Author: Matthew G. Saroff

House Rules Update

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Well, the incoming House of Representatives has adopted the new rules for the 111 House of Representatives.

Because the house is elected every two years, it’s easier to change the rules than in the Senate, which is technically a continuing body, because 2/3 of its members are returning every Congress.

The changes made are generally fairly obscure, but the important ones are changing the motion to recommit such that a report must returned “forthwith”, rather than “promptly” and eliminating term limits on committee chairs.

The change in the motion to recommit means that a motion to ammend a bill must be voted on then and there, as opposed to being sent back to committee, where, at best it is delayed, and frequently dies.

The Republicans have been using it for some time to obstruct legislation.

The end of term limits for committee chairmen is also an improvement, though less of one.

It return the chairman system to one that is largely based on seniority, though the case of Waxman beating out Dingell at the Energy and Commerce Committee shows that it is not universal.

I’m not a fan of seniority determining who is chairman of a committee, but under the Republicans, it became pay-to-play for chairmanships, which is worse.

Also interesting is a provision for the House to continue its contempt of Congress actions against Harriet Miers and Josh Bolton, which means that they might have a receptive Attorney General actually enforce the subpoenas for them to testify.

Of course if I were in Congress, I would trying to get the House Sergeant at Arms to arrest them and lock them in the House basement, which was last done in the 1930s.

This is why you should be glad that I am not in Congress.

OK, so I Finally Have a Handle on What is Going on in the Ukraine Gas Fiasco

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First, the prior contract on natural gas prices, which covered both gas and transit fees across Ukraine expired.

So Gazprom its Ukranian counterpart Naftogaz were negotiating, and then, because there was no deal on prices, Russia reduced shipments to the Ukraine but shipped more to the EU, on the far side of the pipeline, along with routing as much gas as possible via Belarus.

Russia then shut down the feed Ukrainian pipeline, because they said that the Ukrainians were stealing the gas, which has led to gas disruptions across Europe.

So they are now in negotiations, and there are a number of sticking points:

The first is that Ukraine wants to cut the contracted agent for the gas sales, RosUkrEnergo, because they believe it to be corrupt, which is probably true, but it also gives them the ability to monitor just how much gas enters the Ukraine from Russia.

The next big issues are over price. Ukraine was paying $179.50/tcm (thousand cubic meters) with a transit fee of $1.70/tcm/100 km, and has offered $201/tcm with a transit fee of $2.05/tcm/100km.

When you consider that a lot more gas goes through Ukraine than is used there, it sounds like a wash in terms of cost to the Ukranians.

Gazprom wants to keep the transit fee the same, and charge $480/tcm, which is much closer to the market rate, it’s selling gas to the EU at around $420/tcm.

So the numbers offered by Gazprom seem to be in line with the market, plus about 20% because you always start negotiations that way as the seller.

In any case, the EU has gotten agreement from both sides to act as an independent monitor of gas flows, because they want their gas:

After phone conversations with Prime Minister Vladimir Putin of Russia and his Ukrainian counterpart, Yulia Tymoshenko, on Wednesday, the European Commission president, José Manuel Barroso, said both leaders had agreed in principle to allow monitors to verify gas movements. But he also warned both countries — and particularly Ukraine — that failure to help restore supplies could have consequences for their relationships with the European Union.

(emphasis mine)

It turns out that the best guess here is that reductions of gas leaving the Ukraine side were far greater than the reductions that the Russians reported on their side, and the implication is that the Russians are actually telling the truth when they are saying that the Ukrainians are stealing gas from the pipeline.

Also Wednesday, Chancellor Angela Merkel of Germany spoke with Putin by phone, and in Moscow, Putin met with a former German chancellor, Gerhard Schröder, who now serves as chairman of the board of a Gazprom-controlled company planning to build a pipeline from Russia to Germany under the Baltic Sea, cutting out Ukraine.

(emphasis mine)

It appears that the Germans certainly think that the Ukraine is taking more than it buys from Russia, and I’m inclined to agree.

Much of recent Ukrainian economic expansion, before the world wide recession hit, was driven by below market gas supplied with the implied quid pro quo that Ukraine would be an ally of Russia, and having to pay fair market value for the gas is a real hardship, particularly now that FSU countries’ economies seem to be in free fall.

Like the chicken said, “You knew the job was dangerous when you took it.”

That being said, we are not seeing a punitive price, and best evidence is that the Ukrainians are stealing the gas.

If the ‘Phants Can’t Kill the Stimulus Package

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They will do their level best to ensure that whatever passes is so broken as to be useless.

Case in poiny, Mitch McConnell is suggesting that instead of revenue sharing grants to the states, that they be loans:

But back to my original point: This idea was tried once before, in the depths of the Depression. In 1932, Congress appropriated $300 million to the Reconstruction Finance Corporation to send to the states for unemployment relief. (Unemployment insurance did not exist until the Social Security Act of 1935 was passed). Unfortunately, Herbert Hoover’s RFC didn’t offer the funds to the states as grants but as loans. Already all-but-insolvent, many states didn’t take the offer. And the economy continued its plunge into the abyss.

This is Mitch McConnell’s idea of a policy worth reviving.

