Daily Sources 4/15

1. GERMAN BLOG SUGGESTS THAT GERMAN Q1 GDP MAY HAVE DECLINED BY AS MUCH AS 11.5% AND THE DEBATE ON WHAT NEXT AT THE ECB APPEARS TO HEAT UP

Eurointelligence reports that Herdentrief extrapolated from recent data that German GDP may have fallen by an annual rate of 11.5%.

"This estimate is based on the available data for January and February, and the data for employment and inflation for February, which he explains in a very detailed calcuation. Q2 will start with a huge inventory overhang. The recession, he concludes, is on the verge of turning into a depression."

Joellen Perry at Real Time Economics reports that ECB governors appear to be at odds with each other over whether or not to cut interest rates below 1% (they are currently at 1.25%) as well as whether to engage in "quantitative easing."

"ECB heavyweight Axel Weber, who heads Germany’s central bank, launched the latest broadside Wednesday, saying in a speech that he’s 'critical' of lowering the bank’s key rate below 1%. And as ECB policy makers debate new unconventional steps that could be unveiled at their next rate-setting meeting May 7, Mr. Weber said, 'direct interventions in capital markets should take a backseat.'"

2. CHINESE REFINERS TO RUN MORE CRUDE ON SIGNS OF ECONOMIC RECOVERY AS OPEC CUTS DEMAND FORECAST AND RUSSIAN PRODUCTION FALLS

A Platts survey showed that Sinopec plans to run 3% more crude in April from March while PetroChina plans to run 4% more crude in April from March.

"PetroChina's Jinzhou refinery in northeast China's Liaoning province also restarted a 270,000 b/d CDU early April after having shut the unit in December 2008 due to negative profit margins."

In the meantime, foreign investment in China fell 9.4% in March from a year earlier--sharply, but a much slower rate of decline than had been seen in earlier months. Aaron Back and Victoria Ruan at the Wall Street Journal report that the slowing decline prompted the Ministry of Commerce spokesman Yao Jian to call the March data a sign of economic recovery.That said, the numbers, given a sixth straight month in FDI declines, were grim:

"For the full first quarter, China attracted $21.78 billion in direct foreign investment, down 21% from a year earlier, the Ministry of Commerce said.

Foreign investment fell 16% in February from a year earlier and declined 26% for the first two months of this year."

Conversely, Brad Setser at Follow the Money notes that:

"What is clear is that the slowdown in China’s reserve growth has started to translate--as expected--into a slowdown in China’s direct purchases of US assets."

In the meantime, OPEC today cut its forecast for global oil consumption to 84.18 mb/d in 2009, meaning that it expects oil consumption to decline by 1.37 mb/d from its estimate of 2008 consumption, as per Platts.

"With the downward changes to demand estimates outweighing the revisions to the non-OPEC supply forecast, OPEC also reduced the estimated 'call' on its own crude in 2009 to 28.74 million b/d, down from a previous figure of 29.07 million b/d."

As Russian crude exports to the US increase, RIA Novosti reports that overall crude production is down 1.3% year on year for the first quarter and up 0.5% in March from March 2008. And Nick Tattersall at Reuters reports that the situation in Nigeria is heating up as MEND has indicated it will join youth protests, having abducted two British oil workers, and having warned that it would not take responsibility for the safety of Shell employees. MEND emailed a statement to reporters saying:

"We wish to warn that should any MEND camps be attacked, the entire Niger Delta region will become a theatre of another civil war. The same position will be taken if the military carries out any punitive invasion on the impoverished communities that protested against Shell."

MEND attacks cut Nigerian supply to the market last year by as much as 1 mb/d, contributing substantially to the run up in prices.

3. MEDVEDEV GIVES INTERVIEW WITH CRITICAL PRESS, AHMADINEJAD A CONCILIATORY SPEECH--IS TRIANGULATION BEARING FRUIT?

David Nowak and Jim Heintz at the Associated Press report that President Medvedev had his first interview in a Russian print publication known for its criticisms of the Kremlin. The reporters conclude that Medvedev is beginning to establish his independence from Putin and a more open approach:

"Although Medvedev's interview with Novaya Gazeta did not break new ground, it was symbolic. The newspaper has consistently challenged the Kremlin on matters including human rights, freedom of speech and Russia's alleged backsliding on democracy."

The reporters note that Putin never gave an interview to the publication. Though it is far too soon to tell, I think it is fair to say that Russian and US interests are more similar than many US analysts are prepared to admit. I think this is particularly true of Iran--a historical competitor with Russia in the Caspian--and as Medvedev's publicly expressed concern regarding Tehran's satellite launches indicated fairly well--see Daily Sources 3/18 #2.

In the meantime, Associated Press writer Ali Akbar Dareini reports that in a speech in Kerman, President Ahmadinejad said:

"The Iranian nation is a generous nation. It may forget the past and start a new era, but any country speaking on the basis of selfishness will get the same response the Iranian nation gave to Mr. Bush."

Nazila Fathi at the New York Times reports that he also said:

"[The Americans] have said they want to resolve issues through diplomatic channels and we say that this is excellent. ... Our people favor logic, dialogue and constructive cooperation based on respect, justice and rights of nations."

