Gleanings II ~ 499 ~ Compliments of Nick Rost van Tonningen Posted by John on February 24, 2013

The G-20 Finance Ministers’ meeting in Moscow last weekend essentially told Japan it could keep doing what it had been doing but to be less public about it. And, more generally speaking,  it implicitly acknowledged that ‘competitive devaluations’ are now the order of the day but that officials should quit talking about “currency wars”. In its aftermath two things were worthy of note. IMF Managing Director Christine Laggard declared that there were no currency wars (thereby confirming that there are currency wars), & the Governor of the Bank of New Zealand, in a speech on February 20^th, said he deemed the New Zealand dollar overvalued (thereby rationalizing a need to ‘drive it down’), thereby joining his South Korean & Norwegian counterparts who recently said similar things.

In 1947 3% of all retiring members of Congress joined the ranks of paid lobbyists; today half of all ex-Senators & 42% of all retiring members of the House of Representatives do so – why, if Americans do not allow human incest, do they tolerate industrial-political incest?

Fareed Zakaria on his Sunday morning program on CNN had an interview with former Australian Prime Minister John Howard who, over a decade ago, prompted by the 1996 Port Arthur massacre in which 35 people were killed & 21 more injured, forced the states (since his government had no jurisdiction to enact gun control laws) to sign on to a National Firearms Agreement that banned all semi-automatic rifles as well as all semi-automatic & pump action shotguns, and seriously tightened  gun ownership & acquisition regulations. And if the statistics they trotted out about the decline since then in killings & suicides involving guns are anywhere near the truth, they wholly invalidate the NRA’s claims that restrictions on gun ownership & acquisition don’t have any impact on such killings & suicides (if my memory serves me right, but I am not counting on that & neither should you, they talked about a 59% decline in suicides by gun). But unfortunately he then featured Larry Summers on what is needed to get the economy growing again, he being someone who deserves no credibility whatsoever on this or any other subject. First ‘he was run out of town on a rail’ from the Harvard University President’s office, then was a key player in the clique in the Second Clinton Administration that prompted Congress to kill off Glass-Steagall (that, since the 30’s had separated commercial- from investment banking) with the Gramm-Leach-Bliley Act, thereby setting the stage for, & spawning, the 2007 financial crisis, next spent a few years amassing a small fortune in the resultant free-for-all financial sector &, finally, returned to help lead Obama, who doesn’t seem to know economics from first base, up the economic garden path during his first ter

Deng Fei is a social activist in China’s cyberspace, well-known for launching periodic online campaigns, usually to help children. And when everyone was home for the Chinese New Year holidays, he launched another, but different, one asking “How is the river in your hometown?” & suggesting everyone home for the holidays should take a picture of a body of water there & upload it to Sina Weibo, China’s Twitter counterpart. Despite interference from the censors, it quickly went viral with thousands upon thousands of people doing so, and most of what they showed wasn’t pretty. But, more importantly, this threw the spot light on a related issue, the evidence of which couldn’t be uploaded so easily, if at all, to Weibo, namely that it’s not just the surface water that’s being polluted but that huge amounts of polluted waste water are being pumped underground to circumvent whatever (weak?) regulations may be in place that require it to be dealt with on the surface. This quickly became such an issue in its own right that the China Daily, the official mouthpiece of the Communist Party felt compelled post the following commentary on Weibo : “Many regions have reported smog, and now there are tragical reports of underground water pollution. Dumping waste water underground is an evil act; is it any different from killing future generations? We may be keeping silent for our own sake, and unable to say, for our children’s and grandchildren’s sake : Let the skies be clear again, let our earth and water be pure once more, tighten regulations, do not delay, for there is no time to waste; make great changes now and there will be hope for the future. We can’t talk about a beautiful China without doing something to make China beautiful; we look forward to a wave of environmentalist action. Good night.” Since then there have been two interesting developments. The government of Weifang City, Shandong Province, has offered a 100,000 yuan ((US$16,000) reward (i.e. almost twice the average annual wage) for the first whistleblower who can substantiate “the widely circulated rumours of chemical plants and paper mills pumping polluted waste water underground.” And the Straits Times, an English-language newspaper published in Singapore,  reported on its front page that an unnamed official from the China Geological Survey had recently told an international groundwater conference that the groundwater in 90% of Chinese cities is polluted & in 60% of them “severely so” (which in a way is ‘old news’ since last September already the China Business Times reported that, according to China’s Ministry of Environmental Protection, & that of Lands and Resources, 90% of China’s groundwater is contaminated with poisonous pollutants, and that the quality of 40% thereof is getting even worse). It may well be that for future generations of Chinese the unfunded environmental cost of the past three decades of headlong, mindless economic growth with no regard for its long-term environmental consequences will become an albatross around their necks not unlike that created for future generations of North Americans by the ill-advised & underfunded, untrammeled expansion of social welfare-, & pension-, entitlements in the past four, five decades. And before Canadians in general, & Albertans in particular, get too snooty about the shortsightedness of the Chinese government, they might want to take note of the fact it has recently come to light that Canada’s Minister of the (Anti?) Environment was, in an internal memo from his Deputy Minister dated June 19^th, 2012, apprised of the growing evidence that waste water from the Alberta oilsands’ tailing ponds is finding its way into the Province’s groundwater.

