Economist May 23rd

Starting a marketing meeting so I might not be free again until late. Here's some of the magazine to get you started on prep for tomorrow:

Indian Elections – Congress Party wins 206 seats of the 545 Parliament. Manmohan Singh is the leader. Symbol is an open hand. Trouble to deal with fuel and fertilizer subsidies and bureaucratic ‘leakage’ (corruption).

Decoupling? Is that what the kids call it these days? – Notion that emerging economies wouldn’t be affected by American troubles because they’re solid on their own – proved false as depression spread worldwide, but some suggest that strong emerging economies (China and Brazil) are decoupled from US as they will recover faster than us.

Hold on? Cap and Trade is not a good idea? – Economist can’t make up their mind. Now cap-and-trade is too complex. Better idea is carbon tax. Coming next week: Economist supports Gordon Brown.

Ugly End in Sri Lanka – Tamil Tigers are done. Leader Velupillai Prabhakaran is dead. Sri Lanka needs to take action to avoid continued civilian casualties and establish firm assurances that conflict is over.

Get on the Colonialism bandwagon! – China and Arabs are buying 20 million hectares of farmland for $20-$30 billion. Government to government deals are usually shady and what happens when governments change hands? 2015: The China-Congo War.

Gordon Brown: He whose name cannot be spoken – British Parliament is a mess. Time to clean house and kick out the crooked pols, but problem is not constitutional and overreaction would damage what has been an historically solid parliament.

Arnold gets a few more gray hairs – California budget proposal doesn’t pass. Layoffs in prisons (as in we’ll release 38,000 prisoners) and cut funding for Medi-Cal (health coverage for 225,000 children). Selling off property, like San Quentin prison.

New HUD at the table – Shaun Donovan is new secretary of HUD – Housing and Urban Development. 2.2 million foreclosures last year – April 2009: 1 in every 374.

Lindsay Lohan disease? - bats suffering from ‘white-nose syndrome’ – infection and powdery pattern on face. 500,000 bats have died. 2.4 million lbs of bugs will not be eaten.

Colorado on the rebound (kind of) – construction of new buildings has tanked, but unemployment below national average and house prices dropped only 4% as opposed to average 18.5.

Go read The Onion – even The Economist writers read it. Satire newspaper that is the only thing making fun of Obama: Black Man Given Nation’s Worst Job. Obama’s First 100 Days

Colom Cleansing, A YouTube Sensation – In a posthumously posted YouTube video, murder victim Rodrigo Rosenberg (a Harvard-educated lawyer) says Guatemalan President Álvaro Colom killed him because he knew of corruption in the partly state-owned bank – the Banrural. Question of the day: Is Guatemala a failed, lawless state?

Smacking Seriousness into the Brazilian Court Jester – Brazil’s Supreme Federal Tribunal (Supreme Court) is a bit of a joke. The court is overburdened by rules and provisions like “the limitless right to appeal against any court ruling until the case reaches the 11 wise men and women.” Brazil has more lawsuits per person than any Latin American country except Costa Rica.

I need a Vacation … from Taxes – The OECD, an economic group of rich countries, ruled to keep the Cayman Islands (a British colony) on its list of uncooperative tax havens. Additionally, Obama’s budget proposes to close loopholes that allow American companies to use offshore centers to avoid taxes (a Stop Tax Haven Abuse bill).

Welcome to the Jungle – Shushufindi 61, hidden away in the Ecuadorean jungle, is a dumpster for large oil companies, such as Chevron. Shushufindi is one of several hundred “dumpsters” that are at the center of a long-running legal wrangle between Ecuadorean and American activists and Chevron

The Srilankan Tigers are out of the bag - Srilanka declared victory over the ruthless Liberation Tigers of Tamil Eelam (LTTE). Sinhalese ethnic majority are happy but the Tamil minority continue to feel stranded by government and question the post-war reconciliation. International pressure for war-crime being called for by European Union.