I would note that for a non trivial number of states, I think that it’s around 15, this loan would not allow them to prevent draconian cuts in services, because they are not permitted to take out loans for operating expenses, only for capital investments.

These folks are not concerned that a stimulus package will not work, they are concerned that it will work, because if government works, then they are fracked politically.

Gaza Update

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Well, there was a 3 hour truce to deliver supplies, and then the fighting started up again, and the Israeli cabinet has OK’d continued conflict.

On a brighter note, things seem to be developing diplomatically, with a lot of people on both sides in Cairo.

Finally, if you think that the Middle East can make you cynical, you haven’t ever truly experienced real cynicism. Just check out the War Nerd’s latest, it’s on Gaza, and it makes everyone else that I’ve ever heard of sound like Little Orphan Annie.

To paraphrase Paul Hogan in Crocodile Dundee, that’s isn’t cynicism, this is cynicism

Just When You Think that Bush and His Evil Minions™ Can’t Get Any More Petty…..

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Remember that Obama wanted to start living in Blair House on January 1, as opposed to January 15, because his two children needed to start school?

Remember how the Bushies said that they couldn’t because it was already booked.

It turns out that it was a lie. There was no one booked to stay there, and they hurriedly invited John Howard, Australia’s former Prime Minister for one night so that Bush could bestow upon him that final mark of shame, a Medal of Freedom.

Note that Blair house has 119 rooms and 35 bathrooms, so they might never have even seen each other.

They really are a group of very small people.

Economics Update

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Umm….Holy excrement?

The payroll firm ADP Employer Services just released its report as to job losses in December, 693,000 jobs lost…..In one month…..The ironically named Challenger, Gray & Christmas is also saying that layoffs reached a 5 year high in 2008.

The BLS will release its numbers on Friday, but I rather expect them to hew pretty closely to ADP’s numbers, particularly since ADP has been working to make its survey match the government numbers.

It’s no wonder that late loan payments are higher than at any point since 1980, there are a lot of people out of work.

In retail, we saw U.S. retail sales fell 0.8% YOY in the week following Christmas, and mall vacancies are at a 10 year high, rising from 6.6% to 7.1%, the highest quarterly jump ever recorded, and the highest vacancy rate ever recorded.

We are also seeing mortgage applications down for the first time in 4 weeks, though that could people waiting for the Federal Reserve’s purchase of mortgage backed securities to drive rates lower.

We are seeing similarly grim economic data in Europe too.

About the only bright news is that GM is saying that it does not expect to need more in the way of loans…After $13.4 billion in tax dollars to GM and $6 Billion to GMAC, I would certainly hope so.

The jobs number drove the dollar down, and traders are starting to go long on the Canadian dollar, which implies that they expect commodities, oil and timber come to mind for Canada, to start going up again.

That being said, expectations were not met today, with oil falling by 12% on reports of large inventories…..They are literally running out of tanks to store the stuff.

Retail gasoline, however has risen for the 9th straight day, and is now higher than it was a month ago…..My thinking here is that there was an overshoot on the way down, and (assuming that oil stays around $50/bbl) we will be looking at $2/gal gas.

Harry Reid: Bite My Shiny Metal Ass

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It seems that he is is afraid of his own shadow, because now he is going on about the risks of “overreaching”.

The American people don’t give a damn about overreaching right now. They care about results, and the Republicans will do everything that they can to prevent results, so when he says, “essential for President-elect Obama and congressional Democrats to work closely with Republicans in the new Congress,” he is simply giving Republicans a club to hit him with.

Tim Kaine to head DNC

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I think that this development reflects a decision by Barack Obama to de-emphasize and reduce the activity level of the Democratic National Committee.

Regardless of his virtues or vices, and I see VA Governor Tim Kaine as a Conservative in the party, it’s clear that he can’t devote himself full time to running the DNC.

In normal times, being governor is a full time job, and now, with state finances imploding, it’s twice that.

Gaza Update

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In what may be the most significant move of the war, Israelhas seized the Hamas TV station, Al-Aqsa.

Really I’m serious. I believe that one of the strategic goals of this war for the Israelis is seizing Hamas’s media tools, which play a significant part of their political apparatus.

I’m not making joke about how this war is really a hit called by Disney Corporation, because Al-Aqsa broadcast “Farfour,” an anti-semitic Mickey Mouse look-a-like.

There is more to this action than that, though I would still day, whatever you do, don’t f$#@ with the mouse.

The most interesting thing here is just how terrified surrounding Arab governments are of Hamas.

Notwithstanding Hamas’s Sunni theology, their close ties to Iran have Egypt, Jordan, and the House of Saud in particular concerned about some sort of revolutionary Shia tidal wave hitting them.

Senate Follies

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Neither Franken nor Burris were sworn in today.

Burris was turned away because Harry Reid is taking a stand on principle, which he will shortly fold on, and Franken was not seated because the Republicans are using Reid’s brief flirtation with principle as a fig leaf for politics.

And I just heard on Countdown that the head of the Senate Rules Committee, Diane Feinstein,* has said that in fact Burris’s paperwork is in order.

This is FUBAR.

*Full disclosure, my great grandfather, Harry Goldman, and her grandfather, Sam Goldman were brothers.