Monday, November 24, 2008

Daily Sources 11/24

1. On Friday Anurag Kotoky of Reuters reported that Goldman Sachs' most recent forecast calls for US GDP to fall by 5% in the fourth quarter 2008 and unemployment to grow to 9% by the end of 2009.

2. Real Time Economics reports that home resales fell to a 4.98 million annual rate in October, down 3.1% since September. The medium home price was down 11.3% since October 2007. The post contains the reactions of various economists.

3. Galrahn at Information Dissemination has a post hailing the current international interest in coordinating the naval response to the piracy infesting the Somalian littoral as a success of American international maritime strategy. In short, US maritime strategy calls for building international consensus of maritime issues and using such consensus to enforce rule of law on the seas. By waiting for the international community to clamor for coordinated action before making naval commitments to the region, then, the US has met its international policy goals in terms of piracy. Interesting read.

4. Mark Pittman and Bob Ivry at Bloomberg have an analysis showing that with the bailout of Citibank, the commitment of tax payer funds to rescue the financial industry now tops $7.7 trillion, or more than half the GDP.
"The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis."
5. Philip P. Pan at the Washington Post reports that the Georgian and Polish presidents claim they were shot at as their motorcade approached South Ossetia to inspect a Russian checkpoint. Russian officials deny the accusation.

6. Ben Farey at Bloomberg reports that OPEC President Chakib Khelil told reporters in Vienna today that OPEC has provided the world with an economic stimulus by "accepting an oil price" lower than their "target price" of $85/b. (This is disingenuous, of course, as OPEC has called several emergency meetings and cut production in order to try and stave off the collapse in prices. Moreover, OPEC had refused to publically announce a target price they would defend.)

Khelil also suggested that were OPEC to meet today, production would be cut by 1 million barrels. Khelil also said that there had been 85% compliance with the October cut. Brian Baskin at Dow Jones reports that Lawrence Eagles, head of commodities research at JPMorgan Chase & Co., said Friday that without a "massive" production cut from OPEC, oil was likely to fall to $35/b. He said in a conference call that:
"OPEC needs to cut 3 million barrels a day to compensate for the bleak global economic outlook, which is expected to result next year in the first contraction to oil demand since the early 1980s."
Steven Bodzin and Daniel Cancel at Bloomberg reported yesterday that Venezuelan Energy and Oil Minister Rafael Ramirez told the media that Caracas will call for a 1 million barrel cut in production at OPEC by year end. The Associated Press reports that Iraqi oil exports in October grew to 1.7 million b/d, up from about 1.64 million b/d, an increase of roughly 60 kb/d. Iraq is not bound by any production quota as it recovers from the wars.

7. Ernesto LondoƱo at the Washington Post reports that the Kurdish regional government took delivery of three planeloads of small arms they had purchased from Bulgaria without seeking approval from Baghdad. Kurdish officials last week were complaining that al-Maliki was in the process of establishing a praetorian guard of sorts. The news of the arms sale is sure to alarm Iran, and, in all probability, Turkey, though Barzani's KRG has been at pains to try and smooth ruffles with Ankara.

8. The Associated Press reports that Saudi Arabia reduced its benchmark interest rate by 1% to 3%. Riyadh also reduced the cash reserves banks are required to hold from 10% to 7% of total deposits and loans.

9. Simon Romero at the New York Times reports that Chavez supporters won the great majority of gubernatorial and municipal elections held in Venezuela this weekend, but the opposition takes comfort in the fact that their victories were in the most populous and economically significant regions.

10. Choe Sang-Hun at the New York Times reports that North Korea has announced it will suspend all trips of the only running rail line between it and South Korea. Pyonyang will ban South Korean tourists from visiting Kaesong, which hosts the Kaesong Industrial Park--the joint economic project of the two countries. Pyonyang will also "'selectively expel' South Koreans working in a joint industrial complex there starting Dec. 1."

11. Rachel Donadio reports that Pope Benedict XVI wrote a letter published by Corriere della Sera on Sunday in which he cast doubt on the notion of an "interfaith dialogue." On the other hand, the Pope emphasized the importance of inter-cultural dialogue: "He called for confronting 'in a public forum the cultural consequences of basic religious decisions.'" Words, and their meanings, are important to theologians, and the Pope's point is not a trivial distinction. Iran's reformist leadership had, some time ago, called for a "dialogue of civilizations." In practice, though, this was mostly an effort to get all parties to express their respect for the cultural differences of their neighbors.

The Pope's call puts this notion on a more pragmatic plain, which is interesting, and reminds me of his--widely criticised--letter last year where he pointed out that possibly the most important Christian religious council had been called to accept, as inspired revelation, translation of the Old and New Testaments. A key criticism of Christianity by Islamic prosyletizers is that the Bible was distorted by the very process of translation. Since the Koran is in its original language, it has not, in their view, been so twisted. In that letter the Pope also pointed out that if Christians were to regard all lands previously controlled by Christians as legitimitely the target of Christian reconquest, most of the world would be considered as such. That is, I understand this new letter primarily as a challenge.

12. Dan Eggen at the Washington Post reports that members of APEC warned President-elect Obama that pulling back from free trade agreements would exacerbate the current global economic situation. APEC also issued a statement similar to that put out after the G20 summit on November 15 which pledges to maintain low trade barriers going forward. Canada specifically warned against the reworking of NAFTA.

13. Marc Lacey at the New York Times reports that many of the people protesting the recent municipal elections in Nicaragua are former Sandinistas. Mary Anastasia O'Grady has an opinion piece at the Wall Street Journal which reports that the Carter Center, the European Union, and the Organization of American States were all denied credentials to observe the election by Managua. Local observers were also prevented from entering polling stations. O'Grady's reportage needs to be taken with a grain of salt, however. For example, she writes that "Mr. Ortega ruled the country from 1979-1990 as a Sandinista dictator." Well, maybe, except you have to admit that the Sandanistas held elections and then abided by the result when they lost. Atypical of dictators.

14. Keith Wallis at Lloyd's List reports that seafarer groups internationally are calling for a boycott of South Korean goods. A very large crude carrier anchored off South Korea was hit by a barge which had partially come off its tow. The captain and chief officer were taken into custody, and even though a South Korean court cleared them of responsibility, prosecutors are still calling for a three year jail term. The two seafarers are of Indian nationality.

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