Category: Europe

It Must Be Nice to Live in a Place Where There are Civil Rights

No Comments

Like the UK, where the nation’s highest court, the Law Lords, have rejected the use of secret evidence in trials:

Britain’s highest court, the House of Lords, ruled against the government on Wednesday in a sensitive case involving the use of secret evidence to justify imposing home curfews on terrorism suspects.

Nine law lords unanimously upheld an appeal by three men who argued it was against their human rights to be subject to control orders, a form of house arrest, based on secret evidence they are not privy to and cannot challenge in court.

“A trial procedure can never be considered fair if a party to it is kept in ignorance of the case against him,” wrote Nicholas Phillips, Britain’s most senior law lord, in issuing the lengthy judgment.

(emphasis mine)

Of course, in the good old USA, we’re moving to a new and improved military commissions system here, for whom an unfair trial is a feature, not a bug.

Economics Update

No Comments

Well, the Euros are not doing well with unemployment, hitting 9.2%, which is not as bad as it sounds, because the EU’s count is more accurate, and so generally excludes fewer people from the unemployment statistics, and because the social safety net is better there.

We have some good news in real estate, with pending existing home sales jumping, though the numbers are still awful, and large proportion of them are distressed sales.

Still, the most recent numbers on construction spending are grim, and you can see that it looks like non residential construction is due to start falling too.

Still the home sales number kept profit taking against oil to a minimum.

The dollar is getting interesting, as in the curse, “May you live in interesting times,” over the past few weeks. It hit another low for 2009:, and there is active talk about countries moving to some other currency, typically the Euro, Russia’s idea of some sort of “non western” reserve currency being a pipe dream.

Economics Update

No Comments

We’re All Red States Now
(Philly Fed Index, Red is Contraction)

The revised numbers for the first quarter GDP are out now, and it’s an upward revision for once, from a fall of 6.1% to a fall of only 5.7%.

Of course, -5.7% is still pretty ugly, and the fact that the ATA Truck Tonnage Index fell 2.2% in April, and that the Philly Fed State index is not showing expansion in any states, seems to indicate to me that we are still talking about a change in the 2nd derivative, i.e. not getting worst faster, than a rebound.

Still, there was still some good news, with the Consumer Sentiment Index reaching an 8 month high, 68.7, and Japan’s factory output unexpectedly rose last month.

Still, with Euro zone inflation hitting 0% this month, the specter of deflation is very real.

Meanwhile, the less concern about the economy has pushed the dollar down, while oil price increases have pushed the Canadian dollar up by 9.6% in May.

Auto Industry Update, GM Bankruptcy Imminent Edition, the Sequel

No Comments

It looks like some of the larger bondholders have blinked, and have agreed to a slightled debt for equity swap.

Even so, GM’s bankruptcy now seems a foregone conclusion.

It’s the Credit Default Swap doing this. There are too many players out there who bought the debt cheap along with an under-priced CDS to hedge the risk, and so have no incentive not to burn the house down.

Still, all this has GM playing the turd in the punchbowl in Europe, where it
made a surprise demand for an additional €300 million payment on the sale of its Opel division, and at this point, the Germans are beginning to suspect that the US Treasury is trying to pull this money from Germany to the US:

German leaders expressed frustration with the United States Treasury, citing inadequate guarantees that European assets would be protected from the likely bankruptcy filing in American courts and that German money would be used only for Opel.

There is also the issue that EU regulators are looking to see if the loan guarantees offered are an illegal state subsidy.

Meanwhile, Ford’s former parts division, Visteon, and Metaldyne have both filed for bankruptcy, and I think that this likely going to get worse, not better.

Economics Update

No Comments

The economic press is touting the fact that consumer confidence hit an 8 month high.

More accurately, they are touting that the jump from 40.8 to 54.9, is the biggest in 6 years….Only, of course, the index is bench marked such that 1985=100, so the number is still crappy.

It’s the same as the Chicago Bank of the Federal Reserve’s April National Activity Index, which is up (Yay!), but this does not mean expansion, it means contraction, just not quite so fast (Awww!).

You know, maybe we can wait to call a recovery until we have a month where the year over year Case-Shiller housing price index does not fall by 18.7%.

Consumers will not spend under these circumstances, and the economy, which is/was 70%+ consumer spending, will not recover.

In any case, be glad we aren’t German, and not just because that means that we aren’t German, because Germany’s GDP fell by 3.8% for the quarter and 6.7% year-over-year, as their export driven economy sputtered.

Meanwhile, in energy and currency land, oil was up on the consumer confidence figures, and the dollar rose as people freaked over the DPRK conducting another nuke test.

If I could predict the actions of the North Koreans, I would make a killing on the futures markets.

An Idea So Good, that It Can’t Happen Here

No Comments

But it appears that the EU is getting ready to give people the same basic rights with software as they have with other consumer products:

Software companies could be held responsible for the security and efficacy of their products, if a new European Commission consumer protection proposal becomes law.

Commissioners Viviane Reding and Meglena Kuneva have proposed that EU consumer protections for physical products be extended to software. The suggested change in the law is part of an EU action agenda put forward by the commissioners after identifying gaps in EU consumer protection rules.

This would invalidate the bullsh$# license provisions which say, “What, you expected this sh#$ to work? Your problem!”

It would, of course, put Microflaccid out of business.

Economics Update

No Comments

Grim news out of Europe, with Euro zone GDP collapsing by 2.5% in the first quarter…That’s a quarterly decline, not a year over year decline, and largest decline for the Euro zone in at least 13 years. Before that there were no Euro zone statistics. (It should be noted that the YoY number is 4.6%, which is merely scary, as opposed to a terrifying double digit annual decline)

Not surprisingly, this pushed the dollar up relative to the Euro.

