Thursday, February 3, 2011

notes on the week ended Jan 29th

just some brief notes, cause i was a wreck most of last week, and im still just going thru the motions...on tuesday the 25th i was informed that my close friend & co-conspirator, Dr. Alison Snow Jones, who blogged as Maxine Udall (girl economist), had died suddenly the week before...some of you know of her, but for those of you who dont, here's her blog: Maxine Udall (girl economist) - the top post is the blog death notice; the remaining posts are hers; there's also a memorial page at Drexel University, where she taught...steve randy waldman put together a nice selection of excerpts from her writing here: Alison Snow Jones...she had also recently started a blog for her other writing, Maxine's Creative Writing, but only had 4 posts up at the time of her death...

you may have heard the 4th quarter GDP came in at a respectable 3.2% annualized growth rate, the best growth since the recession started...but as usual, there is a caveat in that number; economists surveyed by bloomberg had expected a 1.6% deflator to be applied to it to adjust for inflation, but the number reported by the bureau of econ analysis only had a .3% deflator applied to it, so if the bloomberg survey deflator had been applied, the reported GDP would have been nearly cut in half...

in preparation for the political hot potato of the debt ceiling artifact approaching in march, the treasury is suspending its Supplementary Financing Program (SFP), by which it provides liquidity for Fed balance sheet operations; that amounts to $200 billion of short term notes that wont be rolled over, and as the Fed has other vehicles to provide itself liquidity for operations...there is a real disconnect as this ceiling approaches; on one hand, the GOP-obama tax cuts will cause the the deficit this year to balloon to $1.5 trillion, yet on the other hand, conservative senators are introducing a balanced budget amendment to coincide with the debt ceiling fight in the house...THE US HAS NO FISCAL POLICY, much less a sane one; its all disgusting mindless political posturing with no insight or foresight...

the report of the FCIC (financial crisis inquiry comm.) was released this week and in general didnt tell us anything we didnt know already, although with 1200 some documents and 2 dissenting views by members who couldnt agree as to the cause (remember when the republican members walked out after their attempt to ban the phrases “Wall Street” and “shadow banking” and the words “interconnection” and “deregulation” from the panel’s final report?) im sure there are a lot of minutia no one knew before...i am including a link to Lambert Strether's version, because the report as released is not searchable, and he pulled it apart into 1147 separate named & useful links...there were also a couple dozen different takes on it in the media you can find links for filed with "banks & banksters" on this weeks blog post...

the case shiller housing price index was out this week, and as i explained last time, it lags quite a bit; this time the data from the 3 months ended november showed a one month decline of .5% and a YoY price decline of 1.6%; so home prices are now 31% off the peak and the price declines seem to be accelerating again, and spreading to cities previously less affected...

you may have noticed over the past few weeks that i was quoting contracts on different varieties of crude at what seemed to be wide difference in price; i didnt know or understand it at the time, but in fact some of those spreads have recently hit records, and one of the reasons was revealed this past week; a unit of Hess petroleum had taken the first 8 north sea cargoes, and the first 2 brent for delivery in february...thats out of a typical 25 forties cargoes per month, so there was something of a squeeze in brent, while west texas intermediate (WTI) inventories were building in OK & TX over the past two weeks...of course, what is now happening in egypt, and its possible impact on suez shipping, now far outweighs any other market constraints or considerations...a lot of the world has been blaming the arrogant US monetary policy for the food inflation that first started these north african riots several weeks ago, but as ive pointed out, much of the wheat crop loss is weather related, and using 40% of our corn crop to produce economically irrational ethanol hasnt helped either...there are a considerable set of links in this weeks GGO to food related stories, including russian price controls, and governments from india to indonesia entering the market to buy stockpiles of rice and wheat...

there wasnt significant crisis news out of europe this week, but negotiations over increasing the size bailout package and hand ringing over 2% inflation continued & bloggers continued to write about it, so i've got a couple dozen articles linked at the end of this weeks post, if you're interested…and if you have interest in the meetings going on between the high-rollers at Davos, they are being lived blogged on this site World Economic Forum; for the most part, i didnt link to any of the articles from there either...

last week i mentioned that hudson bay in canada was still mostly ice free, and that greenland's melt season had continued 50 days longer than normal, and i want to follow up with some additional thoughts on that situation here; the best way to understand what has happened this winter is to think about what happens when you open your refrigerator; the cold air spills out on the floor, and warm air enters the top; that is analagous to what has happened over north america this winter, and, exacerbated by the el nino, last winter as well...the adjacent map is that of the temperature anomalies for north america covering the period from mid december to mid january; you can note from that that large parts of baffin island, between greenland and canada proper, had a temperature exceeding 21C, or about 38F above normal, averaged over the entire month, an amazing amount to be sustained over an entire month…additional large parts of the canadian tundra were well over 10C above normal...there's two problems i see here that this condition will exacerbate; first, we know that large amounts of frozen methane, a potent greenhouse gas, is frozen in the permafrost and is released when the permafrost thaws; by not freezing deeper this winter, it sets us up for a summer when this methane feedback accelerates...similarly, the east siberian ice shelf, which i posted about last spring, has methane-hydrates frozen at high pressures on the seabed floor, and as the water warms, it thaws & methane bubbles into the atmosphere, and east siberia has also been moderately warmer this winter...although overall not as important a greenhouse gas as CO2 because it's quantities are a magnitude less, it's increased presence in the atmosphere is accelerating more rapidly than CO2 is: pre-industrial CH4 was about .7 ppb and its now at 1.8 ppb...the other problem relates to the ice loss from greenland; the melt has been accelerating exponentially and is now twice what it was a recently as 2002; if one could take all the ice that had melted off greenland this past year and put it on top of new jersey, it would cover new jersey with 257 feet of snow...

the above are my weekly comments that accompanied my sunday morning links mailing, which in turn was selected from my weekly blog post on the global glass onion…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me...

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