Relevant and even prescient commentary on news, politics and the economy.

China and Bear Stearns

Business Wire reports:

NEW YORK & BEIJING–(BUSINESS WIRE)—-The Bear Stearns Companies Inc. (NYSE:BSC) and CITIC Securities Co., Limited (SSE:600030), with unanimous approval from their respective Boards of Directors, today announced an agreement in principle to establish a comprehensive strategic alliance. This alliance will include sharing management expertise and technology to develop new capital markets products and businesses in China, establishing an exclusive joint venture combining the existing businesses of both companies in the rest of Asia, and cross-investments of approximately $1 billion in each firm by the other. The alliance will bring together Bear Stearns’ capital markets expertise globally and market leading analytics with CITIC Securities’ vast resources and extensive business network to better serve clients worldwide.

The joint venture will provide a wide range of capital markets services, including cross-border mergers and acquisitions advisory, international equity and fixed income capital markets with a particular focus on international offerings of Chinese companies, venture capital and private equity, asset management, and equity and fixed income services. The joint venture will serve as a conduit for international companies seeking access to Asian capital markets and for Chinese entrepreneurs, corporations and state-owned enterprises looking to access capital or invest outside of the region.

As you know I have picked on the stock price of Bear Stearns as a barometer of who gets punished in the derivative markets, fair or not.

Is this venture a successful rebound of the market, or something else? Not knowing the specifics makes an answer purely conjectural, but I do wonder if Bear Strearns learned anything from the loss of two of its funds, or whether this merely lets them go global and sovereign?

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Farm Bill and WTO GATS Part 2

The NYT reports:

The World Trade Organization made a last-ditch effort on Tuesday to salvage stalled global trade talks by asking the United States and Europe to lower their barriers to farm imports in return for greater export access to India, Brazil and other developing countries.

Pascal Lamy, director general of the World Trade Organization, said the group was trying to goad negotiators into making some compromises.
A long proposal laying out possible compromises by 150 countries involved in the talks was issued at the World Trade Organization’s headquarters in Geneva. Officials said the draft was aimed at breaking a deadlock on issues that have eluded compromise since last summer.
Pascal Lamy, director general of the trade group, said the goal was to goad negotiators by laying out ambitious compromises they had been unwilling to make, in part because they did not see compromises by others. He said it would not be clear until September whether the new proposals would accomplish that goal.
The proposal was careful not to assign blame, but it also said time was running out on the possibility of a global trade deal. It was generally acknowledged to be a final attempt to save the talks, with the expectation that they would be declared a failure if it did not succeed.

NYT reports on complaints issued by Brazil about US farm subsidies, especially commodities.

The stalled talks are emphasizing a deeper issue: In some ways, the balance of power between advanced and developing countries is shifting, politicians outside the West, including Mr. Nath, say. “The reality is that there is a new economic architecture,” Mr. Nath said in an interview this week in his New Delhi office. “This new economic architecture is going to have new windows and new doors. It can’t be wished away.”
India and Brazil are refusing to open their markets further to goods from Western countries without a substantial reduction in subsidies provided to Western farmers.
On Thursday, Brazil filed a complaint with the W.T.O. about American farm subsidies. “This complaint attacks the entire U.S. farming policy,” Donizeti Beraldo, head of trade and international affairs at Brazil’s National Agriculture Confederation, was quoted by Bloomberg News as saying. Then, referring to the trade talks, Mr. Beraldo added, “If the U.S. fails to advance on talks, they will be at risk of more complaints.”
W.T.O. members are preparing for what is expected to be a decisive round of negotiations at the group’s headquarters in Geneva. On Monday, the presiding officers will release draft agreements that could form the basis of a compromise or, depending on the view of countries like India, give a firm indication that the current round of trade talks begun in 2001 is on its last legs.
Mr. Nath, whose office includes a shelf of thick W.T.O.-related publications, was quick to brush off questions about his flexibility, but still left no room for compromise.