The Epoch Times is the offshore voice of the Falun Gong &, as such, anything but unbiased on Chinese political matters. But it can be a useful source of factual information on China. Thus in its latest issue it reported that ‘long-term industrial pollution’ has resulted in an accumulation of agricultural chemicals, heavy metals & non-biodegradable pollutants in the soils of tens-, if not hundreds-, of hectares of farm land in the Pearl-, & Yangtze-, River Deltas, and the Bohai Economic Rim’ with presumably potentially serious public health implications (the Bohai Sea is the very Northern-most part of the East China Sea the Bohai Economic Rim runs East from Beijing & Tianjin & the surrounding area to the North Korean border). And its source for this was Time Weekly, a Guangzhou-based five year-old weekly newspaper that ‘partners’ with the NYT, which had in turn had based its story on documents leaked on the Internet from a nationwide investigation into soil pollution by the Ministries of Environmental Protection & of Land and Resources; launched in 2006 that had used 20,000 people to take & analyze soil samples from all over the country, cost 1BN yuan (US$150MM, give or take), & taken three years to complete.

Business Week has a fascinating article about a hacking source sleuth taking advantage of a slip-up by a Chinese (officially-sponsored?) hacker to unmask him to the point where he not only could name him & identify where he worked (a university) but also was able to show a picture of him & his wife.

The end of an era? Rabobank has sold 90.1% of the shares in Rotterdam-based Robeco to Orix Corp., a Japanese financial services group. This is likely the oldest mutual fund management group in existence. It was founded in 1929 by a group of Rotterdam businessmen &, after a shaky start (it lost half its initial ƒ2MM stake in the first three years of its life) it flourished in the post-WW II era, in part because much of its assets had been invested in the US before the war.  Until fairly recently scuttlebutt had it that Australia’s Macquarie had the inside track with a price in the 3BN Euro (US$3.96BN) range; so both Orix coming out on top, & the price it paid (1.9BN Euros/US$2.54BN) for 90.1%, were a bit of a surprise. And with Robeco having AUM of 190BN Euros, Orix did get a good deal, unless there was a reason for the sudden downsizing of its value (early in my career I called a couple of times on the Robeco people at its then Rotterdam headquarters & while at Alberta Treasury in the 80’s its CEO made a couple visits there and, being almost stone deaf, he always brought with him his own sound system with microphones wired together – this was in the olden, pre-wireless days – so that there was a microphone in front of every person at the meeting, and he could hear what was going on).

The CW has it that Western civilization is doomed to be overwhelmed in time by the Muslim East because of the latter’s higher fertility rate. But Nicholas Eberstadt, a demographer at the American Enterprise Institute begs to differ. For in a paper entitled The Fertility Decline in the Muslim World : A Veritable Sea Change, Still Commonly Unnoticed he documents how in 49 Muslim countries the fertility rate fell off sharply between 1975-80 & 2005-10, in 22 of them by 50%, or more, in nine (Albania, Algeria, Bangladesh, Kuwait, Libya, Oman, Qatar, Tunisia & UAE) by 60%, or more, and in Iran by 70% (to the point it is now below the 2.1 ‘replacement rate). But he then strays off into, possibly ideology-driven, pontificating about the effect this will have on population growth during the foreseeable future (while as a demographer he should know better than most that demographic trends change at a snail’s pace & have long lead times). And fails to mention these declines from what were off exceedingly high initial levels).

