"The bank’s assessment for 2009 was grimmer than those of most private forecasters. It did not provide a specific estimate, but bank officials said its economists would be publishing one in the next several weeks."2. Sean O'Grady at the UK Telegraph reports that the latest data from the Bank of England shows that there has been a $1 trillion decline in the accounts held by foreigners in the UK.
"Some $597.5 billion was lost to the banks in the last quarter of last year alone, after a modest positive inflow in the summer, but a massive $682.5 billion hemorrhaged in the second quarter of 2008–-a record. About 15% of the monies held by foreigners in the UK were withdrawn over the period, leaving about $6 trillion."One reason behind the outflow is the decline in sterling--most financial instruments held in the UK are priced in sterling, as it falls losses are increased for foreign accounts with currencies rising relative to it.
3. The Associated Press reports that Chinese ships shadowed and harassed a UN Navy vessel--the USNS Impeccable--with a civilian crew conducting surveys in international waters of the South China sea.
"The [Pentagon] statement said the Navy sprayed one ship with water from fire hoses to force it away and the Chinese crew members stripped to their underwear and continued closing within 25 feet."The Obama Administration has made an official protest about the incident. (h/t Galrahn at Information Dissemination.)
4. Kumar Malhotra at the BBC reports that the Indian defense establishment has become concerned about strengthening ties between Nepal and China. The Hindu nationalist party, Bharatiya Janata Party, raised the issue in parliament last month. Beijing is likely strengthening ties with the Maoist government in Kathmandu as the 50th anniversary of the exile of the Dalai Lama approaches in an attempt to tamp down protests by Tibetians in Nepal this year.
5. Geoff King at Platts reports that OPEC secretary general Abdalla el-Badri said today that cartel compliance with the December 17 production allocations was at 85%. He indicated OPEC will encourage further compliance given fears of new price slides on the back of large stocks of crude and products on land and at sea. "'This price [$40/b] is not suitable for any future investments,' Badri said, referring to what he said was the International Energy Agency's preferred price level."
6. Edward Luce and Chrystia Freeland of the Financial Times report that in an interview, Larry Summers made the case for coordinated stimulus globally:
"'The old global imbalances agenda was more demand in China, less demand in America. Nobody thinks that is the right agenda now,' said Mr Summers.7. Michael Cooper at the New York Times reports that there was a 4% increase in ridership on public transportation systems nationally in 2008.
'There’s no place that should be reducing its contribution to global demand right now. It is really the universal demand agenda.'
While the US and other western nations should return to living within their means in the medium term, everyone should raise spending sharply now.
'The right macro-economic focus for the G20 is on global demand and the world needs more global demand,' said Mr Summers."
"Ridership was up on all modes of public transportation in 2008; it grew on subways by 3.5%, on buses by 3.9% and on commuter rail by 4.7%. Light-rail use increased by 8.3%, spurred in part by a new system in Charlotte, N.C., and growth in New Orleans, which is still recovering from Hurricane Katrina."Analysts do not expect ridership to continue to increase in 2009, as states will be forced to raise fares and cut back on service in order to compensate for declining tax revenues.