The issue is not flexibility, he said: “It is removal of subsidies, which are a distortion of global trade…”

India and Brazil are asking the United States to reduce the estimated $22 billion in subsidies that it allots to farmers, and the European Union to trim its farm aid from 55 billion euros ($75.8 billion), saying the subsidies keep food prices on world markets artificially low and make it difficult for farmers from developing countries to compete.
Advanced industrial nations would like to see a substantial reduction in the taxes on exports to countries like India and Brazil to give their manufacturers access to those fast-growing economies.
Mr. Nath said he is seeking some understanding from the United States. Despite the growth of outsourcing and high-technology jobs in India in recent years, agriculture still supports about two-thirds of the country’s citizens.

India is in the midst of an economic boom that has driven up stock market indexes, wages and real estate prices to near record highs. Still, Mr. Nath was quick to distance the country from developed- nation economies.
India “is so far away from the United States and the European Union,” he said.
“We have 300 million people that live on $1 a day…”

Mr. Nath’s hard line in the W.T.O. talks was in marked contrast to his three-year stretch as commerce minister. There, his tenure has been characterized by an increasing openness to foreign investment and partnership at home. He has sometimes faced criticism that he is too business-friendly. (italics are mine)

Add the gambling issue that is being backed by the EU. Changes and more. Tariffs are not the answer.

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Foriegners in the US military since year 2000

This article adds a bit more information about who is fighting for the US as well:

More than 30,000 foreign troops are enlisted in the US Army, many of them serving in Iraq. Their reward for risking their lives for their adopted country is US citizenship.

They may have different reasons for joining the US Armed Forces, but all three are now among the more than 30,000 foreign soldiers fighting for America — not as Americans, but as a Mexican, a Portuguese and even a German. Without its foreign soldiers, the United States would have trouble coming up with enough troops to meet the demand in Iraq. The foreigners, for their part, take the dangerous job mainly for its biggest reward: US citizenship.

Since Sept. 11, 2001, the United States has granted US citizenship to 32,500 foreign soldiers. In July 2002, US President George W. Bush issued an executive order to expand existing legislation to offer a fast track to citizenship to foreigners who agree to fight for the US Armed Forces. About 8,000 non-Americans have joined the US military every year since then.
The foreigners already represent 5 percent of all recruits…

With stop-loss orders being re-issued and some bonuses for ‘hard to find’ specialties (officers) at $35,000, where are we headed?

Update:
Boston Globereports this:

A recent change in US law, however, gave the Pentagon authority to bring immigrants to the United States if it determines it is vital to national security. So far, the Pentagon has not taken advantage of it, but the calls are growing to take use the new authority.
Indeed, some top military thinkers believe the United States should go as far as targeting foreigners in their native countries.

“It’s a little dramatic,” said Michael O’Hanlon , a military specialist at the nonpartisan Brookings Institution and another supporter of the proposal. “But if you don’t get some new idea how to do this, we will not be able to achieve an increase” in the size of the armed forces.”

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Progress on right to know about sewerage!!

Right to know hearings for contamination of local water resources.

Dr. Summers, from the Maryland Department of Environment, explained how Maryland’s strong monitoring and notification requirements had helped quantify problems and were greatly appreciated by many utilities as it allowed them to explain and justify why more investment is required. Stuart Whitford, from the Kitsap County Health Department explained his support of H.R. 2452 by telling a scary story about a sewage spill that went on for two years before anyone realized what was going on (and after 4.8 million gallons of sewage was spilled!).
Microbiologist Erin Lipp did a great job of explaining how potent just a little bit of raw sewage can be and that the illnesses from sewage are vastly underreported.
Finally, even Kevin Schafer, the representative for the wastewater treatment community supported the monitoring and notification, but just wanted to make sure that details were spelled out and that the requirements were not too costly.

Sewerage is a water resource is a previous posting buy rdan.

