Tuesday, May 5, 2009

The Economist - May 2nd

Next in last week’s news: swine flu – governments planned for another outbreak of bird flu, but whether or not swine flu is dangerous, the world needs a new system for reacting, and more importantly, a better system for identifying new diseases.

Berlusconi is 73 years old? – Doesn’t look a day older than Mussolini. Italy has tremendous potential, but Berl’s strong leadership hasn’t translated into any reforms that would remove regulations that are restricting commerce.

Anything new about Jacob Zuma? – Not really. His party, the ANC, doesn’t have 2/3 of Parliament so there’s possibility that ANC and Zuma could face a legitimate opposition alliance of the Cope and Alliance parties. More ‘wait and see’ talk.

Even without Jorge, Chile still has an advantage – S. American economies are surprisingly well balanced. World recession has hit growth, but it may help Latin America to become more self-sufficient as foreign capital recedes.

Gordon Brown: Leave the man alone – but he does kind of deserve it. 61.5% tax rate on incomes over $147k (US) – What a gormless plonker. Economist suggests (drumrolll) carbon tax! Yeah!!!!

Malakand Malaise no more? – Pakistan gets going on fixing its Taliban problem in the lawless, nearly ceded, Northern territories – kind of. They busted some heads, but might as easily give up – like they did with dismantling the LET – the group behind the Mumbai attacks.

Anything new about Barack Obama? – not really. Poll numbers are still high. 45% believe country is on right track. Honeymoon might not last forever as he faces auto industry, health care, and climate.

Oh yeah…a trade policy – Obama not as protectionist as he suggested on campaign trail, but hasn’t done much to advance free trade – ignores the issue. Doha trade talks might be successful in promoting free trade, but no one is really confident.

Greatest Clip-art driven article ever – Dachshunds (the wiener dogs) are popular in local dog races because they’re really funny to watch. And they’re the best dog breed ever.

Who broke wind? – Not AEP – they put up a power line across W. Virginia and Virginia in 2 years and it took feds 14 years to approve. Wind power has potential, but govn’t regulation needs to help, not hinder.

Newman! – Post Office is hurting – losing $2.8 billion last year. Considering reducing service to 5 days or further rate increases. Forbidden to expand into other services. Banking at the Post Office? Brilliant idea!

Rhode Island: We’re better than Michigan! – wait, what? We’re not? – 16 new homes in the entire state for February. Unemployment highest in nation. Biomed and wind energy markets offer hope. They used to tax $2 per act of intercourse… no joke necessary.

You’ve never heard of shrinkage?! – Republican Senator Arlen Specter of Penn switched parties. Doubtful he could get re-elected in Penn as Republican. Party is shrinking and more far-right ideological.

Déjà vu? – Some more about Latin America and their relatively mild recession. End of 5 years of growth, but traditional Latin American weakness in financial systems, currency and public finance aren’t the cause. More populist governments, like Venezuela will fare the worst.

Big Papi from Paraguay – Fernando Lugo is Paraguay’s president and a former bishop. And he likes women – fathered a few ‘little Lugos.’ Has a lot of work to do – fight corruption, develop political infrastructure, and make up for lost time as a Padre.

Maybe Swine Flu could clean up the drug problem – Mexican Army soldiers are in cities to fight the ‘narcos.’ And they occasionally rape and murder random people, but Mexico lets that one slide. No big deal…until the Army is too powerful and the people don’t trust it… Yay!

Could use some help - Last year cyclone named Nargis nailed Myanmar and killed 140,000 people. They have no food, water, or rebuilding money. Nobody wants to donate because junta (regime) is dreadful and squanders it all anyway.

Domo Arigato, Mr. Ozawa - For such a great scandal. Japan’s current Prime Minister is Taro Aso of the Liberal Democratic Party (LDP). He has to hold an election by the end of September. Looked like a lock for change of party to Ichiro Ozawa’s Democratic Party of Japan (DPJ). Now Ozawa in trouble for accepting illegal funds and victory doesn’t look so good. Ozawa’s new plan is to hide until the election.

Knock, Knock? WHO’s there? – Taiwan! - Taiwan has finally been asked to attend a World Health Organization assembly, but only as an observer, and only because of pandemic murmurings, and only because China let them.

It’s time to move on, time to get going - China still hasn’t forgiven Japan for some ‘harsh occupation’ during the 1930s and 40s. China made a movie called “City of Life and Death” that documents atrocities committed during this ‘gruesome chapter. Japan PM Taro Aso responded by placing flowers on Japanese soldiers memorial, making China mad. China turning a new leaf, willing to ignore and move on.

“Romantic Episodes” probably didn’t help - American soldier Lance-Corporal Daniel Smith accused of raping Filipina while on US military assignment in Philippines. Filipino nationalists want America out, Smith sentenced to 40 years in prison by Filipino court. Turns out $2000 from Smith and a US visa to the woman made the sex consensual.

Tamil Tigers no more – almost - Sri Lankan government still close to complete Tamil Tiger annihilation. Still. Estimate at 50k civilians still trapped in the ceasefire area. Aid orgs want President Rajapaksa to stop using heavy artillery.