Myanmar’s Opposition is helpless - Aung San Suu Kyi, Myanmar’s opposition leader of National League for Democracy (NLD) has been in restrictive forms of detention for last couple of decades. She is seen as a threat by “Junta” for next year’s election because of her popularity. General’s of Junta party are wicked and have isolated the country from global markets

Tag team battle for President election in Indonesia - Susilo Bambang Yudhoyono, the incumbent president, is up against both his predecessor, Megawati Sukarnoputri, and his deputy, Jusuf Kalla. Megawati & Kalla’s rating are poor and are not seen as a big threat. Yudhoyono’s rating is 70% and is rumored to have a strong pimp slap.

My new favorite Economist picture on page 45 - North Korea has few connections to the outside world and Kim Jong continues to break them. Recently broke industrial agreement with South Korea. Kim has asked United Nations Security Council to say sorry because they blasted him for testing a long-range rocket (latest updates say that another missile has been tested last week) Core Competency – Extortion through threats.

Nevermind. New favorite Economist picture on 46! - The opposition Democratic Progressive Party (DPP) wants independence from China and can only afford to protest on street. They claim government is secretly negotiating with China. Nationalist Party and President Ma have eased tension against China and signed agreements for liberalization

China Television Center drama - State broadcaster, China Central Television (CCTV) getting an extravagant complex. A fire (due to Firecrackers) gutted it three months ago which led to recent “firing” of broadcaster’s director, Zhao Huayong. The big Trouser structure (looks like pants) is scheduled for opening on day of the celebrations to mark communist China’s 60th birthday on October 1st.

China in “cruise control” of global economy - Chinese think their country is having a rather good crisis. E.g. President Hu Jintao’s importance at G-20 in April, China was center of all attention. Timothy Geithner, America’s treasury secretary, pays tribute in Beijing next month. A “G2” being proposed, where America and China get together to tackle the financial crisis, climate change and more (don’t we already have enough G’s doing nothing?)

Joe Biden to save the day - Almost all of the progress made in the Balkans since the mid 1990s has been erased by the global recession. Political tensions are building, especially in Bosnia, and the U.S., led by VP Joe Biden, feels obligated to help since they don’t believe the EU is capable of flexing enough muscle. However, the Balkan countries all want to be part of the EU, so EU involvement makes a whole lot more sense.

Does Chuck Norris make Dalia Grybauskaite jokes? - Politics in Lithuania are corrupt. Luckily newly elected President Dalia Grybauskaite is one tough cookie that has a black belt. I’m telling you, you can’t knock her over… they call her “The Wall”.

Gute Nachricht oder schlechte Nachricht zuerst? After bottoming out this winter, the Euro Zone appears to be slowly climbing out of recession. The country hit hardest was uber-productive and export-dependent Germany, although Spain has experienced more severe unemployment due to the temporary nature of many work contracts.

Turks might want to cut back on ‘crevice searches’ - Kurdish minors in Turkey are being abused and face prosecution for their involvement in illegal street protests in support of the separatist Kurdistan Workers’ Party. Turkish authorities have promised to address these concerns, but most are skeptical about their efforts, equating the promises to O.J. Simpson’s vow to find the real killer.

German Comedians - May 23rd is the 60th anniversary of the Federal Republic of Germany. There is an aside about the PrimeTime Theatre in Berlin that opens and closes the article and highlights the open-mindedness of the new Germany, something that 60 years ago didn’t expand beyond blond hair and blue eyes. Germany is now a diverse country that is trying hard to close the equality gaps of the east and west, all while managing the worst economic climate of the Federal Republic’s existence.

Ireland - After an initial defeat, a second Irish referendum on the Lisbon treaty will be held soon, and a Yes vote is expected this time around. The No vote is being campaigned by the Libertas party and its founder, Declan Ganley, who want more Europe power and less individual country sovereignty.

The Most Brightly Polished Turd Award Goes To… Figuring out which banks are best is like picking the prettiest war torn village, but things are getting better. As the financial strength of banks improve they are likely to repay govt aid $$$ (most likely to be gov’t free soon are Goldman, Morgan and JPMorgan). Economists pick for best banks: In the US the award goes to JP Morgan and in Europe to Credit Suisse. Interesting side note: Rabobank (Co-op in Netherlands) has the only AAA rating (by S&P) among banks.