GLEANINGS II – 499

Thursday February 21^st, 2013

THE GOP’S NASTY NEWCOMER (NYT, Frank Bruni)

• Ted Cruz, Texas’ Hispanic Republican freshman Senator, has been in the van of his party’s effort to derail Chuck Hagel’s nomination as Obama’s second term SecDef. In just six weeks on Capitol Hill he has gained a reputation as an ornery blowhard who will upbraid other lawmakers who, while they may, or may not, deserve respect, at least deserve a modicum of courtesy. During the grilling of ex-Senator Hagel by the Senate Defense Committee he was so offensive in insinuating Hagel had been corrupted by foreign influences, that Sen. McCain, who earlier himself had criticized Hagel, told him to cool it. Rather than being an asset to the Republican Party, given his hardscrabble background, he is a prime example of the nastiness that now plagues the Republican Party & holds it back, due to the Tea Party’s intransigence & conservatism, complete with the whiff of meanness & the undue showmanship, that he rode to power in November. The party is now so dominated by belligerence & misplaced morality that it cannot play a credible role in a functioning two-party system. According to Sen. Lindsey Graham (R.-SC), condemning him with faint praise, “He’s got unlimited potential … But the one thing I will say to any new senator : you will be respected if you can throw a punch, but also have to prove you can do a deal.” In contrast to Cruz, Republican leaders like Sen. Rubio & Rep. Cantor are starting to grasp that it’s helpful to be seen as a constructive force operating with a generosity of spirit, rather than with spite & venality.

Cruz is 41, a former Assistant Deputy Attorney-General &Texas’ Solicitor-General (the youngest in the US),he now is Vice Chairman of the National Republican Senatorial Committee.

NEXT OIL BOOM UNDER CALIFORNIA FARM LAND? (NBCNews, Jane Wells)

• The federal government believes the Monterey Shale underlying more than 1,750 sq. mi. of Central & Southern California may contain 15.4 bbls. of oil, far more than the Bakken. And at the quarterly auctions of mineral rights on federal lands oil companies in ten years have bid up the price of land there from US$2/acre to over US$500.
  The industry had better get its fracking shit together if this is to fly in California.

THE GUN DEBATE IS CHANGING THE DEMOCRATIC PARTY (NBCNews, M. Murray)

• In the special congressional primary to fill Jesse Jackson Jr’s vacant seat, Cook County Chief Administrative Officer Robin Kelly has become the front runner with ads that say she “has spent her career fighting to get deadly weapons off our streets … In Congress, Kelly will keep taking on the NRA, fighting to ban assault weapons and outlaw high capacity ammunition clips.” And a TV ad by Independence USA, a super-PAC funded by New York Mayor Bloomberg, says “In the race to replace Jessie Jackson, watch out for Debbie Halverson (a former member of the House of Representatives & the only white in the primary). When she was in Congress before, Halverson got an ‘A’ from the NRA … when it comes to preventing gun violence, she gets an ‘F’.”

It’s not her promises that makes this interesting, for political campaign promises are worthless, but the fact she is willing to take on the NRA in her campaign & that it appears not to be fighting back. But Chicago is not the US, it is the country’s murder capital & recently witnessed some particularly headline-grabbing murders of innocent, young, female bystanders.

YOUNG AMERICANS : NO HOUSE, NO CAR, LESS DEBT (NBCNews, John W. Schoen)

• The Pew Research Center on February 21^st released a survey showing that Americans under age 35 have much less debt than before the 2008 meltdown (the one exception being student loan debt). They are putting off ‘big ticket’ purchases like cars & houses that traditionally have been the main reason for taking on debt. They go to school longer (which puts them in the job market at a later age). They are marrying & having kids later. And when they want to borrow, many have a hard time getting a loan since they have no credit history. Last but not least, the housing bust, & subsequent foreclosures, have make them gun-shy where buying a house is concerned.

While their student loan burden also prevents them from saving up for a down payment on a house, this is all part of a sea change in popular attitudes that is making a break from the credit-fueled, instant gratification ,‘and-and’ spending mindset of the Boomer Generation.

CORN SHORTAGE FUELS ETHANOL PLANT COUNTDOWN (CP)

• The 2012 drought has made corn so scarce (in places?) that, according to the Renewable Fuels Association, 20 of the US’ 211 ethanol plants have ceased production over the past year, five of them last month alone. The 770,000 bbld. production rate in late January was the smallest in over two years. While nothing to get concerned about yet, since 191 of them are still working & their corn stock piles are large, what if the 2013 corn crop were to be small again? In 2012 more acres were planted to corn but 13% less corn harvested.

The economics of ethanol production are such that plants must be located near their source of raw material; so plant closures are heavily influenced by local farm conditions.