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Farm Bill and WTO GATS Part 1

The National Ag Law Center reports:

Trade policy has always played a major role in the evolution of the U.S. agricultural sector. With the 1994 Agreement on Agriculture resulting form the WTO Uruguay Round, trade policy started to play an even more important role in domestic farm policy. As we move deeper into 2006, the intersection of these two policies becomes more prominent with the negotiations of the Doha Round that may result in a new WTO agreement on agriculture, and Congress considering what to do as the 2002 Farm Bill expires in 2007. If the Doha Round fails, Congress will need to consider the implications of the Brazil Cotton Case and whether current policy may open the U.S. to more WTO challenges. No one can predict the result of this geopolitical chess match, but one can assume that the agricultural policy landscape is poised to change in the next few years.

July post by rdan

July post 2 by rdan

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The game of statistics

The tune for the other game of statistics

The Boston Globe printed this poem.

By Mary Oliver October 13, 2007

In the language of baseball
I am 3 and 2,
and not so nimble
as I was once

and the game, at the moment,
is indecisive.
There are many poets
who love baseball
which is, after all,
a metaphor
for many things
that happen when there isn’t a game.

The ball gleams forth, and high,
and maybe it’s a hit
or maybe the runner is out.
Nothing is certain except the way

the old players hang on
to their smarts, their prowess
as long as they can
while the luminous young

keep showing up,
so swift, so quick,
with such light in their eyes
and such beautiful swings.

As I watch the playoffs, the metaphors abound, and call for sharing. Different ages, different teams, same glorious sport.

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Slavery in my backyard 2

Another point of view regarding US slavery is expressed in WAPO.

… Congress passed a law, triggering a little-noticed worldwide war on human trafficking that began at the end of the Clinton administration and is now a top Bush administration priority. As part of the fight, President Bush has blanketed the nation with 42 Justice Department task forces and spent more than $150 million — all to find and help the estimated hundreds of thousands of victims of forced prostitution or labor in the United States.
But the government couldn’t find them. Not in this country.

The administration has identified 1,362 victims of human trafficking brought into the United States since 2000, nowhere near the 50,000 a year the government had estimated. In addition, 148 federal cases have been brought nationwide, some by the Justice task forces, which are composed of prosecutors, agents from the FBI and Immigration and Customs Enforcement, and local law enforcement officials in areas thought to be hubs of trafficking.

“The discrepancy between the alleged number of victims per year and the number of cases they’ve been able to make is so huge that it’s got to raise major questions,” Weitzer said. “It suggests that this problem is being blown way out of proportion.” The Department of Health and Human Services “certifies” trafficking victims in the United States after verifying that they were subjected to forced sex or labor. Only non-U.S. citizens brought into this country by traffickers are eligible to be certified, entitling them to receive U.S. government benefits.

Although there have been several estimates over the years, the number that helped fuel the congressional response — 50,000 victims a year — was an unscientific estimate by a CIA analyst who relied mainly on clippings from foreign newspapers…


Yet the government spent $28.5 million in 2006 to fight human trafficking in the United States, a 13 percent increase over the previous year. The effort has attracted strong bipartisan support.
Steven Wagner, who helped HHS distribute millions of dollars in grants to community groups to find and assist victims, said “Those funds were wasted.”
“Many of the organizations that received grants didn’t really have to do anything,” said Wagner, former head of HHS’s anti-trafficking program. “They were available to help victims. There weren’t any victims.”
. . .
Few question that trafficking is a serious problem in many countries, and the U.S. government has spent more than half a billion dollars fighting it around the world since 2000.
. . .
In the past four years, more than half of all states have passed anti-trafficking laws, although local prosecutions have been rare.

But information was scarce, so a CIA analyst was told to assess the problem in the United States and abroad. She combed through intelligence reports and law enforcement data. Her main source, however, was news clippings about trafficking cases overseas — from which she tried to extrapolate the number of U.S. victims.