Chicken or the Egg of Bull and Bear Markets - Bull markets are circular. One example is rising asset prices lead to looser lending which leads to increased demand for assets which leads to higher asset prices…yada yada yada. The opposite is true in bear markets…fire sales lead to dropping asset prices…yada yada. Forces that prolonged the bull market through the mid 2000s: Share buybacks, rising stock prices leading to companies not having to make contributions to pension funds, cities competing for tax revenue offering tax advantages for headquartering there. The opposite effects of these forces are at work in the bear market and it is difficult to shift momentum.

Japan is still a negative Nancy for now - Perhaps Japan’s GDP figures include so much negativity that the future could only look brighter. Japan’s latest economic data was the worst since WW2. Markets shrugged it off as there are signs of recovery in consumer confidence, industrial production and increased fiscal stimulus from govt. Weak exports really hurt Japan.

Take your late fees and shove em - Credit card companies are having a rough time. With high unemployment, write-offs for uncollectible debt is are expected to hit $94b this year, up from $61b last year. Additionally, Congress has voted through a bill that restricts their freedom to screw people over.

Mo money mo problems - Talks of single currency in the Persian Gulf region has been slowed as the UAE decided to pull out. The UAE gave no reasoning for this but it is likely due to plans of the central bank to be located in Saudi. Don’t expect a single currency in the region anytime soon, but overall they have been making progress toward this goal.

Brazilian’s export more than just bikini wax - Brazilian credit rating agency, SR Rating, will be issuing an AA rating on U.S. debt citing the huge debt America has incurred recently as a worry for the Treasury. It said that it is reserving AAA ratings for countries like Norway who sit upon lots of oil and have few enemies.

The Economist - April 11th

Here's the summary of The Economist - cover to cover...

Obama wants a nuclear free world – acknowledges difficulty. Russia and Britain ready to reduce – China and France silent. North Korea launched a missile over Japan

US wants Turkey in EU – Obama visits Turkey –Muslim country with functioning secular democracy. EU, especially Sarkozy say no. Turk PM Recep Erdogan helping diplomacy in Mid East. EU: “Don’t tell us what to do.”

G20 boosts IMF – International Monetary Fund gets $750 billion. $250 billion for ‘Special Drawing Rights’ a quasi-international currency. IMF can help but won’t be a bank and needs new rules.

Water Problems – 2 billion more people by 2025. They need lots of food – farmers wasting lots of water. Set up usage rights, cap and trade system, to allocate water usage for most efficient crop per area.

Accounting rules – banks complain about accounting standards that force them to report losses. Wah. FASB and IASB should promote transparency, not be a tool for new regulation.

Kim Jong Il is back! – Launched a ‘communications’ satellite. Probably cover for Taepodong-2 missile. Bigger problem is disagreement over response – China w/ N. Korea, S. Korea wants to avoid confrontation and Japan is pissed. US envoy Bosworth wants diplomacy and engagement.

Obama polarizing? – widest gap in approval (D – 88%; R – 27%) Most Americans like that world likes Obama, but others afraid that we’re being too nice – citing lack of international support for Afghan war.

Pentagon budget: More $$$, less sexy – Defense Sec Robert Gates shifting $$$ from F-22 (think Mercedes) to F-35 (Toyota). Total budget up 4% @ $543 bil. More $$$ for ‘small war’ stuff, like UAVs.

Fast and Furious: Oakland, CA –violence up. Kids racing cars. Respect killings: wrong look = gunfight.

Little House on the Prairie: St. Louis, MO – There are lots of parks in St. Louis. Hooray.
Volunteering up – AmeriCorps gets $5.7 billion and triples size to 250k. AARP: people prefer time over $.

Choo-Choo Trains - $9.3 billion for trains. Our trains are slow. High-Speed rail could be cool.

Gay Marriage– Iowa and Vermont ok same-sex marriage. Vermont first by legislature instead of courts.

Lessons from Virginia Tech – gun control debate inconclusive. Lesson is that it’s impossible to prepare.

