The Required Disclosures
Friday, April 1, 2011
Thursday, March 31, 2011
- In the first post-earthquake visit by a foreign leader to Japan, French President Nicolas Sarkozy has called for the creation of new and legally binding global nuclear regulations. Japanese Prime Minister Naoto Kan is backing the proposal.
- Forces loyal to Alassane Ouattara have seized San Pedro, a major cocoa port, as part of an ongoing rebellion aimed at ousting President Laurent Gbagbo (who refused to step down after he lost the presidential election last November). Cocoa bean exports, which have been disrupted since the rebellion began, may resume within days.
- Libyan rebels rallied for a counterattack today, on news that President Obama has authorized the CIA to begin covert operations in Libya and that Moussa Koussa has defected.
- US Defense Secretary Robert Gates told Congress earlier today that he expects to see Muammar Gaddafi removed from power by his own people, but that removing Gaddafi from power is not part of the UN Security Council mandate.
- Revised figures released yesterday show that Portugal's deficit is currently at 8.6% of GDP, which is 100 bps higher than it should be under its austerity measures.
- US Treasury Secretary Timothy Geithner has told a G20 meeting that tightly controlled exchange rates are the main flaw in the international monetary system. He also called for a stronger International Monetary Fund.
- Ohio's legislature voted yesterday to strip collective bargaining rights from about 350,000 state employees.
View this article on our website: Gross Assails U.S. Debt as Greek-Like
Gross Assails U.S. Debt as Greek-Like
By Joe Morris
Pimco's Bill Gross has ratcheted up his criticism of federal budget policy, implying he will not favor Treasurys until Congress tackles entitlement spending.
In his monthly investment commentary posted to Pimco's website, Gross calculates the country's unrecorded debt burden at close to 500% of gross domestic product, warning "we are out-Greeking the Greeks."
The comments shed light on Gross's decision, revealed earlier this month, to dump Total Return's entire holdings in U.S. government–related debt, including Treasury debt. A disclosure on the firm's website reveals that as of Feb. 28 the $236.93 billion fund's government-related debt portion was zero, compared with 12% a month earlier. No update has since been posted.
Gross does not reference the Total Return move specifically in his latest commentary but does muster an argument against holding Treasurys. Without congressional cutbacks to Medicare, Medicaid and Social Security, he contends, the country will effectively default through rising inflation, currency devaluation and low to negative real interest rates.
Pimco "has been selling Treasuries because they have little value within the context of a $75 trillion total debt burden," he writes. "Our clients... do not want to be shortchanged or have their pockets picked."
Wednesday, March 30, 2011
- In the wake of last week's protests, which forced President Hosni Mubarak out of office, the Egyptian cabinet approved a law yesterday that criminalises strikes, protests, demonstrations, and sit-ins that interrupt private or state owned businesses or affect the economy in any way. Individuals who call for or incite action can be sentenced to up to one year in prison and fined up to half a million pounds. The law has to be approved by the Supreme council of the Armed Forces, and would be in force as long as Egypt is in a state of emergency (currently, 30 years and counting).
- The Telegraph is reporting that the European Commission has released plans to create a "single European transport area" intended to create "a profound shift in transport patterns for passengers" by 2050. Goals include getting 50% of all travel over 186 miles to be made by rail, and reducing the number of gasoline and diesel-driven cars and trucks within cities by half by 2031 and to 0 by 2050. Opposition to the plan is already beginning to be heard.
- In an opinion piece written for al Jazeera, economist Robert Shiller expresses his belief that the next market bubbles will be in food and farm land.
- Immediate safety upgrades have been ordered at all 55 of Japan's nuclear power plants. The required upgrades include improved back-up power and having fire trucks with hoses ready at all times to ensure cooling for reactors and spent fuel pools. Japanese Minister of Economy, Trade, and Industry Banri Kaidea does not anticipate that these upgrades will require plant operations to be halted.
- Tokyo Electric Power (TEPCO), which has already secured $24 billion in private loans, has warned that this will not be enough to keep it afloat, repair damage at Fukushima and other sites, and pay reparations and other damages they anticipate.
- Rebel forces have been driven out of the oil town of Ras Lanuf under heavy bombardment from the Libyan army.
- OPEC oil production has not compensated for production losses in Libya. Production has fallen about 300,000 barrels per day from February's average, although some analysts are expecting to see Saudi Arabia begin boosting output further to compensate.
- President Obama is preparing a speech in which he will outline his strategy to reach an announced goal of cutting US oil imports by a third over 10 years. The plan is expected to focus on increasing domestic energy production, encouraging the use of more natural gas in public transit, making vehicles more fuel efficient, and encouraging the use of biofuels and other alternative energies.
- Al Jazeera is reporting an increase in illnesses and deaths along the Gulf Coast due to the chemical dispersants used by BP.
Tuesday, March 29, 2011
- A study of international scientific output - as defined by the total number of peer-reviewed papers published by scientists in various nations - indicates that China is on course to overtake the US in scientific output by 2013. Over the 12 year period covered by The Royal Society's study, US scientific output increased by 8%. In the same period of time, Chinese scientific output increased by 722%.
- Traces of plutonium-238, plutonium-239, and plutonium-240 have been found in the soil around the Fukushima nuclear complex. Japan's Nuclear and Industrial Safety Agency has said that the plutonium levels are not harmful to human health, but it could mean that reactor No. 3's containment mechanism has been breached. "Plutonium is a substance that's emitted when the temperature is high, and it's also heavy and so does not leak out easily," said agency deputy director Hidehiko Nishiyama. "So if plutonium has emerged from the reactor, that tells us something about the damage to the fuel. And if it has breached the original containment system, it underlines the gravity and seriousness of this accident." Opposition leaders in the Japanese Parliament are now demanding that the evacuation zone around the plant be widened.
- In a speech televised last night, US President Obama assured the American people that the United States would not get bogged down in a police action in Libya. "And tonight," the President said in his speech, "I can report that we have stopped Qaddafi's deadly advance." Commentators have observed, however, that he did not actually explain how long the United States would remain involved in the Libyan police action, or outline an exit strategy.
- This morning, Libyan forces pushed the rebels as far east as Bin Jawad.
- Indiana prosecutor Carlos Lam has resigned after acknowledging that he advised Wisconsin Governor Scott Walker to discredit labor union protests by orchestrating a fake assault on himself, possibly with a firearm.
- A man in San Antonio was arrested after a gun battle with police over a price increase in Taco Bell's Beefy Crunch Burritos.
Monday, March 28, 2011
- Disposable personal income was up 0.3%. However, in chained (2005) dollars, it was down 0.1%.
- Real DPI, which is DPI adjusted to remove price changes, decreased 0.1% in February (compared to a 0.3% increase in January).
- Personal current taxes increased $2.2 billion in February, compared to a $55.4 billion increase in January.
- Personal savings as a percentage of disposable personal income was 5.8% in February, down from January's 6.1%.
- The PCE price index increased 0.4% in February, if you add food and energy costs back in.