Bipartisan passion melted any uncertainty, and in October 2000, Congress enacted the Trafficking Victims Protection Act, significantly broadening the federal definition of trafficking. Prosecutors would no longer have to rely on statutes that required them to prove a victim had been subjected to physical violence or restraints, such as chains. Now, a federal case could be made if a trafficker had psychologically abused a victim.
. . .
Just as the law took effect, along came a new president to enforce it.
Bell, with Prison Fellowship Ministries, noted that when Bush addressed the U.N. General Assembly in 2003, he focused on the war in Iraq, the war on terrorism and the war on trafficking.
Soon after Bush took office, a network of anti-trafficking nonprofit agencies arose, spurred in part by an infusion of federal dollars.
. . .
The CIA’s new estimate, which first appeared in a 2004 State Department report, has been widely quoted, including by a senior Justice Department official at a media briefing this year. It’s also posted on the HHS Web site.

But at a meeting of the task force this year, then-coordinator Sharon Marcus-Kurn said that detectives had spent “umpteen hours of overtime” repeatedly interviewing women found in Korean- and Hispanic-owned brothels. “It’s very difficult to find any underlying trafficking that is there,” Marcus-Kurn told the group….

The article is heavily edited to shorten to blog format and eliminated some of the history of the efforts to assess the situation, except to point out it is ‘bi-partisan’.

Of course I have a response, but am awaiting answers from experts I can contact. Stay tuned.

Update: Fixed link Slavery in my backyard Part 1

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Potential fizzle of WTO GATS?

WTO GATS rounds of talks are really stalled for many reasons on issues of agriculture and food, water, attempts to get developing countries to ‘liberalize’ areas of their concern that we refuse to do in areas of our concern.

The potential failure of the sixth Ministerial will actually throw the WTO into a deep crisis. After failing to launch the so-called Millennium Round in 1999 in Seattle, this current round of negotiations was launched in Doha, Qatar in 2001. A second ministerial collapsed amidst massive civil society protests in September 2003. Negotiations were supposed to have been wrapped up by January 2005, yet are still stalled on the basic framework.

If the framework (modalities, in WTO-speak) is not completed by March, it will be extremely difficult for negotiators to wrap up the technical negotiations in time to send the final agreements to the US Congress before the expiration of Fast Track negotiating authority in July 2007.

The sixth Ministerial of the WTO follows on the heels of another failed Ministerial, the Summit of the Americas in Mar del Plata, Argentina. The Bush administration attempted to use the meeting to jump-start the stalled FTAA talks, but the meeting ended without even a declaration…

Is this a finale? Will the form of GATS continue in regional trade treaties? Will nation-states be players again as internal markets develop and give them more clout?

Will a world wide slow down affect responses?

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Location, location, location

I was dreaming about my lock on derricks and ports in Canada. For the record, no one sold me Canada’s only main port on the Arctic Ocean. Mr. Broue bought it for $7 American. I bought the railroad that is the only link to the rest of the country(the Hudson Bay Railway)in my dream.

However, the US Coast Guard is setting up shop on the NW passage.

For most of human history, the Arctic Ocean has been an ice-locked frontier. But now, in one of the most concrete signs of the effect of a warming climate on government operations, the Coast Guard is planning its first operating base there as a way of dealing with the cruise ships and the tankers that are already beginning to ply Arctic waters.

The pullback in summer ice has caused the Coast Guard, led by Adm. Thad W. Allen, to plan its first Arctic operating base, probably near Barrow.
VideoMore Video » With increasingly long seasons of open water in the region, the Coast Guard has also begun discussions with the Russians about controlling anticipated ship traffic through the Bering Strait, which until now has been crossed mainly by ice-breaking research vessels and native seal and walrus hunters.

The Coast Guard says its base, which would probably be near the United States’ northernmost town, Barrow, Alaska, on the North Slope coast, would be seasonal and would initially have just a helicopter equipped for cold-weather operations and several small boats.