Hello Cuba – Summit of the Americas in Trinidad and Tobago – 34 leaders, but biggest question is Obama and lifting embargo on Cuba.

Let’s go to Prison: Fujimori in Peru – President from 1990 – 2000. Secret execution squads are bad.

Venezuela Politics – Hugo Chavez doesn’t like competition. Most opposition jailed.
Chagas Plague – ‘kissing bugs’ infect 18m people. Prevention is key since drugs only work in early stages.

Sri Lanka War – Tamil Tigers vs. govn’t. Tigers are almost defeated. Sri Lanka Pres Rajapaksa will have to be careful to end the war on good terms and not exacerbate humanitarian crisis.

Trouble in Pakistan – President Asif Zadari admits internal violence threatening ‘survival’ of country. North West Frontier Province a US concern with its connections to Taliban and al-Qaeda.

Trouble in Afghanistan too – latest effort for security is Afghan Public Protection Program (AP3) – modeled after Iraq militias. Replaces Afghan National Auxiliary Police (ANAP) – improvements are AP3 units have greater US support and are for local defense not law enforcement.

Unemployment in China – six million new students and not enough jobs. China concerned about student unrest. Loans for entrepreneurs and breaks for companies that hire new grads.
China at the G20 – President Hu Jintao gets high marks from home – prominent position at summit - $2 trillion in foreign currency reserves gave him power to suggest use of Special Drawing Rights as replacement to dollar. Pocket change: $40bil loan to IMF.

Asia is a Banyan Tree – Asia is tough to define, so how about a botanical metaphor? Asia is growing and we should pay attention to it. The Banyan represents Asia’s values of learning, justice, and commerce.

Rwanda’s Future – Hutus and Tutsis living as neighbors. Anti-Genocide Law outlaws enthnicity – everyone is ‘Rwandan.’ President Kagame accused of using law as cover to silence opposition.

Nigeria’s President’s Health – President Umaru Tar’Adua has a kidney condition. Speculation that his death would disrupt Nigerian economic growth and bring a return to political instability.

Sudan isn’t Stable – Problems beyond Darfur – soldiers not getting paid – risk that country will fragment.

Iranian Dissidents in Iraq – The People’s Mujahedeen of Iran (PMOI) fought against Iran and now live in a camp in N. Iraq. Iraqis don’t want them and it’s not clear how well Iran would treat them.

Banking in Iraq – Iraq is getting electronic clearing systems to allow for modern banking. Can’t find work? 7,000 new job openings for qualified finance professionals at Rafidain Bank.

Italian Earthquakes – Town of L’Aquila destroyed. Berlusconi’s promise to rebuild towns nearby is reminiscent of earlier earthquake recoveries that were marred by corruption.

Turkey in Headlines – Obama addressed parliament. Kissed PM Erdogan. US will need Turk help as it leaves Iraq. Didn’t use the word ‘genocide’ about the Ottoman Armenian ‘catastrophe.’
French Toast with Freedom Fries – France and US friends – French rejoin military NATO yet little support on Afghanistan or Turkey

Turkey, hold the Danish – Denmark PM Rasmussen leading NATO – Turkey not happy because of history with offensive Muslim cartoons in Danish newspapers.

No Hotels on Baltic Avenue – Lithuania, Estonia, and Latvia need money ($10 billion for Latvia). Hurting their chances to join the Euro. Countries solid – little protest.

Spanish Government Changes – PM Zapatero replaces finance minister and brings in Elena Salgado.

EU Leadership – 6 month rotating presidency, currently with Czech Mirek Topolanek – who doesn’t like US policy. EU might be better off with a full-time presidency – Tony Blair strong candidate.

Local Govn’t Finances – British cities get lots of money from central government – federal money dropping; tax revenue dropping – forcing more responsibility on local govn’t to make decisions.

Hometown Outsourcing – Cities considering privatized services, like libraries and community centers. People not happy – risks of poor service or failure that end up costing more in long run.

