-ND) and Saxby Chambliss (R-GA) are optimistic that it will get the 60 co-sponsors needed to make it fillibuster-proof soon.