But given continued warming, that small base, which could be in place by next spring, would be expanded later to help speed responses to oil spills from tankers that the Coast Guard believes could eventually carry shipments from Scandinavia to Asia through the Bering Strait. Such a long-hoped-for polar route would cut 5,000 miles or more from a journey that would otherwise entail passage through the Panama Canal or the Suez.

The Coast Guard is also concerned about being able to respond to emergencies involving cruise ships, which are already starting to operate in summers in parts of the Arctic Ocean.

And in yet a further kind of new activity abetted by warming seas, Royal Dutch Shell is preparing for exploratory oil drilling off Alaska’s Arctic coast beginning next year.

“I’m not sure I’m qualified to talk about the scientific issues related to global warming,” the Coast Guard commandant, Adm. Thad W. Allen, said in an interview. “All we know is we have an operating environment we’re responsible for, and it’s changing.”

Canada plans on staking a claim and creating a fleet to patrol.

NOAA has extra credit reading and source material for the curious.

Since the slope of the land indicates that oil reserves might be available for harvesting, my dream gets better as oil companies and soverign nations vie for position.

I have booked a cruise next summer through the NW passage with Mrs.rdan, so no cold meatloaf for this fellow tonight!

Update:WebResults 1 – 10 of about 23,600 for holiday cruises through the NW passage with SafeSearch Off
Also Try – through the darkness, alaska adventure,

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FDIC op ed in NYT

Sheila C. Blair of FDIC offers an opinion on the mortgage crisis in the NYT.

THERE have been many proposals to deal with the problems in the mortgage market. But the best place to begin is by looking at the poor lending standards and weak consumer protections at the root of the problem — in particular, the troubling loans called 2/28 and 3/27 subprime hybrids. They have starter interest rates of 7 percent or more for the first two or three years, and “resets” that raise rates to as much as 12 percent, causing monthly payments to increase by at least 30 percent.
When housing prices were rising, borrowers could sell or refinance their homes to pay off the loans before reset and avoid crippling monthly payments. But this year, as prices have dropped, more than $150 billion in these loans have undergone reset, and an additional $300 billion will do so before the end of 2008.
Merrill Lynch estimates that if home prices decline by just 5 percent, a quarter of subprime loans may enter default, resulting in losses of almost $150 billion.
A government bailout is not the answer. Bailouts erode market discipline, raising the likelihood of repeat episodes. And efforts to expand refinancing options will help only those borrowers who have enough equity to refinance.
What happens to those who are unable to refinance and cannot afford the rate resets? Most of their loans are managed by firms called servicers. Typically, servicers sit back and wait for people to default, then foreclose and sell the properties. But in today’s troubled housing market widespread foreclosures will only maximize losses for servicers.
Renegotiating terms loan by loan is too costly and time consuming. Servicers have modified only one percent of these mortgages that reset in early 2007.
So subprime servicers should take a more standardized approach: restructure all 2/28 and 3/27 subprime hybrid loans for owner-occupied homes in cases where the borrower has been making timely payments but can’t afford the reset payments. Convert these to fixed-rate loans at the starter rate.
This would be no bailout. These borrowers would still be required to make their monthly payments — at rates higher than what prime is today. Billions in savings would be generated by avoiding the administrative, legal, marketing and other costs of foreclosure, which can run to half or more of the loan amount. And avoiding foreclosure would protect neighboring properties and hasten the recovery of markets burdened by an excess supply of houses.
The mortgage crisis is growing, and the mortgage industry has the ability to help solve much of it on its own. Subprime borrowers need a better deal — one that they can afford.
Sheila C. Bair is the chairman of the Federal Deposit Insurance Corporation.

This advice sounds sensible, and would peg loans at 7-8% fixed.

She does not say how many mortgages fit the description as a % of the loans outstanding, so how that might solve the problem I have no idea. And with multiple owners of a mortgage that are bundled separately, how one accomplishes the process needs explanation from someone in the services. I wonder whether the market is so inflexible that it cannot deal with specifics, or the players are.

There is another article on Citicorp and other banks attempts at solving the problem from a high roller point of view.

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