OMG - Australia’s new bff is China. US is kind of jealous, and posted it on Twitter - Australia getting rich selling natural resources to China, but worried that they are enabling Chinese world domination. Australia divided on how to proceed. Australia’s PM, Kevin Rudd, can speak faultless mandarin and wants to be China’s zhengyou (true friend)

I would have guessed ‘Basrans’ but it’s ‘Basrawis’ – Iraq’s most important southern city has seen improvement since PM Nuri al-Maliki cleaned house in March ’08, but security concerns still legitimate if services are provided and disenfranchised youth return to the troublesome militias (or is it militiawis) from Muqtada Al-Sadr.

Gaza Home Depot: You can do. We won’t help. – Many Palestinians of Gaza remain homeless - $4.5 billion of reconstruction aid hasn’t shown up. Israel would lift trade restrictions if Hamas abandons leadership. Palestinians growing frustrated with Hamas.

More Jacob Zuma – Seriously?

But what about their sustainable competitive advantage? - Nigeria has a new brand: Good People. Great Nation. [muffled ‘hooray’ as I’m kidnapped] ORC lists capital as worst place for expats with violence, infrastructure, and sanitation problems.

Imagine Prime Minister Rupert Murdoch – Berlusconi in Italy is rocking with high approval rating despite dismal economic outlook. Controls the media. Turning into a modern day ‘post-ideological totalitarianism.’

Where’s the Ukrainian PM? – Johanna Sigurdardottir, openly gay former air hostess is new PM. Financial situation is disastrous – GDP decline of 10%, 50% business insolvent. IMF bailout of $2.1 billion. Might join EU in future if they can get their ship together.

MTV: The Mountains. Starring Turkey-Georgia-Armenia-Azerbaijan: Turks and Armenians don’t get along because of 1915 fight. Azerbaijan and Armenia fight over sliver of land between them. Georgia is abused by Russia, but no one has called the cops yet. If they all get along, Turkey could get into the Epsilon Upsilon Frat (EU) Russia wants control of the gas and oil so that Europe is more dependent on Russia for energy.

Portugal less optimistic than the Economist?! – 95% are depressed about their job prospects and more than 50% dissatisfied with their life. Jose Socrates is the PM – banks are solid, but GDP contracts by 3.5%, exports low. Bureaucracy paralyzing growth and weak political leaders are pushing change.

What happened to Bologne? – French University students are always on strike, especially now worried about the ‘privatization’ of their education system. Government not going to award ‘half-degrees’ and most students getting annoyed by vocal minority.

Roma are not from Rome – They are gypsies mostly from Czech Republic. Despite Czech’s ‘modern’ place in Europe, there’s significant persecution of Roma and they are fleeing to Canada to escape.

Entschuldigen Sie bitte! – The Germans aren’t really embracing the whole ‘open borders’ part of the EU, still restricting labor from 8 other more recent members of the EU from Eastern Europe. The Economist says that they should part with their old ways and show some true logic and open up the borders.

Tories = Conservatives – Their leader is David Cameron who is helping keep their panache to a minimum. Bold positions, particularly undoing costly national-insurance contributions are starting to take hold. Might become new brand of centrist conservatism.

Guess What?! – The British economy isn’t exactly the dog’s bollocks. Spending freezes and budget cuts. They hope for a recovery by 2011….riiiight.

London Bombings – the plotters of the 2005 London bombings will probably never be caught as the bombers were killed in suicide blasts and three of their friends were tried but acquitted. Several sets of fingerprints on bomb materials remain unidentified.

Veteran’s Affairs – British Government consistently mistreated Gurkhas (Nepalese soldiers who fought for Britain) and wouldn’t allow them to settle in Britain or provide them with the promised medical care for the war injuries. Big Parliament upset that condemned their treatment and will soon solve their grievances.

Education reform in Britain – There are two guys, Mr. Gove and Mr. Balls who will play a big part. Balls aspires to lead more than just education reform – also very liberal. Gove is a neocon. The whole vasectomy thing threw me off and I’ve never re-read an article in the Economist so many times without understanding a thing.

Islamic education in Britain and Pakistan – a Madrassas, a religious school, has different roles in Britain (supplement to state ed) as opposed to Pakistan (primary ed, escape from poverty). Both fight with extremist and radicalization that turn Madrassas into threatening training grounds for future Jihadists.

Harder, Better, Faster, kinda Stronger – World Bank reviews its health care loan program (a mere $17 billion) and admits that it didn’t really do as much as it had hoped. Working to improve local bureaucracies instead of just throwing money at the problem.

Big Men on Campus – Hey look at us – we actually have positive net cash positions! Big companies, Exxon, Microsoft, Google, etc… never became exposed to credit markets and kept cash on hand. Perhaps last days of high-leveraged companies?

Ciao Chrysler – Chrysler heading to Fiat. Wasn’t able to renegotiate debt. Government taking over 50% of GM. Closing a bunch of dealers and cutting more workforce. Dedicated to breaking even at domestic sales volume of 10 million cars.