Nyudies and Hoes – people in London like gardening. Nyudie – New yuppie digger

Old School Catholics – New Archbishop Vincent Nichols - faces critics and politics – more conservative

Britain makes movies? – 60’s were fun, 70’s depressing – people are depressed now and they prefer the 70’s. The Boat that Rocked – 60’s radio station; The Damned United – 70’s football (soccer) manager

Stock up on Aquafina – Lots of water around, but world doesn’t use it right. 9% of fresh water withdrawn for use. Need improvements on water usage governance and corporate commitments.

UN at Glacier Speed – UN taking a long time for climate change legislation even with new US govn’t support. Prince Charles wears suits in the jungle.

Activist Investors Decline – single voice large shareholders (hedge funds, rich guys) are not as powerful, so companies can manage their own business. Italcementi isn’t under pressure. But Govn’t might take new role of interfering with decisions.

GM PUMA – GM developed the PUMA (Personal Urban Mobility and Accessibility) (where’s the noun?) Built off of Segway technology. No one called the Scooter Store.

Spain: Now Accepting US $$$ - Spain marketing for US contracts within $317 billion stimulus $$$.

Japan on (oil) shopping spree – strong yen lets Japan buy its own foreign energy projects – target 40%

What’s on NBC? – apparently nothing important. Americans watch 151 hours of TV a month, most ever, but broadcast network share dropped considerably relative to cable and premium (HBO and Skinimax)

Newspaper for breakfast – First Flavor makes edible ads. Thinks people would eat their newspaper.

Europe’s Big Plane – Airbus A400M, a transport, is over budget and late. Ruined by bureaucratic sourcing decisions and overly ambitious technical goals. Stop-gap solution is buy/lease Boeing aircraft

Kikkoman is Soy Sauce – Yuzaburo Mogi turned Kikkoman soy sauce into global brand through attracting the ‘non-japanese’ market as an all-purpose seasoning, not specialty.

IMF: Next on Game Show Network – The IMF gives out lots of money. Little consistency in how programs are managed.

SDR: Special Drawing Rights – A currency that’s not a currency. Unit of account for IMF that includes yen, dollars, pounds, and euros. It’s confusing and Americans don’t like it.
Stock Markets go up and down – There are lots of contradictory statistics that ruin the S&P rally of 21%. There’s less panic (the Vix) but fundamentals are still poor – profit outlooks and commercial real estate.

G20: All Talk – G20 just renamed a bunch of organizations and didn’t make many structural changes to the world’s financial system.

ECAS is/are important – Export Credit Agencies help fund global trade by providing liquidity support.

Fed Reserve: Oversight Please – Congress is thinking about expanding oversight of the Fed Reserve

India Bank of America? – India has restrictions on foreign banks that have allowed the Reserve Bank of India (RBI) to thrive. Foreign banks might soon compete as India is underrepresented by banks.

Japan Banks Invest in their Customers – This is all good until their customers tank and those customers depend on their banks, which now suck because their customers tanked.

Deal or No Deal? – When you’re under stress, you make riskier decisions. Thanks Rutgers!

Smart Guy has an Idea – Mr. Rajan is at University of Chicago and used to work for IMF. Comprehensive, Contingent, and Cost-effective regulations would be nice. Don’t plan when you’re panicked. If you’re really big, then you should have a back-up bankruptcy plan.

Malaria is Bad – Kill off the old mosquitoes without scaring the young ones, that way they don’t develop evolutionary resistance to insecticides.

Biofuels are Bad too – It’s usually worse to make biofuels because of nitrous oxide release.
What is your brain doing right now? – Some smart people are mapping how we think using gene ‘food coloring’ for nerve cells.

Ice is melting, and? – There are some new books about climate change. Lord Giddens thinks that we shouldn’t be so depressed about it so that we’re inspired to change for good reasons as opposed to scary ones. Sir Stern says it’s cheaper to fix the problem than to deal with the consequences. Mr. MacKay is a physicist who calculates energy requirements and wouldn’t believe in Santa Clause.

There are some other good books about Islam, Liberia, Ants, and the sister of William Wordsworth.

Helen Levitt’s photographs of New York are great (really) and you should google them.