KERRY SPEAKS TO NETANYAHU, ABBAS ABOUT PEACE (China Daily)

• On Saturday February 2^nd, the day after taking over from Hilary Clinton, John Kerry spoke on the phone to Israeli President Shimon Peres (whose advise, despite his post being largely ceremonial, is still sought after as a former Prime Minister & leader of the Labor Party & a  long-time dove). He told Kerry ”the results of the recent election could open a window for renewed peace talks.” This seemed to jive with Netanyahu saying that same day that renewing talks with Abbas would be a top priority for his new government & that “The next government I will form will be committed to peace. I call on Abu Mazen (Abbas) to return to the negotiating table. Every day that passes without us talking to jointly find a way to create peace for our peoples is a day wasted.” The next day Kerry talked on the phone with both Netanyahu & Abbas, assuring the former of “his personal commitment, and that of President, to support Israel’s security and pursue a lasting peace between Israelis and Palestinians”, & the latter of his determination to facilitate resumption of the peace talks.

Netanyahu’s progress in coalition-building is moving slowly. So far he has only officially signed up Tzipi Livni & her six seats by promising her the Minister of Justice portfolio and one more ministerial post (prompting tension among her followers as to who would get it); in addition she will resume the role of chief negotiator with the Palestinians which she had when Foreign Minister under Ehud Olmert (which is interesting in light of Netanyahu’s above-noted comments). While his critics call this a ‘union of two failed politicians’ because both fared badly in the election & say he will break his signed agreement with her at the drop of a hat if a better offer were to come along, the Jewish Home Party says Netanyahu’s deal with her alienates it since “a government with one of the major supporters of the Gaza disengagement, who is in favor of dividing Jerusalem, is not a right wing government” (conveniently overlooking that Yair Lapid who heads the Yesh Atid Party with which it has made a deal not to join any coalition that doesn’t include the other, also supported Gaza disengagement in his day days as a TV news anchor), with one of its leading MKs-to-be calling on “all the heads of regional councils in Judea & Samaria to prevent putting talking with the Palestinians in Livni’s hands and prevent the forming a left-wing government” (which may be exactly where Netanyahu may be heading, for it may prove easier to create a viable, moderately left-of-centre-, rather than a a right-of-centre-, coalition, provided he can bring the rump of his Likud following with him & Yair Lapid is willing to break his solidarity agreement with Naftali Bennett, the leader of the Jewish Home Party. And the plot is thickening. For on February 20 a couple of Jewish Home MK-elects complained publicly that Netanyahu isn’t talking to-, & Naftali Bennett himself called on him to start conducting coalition negotiations with-, his party (despite mounting pressures within it to shun Netanyahu since he broke a campaign pledge not to let Tzipi Livni anywhere near the negotiations with the Palestinians). Meanwhile Likud officials took to the airwaves on February 21^st to assert that Bennett has no option but to join the coalition because his voters wouldn’t forgive him if Netanyahu formed a government without him and said “We have talked to the bigger parties first … We have met with (Labor’s) Shelley Yacimovich and [Yesh Atid’s] Yair Lapid twice,  this is where the main effort lies … And because we don’t want a narrow government, we have to bring in smaller parties as well, like Bayit Yehudi (Jewish Home) and Shas”, seemingly more evidence that the eventual outcome may be a coalition in which the right of centre voices will be less dominant than in the last one (although where Netanyahu involved predicting the future is a hazardous undertaking).     

KERRY HEADING FOR EUROPE, MIDEAST; NO ISRAEL STOP

(msnnews, Bradley Klapper)

• His nine-day maiden trip as Secretary of State will start on Sunday February 24^th. He will visit Britain, Germany (where he spent part of his youth as the son of a diplomat father),  France (focusing on Mali), Italy (to meet with Syrian opposition leaders), and Turkey, Egypt, Saudi Arabia, UAE & Qatar (in all of which the focus will be on Syria). The official explanation for steering clear of Netanyahu & Abbas while visiting just about every other major olayer in the Middle East is that he is awaiting the formation of a new Israeli government & will, in any case, be accompanying President Obama on his trip to the Middle East this spring.

But some people see this as a not-so-subtle signal to Israelis & Palestinians that, for the first time in six decades, their affairs won’t be the epicentre of Washington’s diplomatic efforts.

CANADA’S ECONOMIC OUTLOOK ‘RELATIVELY’ ROSY’ (FP, Gordon Isfeld)