On time or your yuan back – Parcel shipping very entrepreneurial in China over last few years. Private start-ups and then also major logistics firms all moving packages around. China wants piece, so China Post (USPS of China) is back and regulations will restrict foreign owned firms.

Two ad agencies merged…and….dachshunds are great race dogs – William Morris and Endeavor are two Hollywood agencies that are joining. Not really big players anymore as media conglomerates are in greater strength positions.

Insert knife in gut, twist, repeat – The Economist gleefully reminds us that in depressions, companies don’t hire and come up with great excuses to hold off on hires. Finance and consulting lead the way with deferred job offers of 6 months to a year, so that we can ‘travel’ (while paying our loans?). And stupid TARP hurts foreign students looking for work in US. Sorry Jorge.

Jobs for Jorge! – Spain is ramping up their business in Latin America. Seems cool. Sexy names like, Telefonica, and Santander. Lots of banking. Offers hedge against domestic Spain slowdown.

Electric Cars? Hello? GM did that already – Shai Agassi was a top guy at SAP and then went on to found ‘Better Place’ an electric car company that doesn’t make electric cars. Wants to create a system where people buy travel by the kilometer. I’ll just stick with my Jeep. Chrysler says it has a lifetime warranty!

Blah, Blah, Flu – No we’re not ready. SARS, I mean, Pig Flu will kill us all. Also, when people are sick or dead, they don’t contribute much to the economy, so the Pig Flu will also cost us money. Pandemic affecting 15-35% would cost us $71 billion – chump change for US!

We’re not happy with your performance, Wah! - Bank of America shareholders are upset with Ken Lewis and the BofA management team. Stock price has fallen by ¾ since fall. Now they are pushing for more shareholder rights, but it’s hard to say if that will help at all. Europe, which has more rights than here, is just as bad as everywhere else and banks are increasingly complex for shareholders to monitor in the first place.

Governor Spitzer returns (seriously) - John Meriwether of Long Term Capital Management, Alan Schwartz formerly of Bear Stearns, John Thain of Merill Lynch, and Dick Fuld are getting another chance at different firms. While these dudes have useful experience (in destroying financial institutions), there is also the risk of them bringing their problems with them. Lawsuits, reputation, and herpes are examples given.

Empty Coffins - So there’s a default pandemic and it’s killing debt holders. This makes refinancing for firms in trouble or those with acquisition goals harder to find. Top tier bonds are still yielding positive returns, but the danger of high profile defaults (GM) could thrash that too.

I used to love ALF – what have they done? - The Fed has a Term Asset Securities Loan Facility (TALF) that is supposed to lend money, a whole trillion, to banks that are capitalized by consumer, student, or small business loans. The loans have limited downside for borrowers, but all the upside of free money. However, the politics of lending process are scaring people off. Through the first few months, almost no money is going out yet, but interest is growing.

New Bids on the Block (Can’t top that one) - There’s two new debt services out there: Prosper and DebtX. Prosper matches those with money to lend to those who need it. They call it peer-to-peer lending. Sounds like internet loan sharking to me. DebtX is a company that gets a hold of distressed, large loans and resells them. Now you have the ability to buy your own toxic assets instead of letting your fund manager do it for you.

The Economist claims foreign currency trade used to be simple - Pricks. But now that everything is mucked up the flow of currency and the returns between developed countries are not rewarding enough to attract speculative interests into currency, so they are looking to the dollar. The dollar is also more attractive because the US government appears to be committed to trying to save the currency. Ironic since printing money and dropping it from planes, usually depreciates the currency but all the effort is making people look back to the US for now.

Famous last words: Assuming there’s no risk - The Fed is turning a profit? The loans to banks and other financial services firms are actually bringing in interest income. Assuming there’s no risk.

PM of Ukraine, is that you? - Milan’s council bet a bunch of money on derivatives and now it’s gone. Some wonder if Milan was fooled by scandalous schemers or just plain stupid. This is also the tip of the iceberg as municipality’s investment losses are beginning to be uncovered all around the world.

IMF: new model, original parts - The IMF wants to triple in size to help with the financial crisis. However what’s better: Keynesian or Austrian? Do the IMF policies of spend to stimulate work? Some still think their actions in the Asian financial crisis hurt more than helped. Also, with all the new resources, should the IMF change their policy? Maybe Cap and Trade is the solution.

Pentagon military policy: it works with my nephew’s Legos – instead of basing our soldiers on foreign bases, we’ll build really cool Lego rafts. Because our soldiers would love to sit around in the middle of the ocean on a floating plastic shell. Sign me up (again).

Who doesn’t smile in their yearbook? – Some doctors believe that the degree of your smile can be associated with your long term prospects for a happy marriage.

But what if it spreads the pig flu? – A crazy scientist named Henk is spraying concrete with bacteria and says that it makes the concrete last longer.

Finally! There is a dancing parrot. He really dances. It’s awesome.

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