"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Wednesday, May 25, 2011

World News!

European Union
  • The EU has agreed on parameters for stress tests on nuclear power plants operating with in the Union.  Threats to be covered will include natural disasters, airplane crashes, and explosions near the plants.  Nuclear power stations produce a third of the electricity in the EU, so they have a vested interest in making sure they are safe and reliable.
  • Representatives of the BRICS[4] nations released a joint statement stating that choosing a new director for the IMF on the basis of nationality undermines the legitimacy of the IMF.  "We are concerned with public statements made recently by high-level European officials to the effect that the position of managing director should continue to be occupied by a European.  The recent financial crisis which erupted in developed countries underscored the urgency of reforming international financial institutions so as to reflect the growing role of developing countries in the world economy."
  • In a move that surprises no one, Christine Lagarde has announced her candidacy to be the head of the IMF.
  • Speaking before a joint session of the US Congress, Israeli Prime Minister Benjamin Netanyahu stated that he was willing to make "painful compromises" for peace.  "Now this is not easy for me," he said, "It's not easy because I recognize that in a genuine peace we will be required to give up parts of the ancestral Jewish homeland."  He also stated that any peace plan will also require Palestinian recognition of Israel as the homeland of the Jewish people, recognition of the right of Israel to exist, the scrapping of the Palestinian Authority's accord with Hamas, and Jerusalem would have to be left undivided.
  • The Palestinian Authority, responding to Prime Minister Netanyahu's speech, stated that it "contained nothing we can build on", and that Israel is attempting to dictate the results of the negotiations before they even begin.
  • In "first I must solicit your strictest confidence in this transaction" news, Richard Cookson (global chief investment officer) of Citigroup has stated his belief that there will be increasing demand for Nigerian sovereign debt.  "Given the demand for the country's bond offer, and given the deteriorating quality of debt in the rest of the world, there should be more demand for the country's debt.  ...The political system is getting better and if all continues to go according to expectations, the overall credit rating of the country is likely to go up, not down."
United States
  • The United States has imposed sanctions on PDVSA, the Venezuelan state oil company, in an effort to reduce Iran's ability to import oil.  The sanctions only restrict PDVSA's ability to compete for US government contracts.  Currently, the US imports about 10% of all its oil from PDVSA.
  • In "brace yourself, Jeff" news, Harold Camping has declared that the rapture did happen over the weekend, and that May 21st was "an invisible judgment day".  According to him we have been spared five months of hell on earth, but the destruction of the Earth is still on track for October 21.
  • The Washington-based Human Rights Law Foundation is suing Cisco Systems, alleging that the company worked closely with security agents of the Chinese government to tailor hardware and software that they knew would be used to "isolate, surveil and suppress Falun gong practitioners in China".  Cisco has denied the allegations.
  • A study published in the journal Business And Politics finds that "stocks purchased by Representatives also earn significant positive abnormal returns....  A portfolio that mimics the purchases of House members beats the market by 55 basis points per month (approximately 6% annually)."  You can read the abstract just by going to the web site, but accessing the actual article requires a subscription.  Don't feel too bad for the Senators, though.  They typically beat the market by almost 12% annually, mostly because they have a distinct information advantage and because current laws to not prohibit Congressmen from trading on material non-public information obtained in the course of performing their normal duties.
  • The US Treasury Department sold 200 million shares of AIG at $29 per share yesterday, netting a $0.27 per share profit on the transaction.  A return of 0.9% isn't too bad for a two-year investment, right?
  • The Venezuelan government has condemned the US sanctions on PDVSA as "hostile action" and "imperialist aggression".  Currently, PDVSA exports roughly 45% of its crude oil to the United States.
[1]  No, I'm not really sure how 46% of survey respondents can believe in the continuation of a trend that only 43% of the respondents believe in in the first place.  
[2]  I.e. mob.
[3]  Originally imposed by Mubarak, and not actually lifted by the new military government.
[4]  Brazil, Russia, India, China, South Africa.

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