In the speech, Ahmadinejad indicated that Iran was in the process of preparing new proposals "on ways to secure global peace and justice" and the settlement of "settlement of international crises," which is inferred to mean a resolution to the dispute with the West over Iran's nuclear program.

This comes on top of an arrest of a US journalist, her trial for espionage, a planned satellite launch, and accusations leveled against the Dutch for cyber attempts to instigate a color revolution. The Leader of the Revolution [LOTR] is the final arbiter of Iranian foreign policy, not Ahmadinejad, but I suspect that they are feeling a bit squeezed just now.

4. THE COMPELLING INFRASTRUCTURAL ARGUMENT FOR INDIA IS LAW

The judge presiding over the trial of the lone surviving Mumbai terrorist has dismissed the lawyer appointed to handle his case because she had earlier met with a victim of the terror attack to discuss handling the potentially plaintiff's case. Rhys Blakely at the London Times reports that the judge indicated that the trial would resume once a new lawyer had been appointed, "I don't want to appoint a junior or raw lawyer for him." A key feature of the rule of law--as far as I'm concerned--is that it will present the best defense possible for a suspect even in those instances where the general public wants a summary execution, or worse.

"The Indian judicial system has been grappling with the question of Mr Kasab's defence for several months, in the light of the refusal by several lawyers to represent him."

I imagine that the defendants in the Boston Massacre were hard pressed to find representation as well--and only a man of John Adam's stature could take the case. Of course, in the present case it is clear that the suspect is guilty, having been caught on video. Still, the insistence upon as fair a trial as possible under these circumstances represents an infrastructural advantage that India has in its neighborhood.

5. THE US CRITICIZES SWAT DEAL--THE SWAT TALIBANIS SAY THEY WILL NOT GIVE UP ARMS

The Associated Press reports that White House Spokesman Robert Gives criticized the Swat sharia legislation signed into law yesterday, saying:

"The administration believes solutions involving security in Pakistan don't include less democracy and less human rights. The signing of that [deal] . . . goes against both of those principles."

In the meantime, a Swat Taliban spokesman said that the organization would not give up their guns in apparent contradiction to the terms of the Swat deal, according to Kamran Haider at Reuters:

"'Sharia doesn't permit us to lay down arms,' Muslim Khan said by telephone. 'If a government, either in Pakistan or Afghanistan, continues anti-Muslim policies, it's out of the question that Taliban lay down their arms.'"

The details of the Swat negotiating terms have not been made public, but Islamabad officials have told the media that laying down arms was part of the deal. Although human rights and democracy are best, it is hard to understand the US critique insofar as it provides no means by which to enforce the adoption of democracy of human rights. If the politically active people of Swat cannot enforce a desire for such ends, or democratically-speaking, they prefer sharia, there is little that Islamabad can do outside of try and find a compromise or wage full-scale war on its own people. You can lead a horse to water ... well, first you have to actually lead the horse to water.

6. PROMINENT SAUDI NEWSPAPER BANNED IN IRAQ

Al-Hayat, a well-respected Saudi newspaper which also happens to be consulted often by oil analysts to try and determine what Riyadh's stance at OPEC will be, has been targeted for closure in Baghdad by the Iraqi government. Maj. Gen. Qassim Atta, a top military spokesman in Baghdad, announced yesterday that he was filing a lawsuit to shut down the paper's office in Baghdad as well as the satellite signal of Al Sharqiya, a local television station which is critical of the government. Marc Lynch at the Abu Aardvark's Middle East Blog comments:

"That's not a good sign. Reminds me of the bad old days of 2004-2005 when the Iraqi government and MNF-I were routinely attacking the Arab media for fueling the insurgency and the offices of al-Jazeera and other satellite television stations were shuttered. You would think that they would have learned from the experience of banning al-Jazeera, which didn't prevent it from covering Iraqi politics but did reduce the access that officials had to its airtime."

7. THE THAI GOVERNMENT REVOKES THE PASSPORT OF FMR PM THAKSIN

Michael Casey at the Associated Press reports that the Thai government has revoked the passport of former Prime Minister Thaksin Shinawatra.

"'If we believe the person who holds the passport is doing anything that could undermine the security of the nation, then we have the right to revoke the passport,' Foreign Ministry spokesman Tharit Charungvat said. The document was revoked Sunday, he said. The government has already revoked his diplomatic passport."

I think that perhaps the military is now officially anti-Red Shirt, though it's hard to tell from my remove.

8. SHIPPING DATA MIXED

Calculated Risk reports today that the Port of Los Angeles throughput for March is up slightly from February:

"Inbound traffic was 6% below last March and 35% above last month. Outbound traffic was 9.8% below March 2008, and 25% above February."

Calculated Risk notes that the impact of the Chinese New Year may skew the data. I would add that February is 10% shorter than March and thus daily volume numbers are more telling. In the meantime, the Port of Rotterdam released its first quarter throughput numbers, reporting that "94 million tonnes of goods were handled, 10.8% down on the same period of 2008." By weight, container throughput fell by 18% to 22 million tonnes; by TEUs the decline was 16%, to 2.3 million TEUs. Iron ore imports fell by 50% on the collapse in demand for steel.

Rebecca Wilder examines the available import data on a US$-basis, and plots the following chart:



Her post, part of a weekly series looking at the global data, is well-worth reading.