As bad as this was, it was even worse in Eastern Europe, because their recent growth was driven by exports and foreign investments looking for high returns, which are both gone.

Again using the quarterly numbers, Hungary -6.4%, Slovakia -5.4%, the Czech Republic -3.4, and Romania -6.4%.

A lot of this was driven by Germany’s contraction, which was among the largest in Western Europe, because they have a Hooverite as Chancellor, which was -3.8%, the biggest decline in Germany since the end of WWII.

Seriously we are talking end of the world numbers, he said, citing experts:

Dr Ray Stantz: What he means is Old Testament, Mr. Mayor, real wrath of God type stuff.
Dr. Peter Venkman: Exactly.
Dr Ray Stantz: Fire and brimstone coming down from the skies! Rivers and seas boiling!
Dr. Egon Spengler: Forty years of darkness! Earthquakes, volcanoes…
Winston Zeddemore: The dead rising from the grave!
Dr. Peter Venkman: Human sacrifice, dogs and cats living together… mass hysteria!

Of course you have to go to Russia for a really scary number, -9.5% in the first quarter….Annualize that.

The news from the US was relatively mild, with the Empire State Manufacturing Survey showing only a modest decline. The index was up, but still below zero, so it still indicates contraction, and the Fed’s report on capacity utilization showed a marked decline.

We are still seeing the largest year over year decline in consumer prices since June 1955, but month to month indicates that there was no change, which eases deflationary concerns…A bit.

In banking, we are seeing further signs of easing with both the LIBOR and TED spread falling.

The easing of credit may be why the FDIC is walking away from its plan to guarantee 10 year bank bonds, though there are also indications of push-back from Treasury.

Meanwhile, the horrible GDP numbers from Europe, and the stronger dollar drove oil down, though retail gasoline is moving in the opposite direction, up 12% over the past 17 days.

Economics Update

No Comments

With all this talk of green shoots, its worth noting that the evidence in the underlying economy does not really indicate much in the way of a recovery, which is why the decline in retail sales in April should come as no surprise.

That’s a big portion of the US economy right there, and what’s not is real estate, which is showing little in the way or recovery either, with foreclosures at a new record in April, though actual repossession of property fell, because the banks are worried about the costs of actually having to take care of the property when they finally assume ownership, along with changes in laws that have drawn out the process in many of the hardest hit states.

The number of foreclosures were up 1% over an already record March, and up 32% year over year.

We also saw a drop in mortgage applications as refinancing slowed with the increase in interest rates.

There is not a whole bunch of economic recovery in the Euro zone either, with industrial output falling more than 20% year over year.

We are seeing some good news on the credit front again though, because LIBOR hit a 2 month low, though in the real world, where it’s lending to real businesses, as opposed to banks, real interest rates, interest minus inflation, are at a 25 year high and it is curtailing all sorts of capital activity.

It also looks like BankUnited may be heading to a headline on Friday Night Bank failures, with a late filing with the SEC saying that they need to raise over $1 billion in capital, because, “the Board of Directors of the Bank entered into a Stipulation and Consent to Prompt Corrective Action Directive (the “PCA Agreements”) with the OTS.” (Office of Thrift Supervision).

In any case, the bad consumer spending figures pushed oil down on demand concerns, and pushed the dollar up as investors fled to safety.

EU Parliament Votes for Sanity

No Comments

A number of copyright numnuts, in particular Nicholas Sarkozy, want the law to require ISPs to take down an account on an accusation from a license holder, but the Euro Parliament passed language saying that any take-down has to be in court:

But a battle has exploded in the last few weeks over a parliamentary amendment that aimed to prevent countries from passing legislation similar to France’s ‘three-strikes’ bill that would cut off internet access if users are repeatedly caught downloading music, films and other content without permission of the copyright holder.

…

France, wanting to save what has become a flagship piece of legislation for President Nicholas Sarkozy, whose wife is a pop star, lobbied other member states heavily on the issue.

…

Catherine Trautmann, the deputy responsible for shepherding the legislation through the parliament, said she was confident that the wording in the compromise meant that a court order was required before access could be cut.

French culture minister Christine Albanel meanwhile believed that the compromise meant that websurfers who had their internet access cut had a right to judicial appeal – but only after the deed had been done.

The deal unravelled on Wednesday morning however, when the full sitting of the parliament supported a late amendment 407 to 57, with 171 abstentions, re-inserting stronger language requiring governments to obtain a court ruling before access can be cut.

…

(emphasis mine)

I guess Sarko is big on this because he just knows that record distributors and movie studios are such honest and empathic people that they would never abuse this power.

This will probably push the bill into the next session, which promises to have even more consumer advocates.

Two snaps up.

I Didn’t Expect a Bloody Irish Inquisition!

No Comments

The right to blaspheme is a basic human right. Or it should be in a modern democracy.

If your God can’t take me calling him a pig felcher, then he ain’t much of a God.

Of course, Ireland, notwithstanding its economic success until recently, is still very much a 3rd world nation, so the Irish Minister of Justice, Dermot Asshole Ahern, has decided to ignore the European Convention on Human Rights, and put forward a bill to make it crime, punishable by a fine of up to €100,000 to, utter or write anything “grossly abusive or insulting in relation to matters held sacred by any religion, thereby causing outrage among a substantial number of the adherents of that religion; and he or she intends, by the publication of the matter concerned, to cause such outrage”.

There is no institution that needs the air let out of it than organized religion, and the right of people to do this should not be abridged.

More Info on the Georgia Mutiny

No Comments

Well, I asked for background on the Georgian mutiny, and I just got it.

This wasn’t a coup attempt. This was a mutiny in the classic sense of the term, with an armored brigade (!) being ordered to take action against peaceful demonstrators, and the commander, Colonel Mamuka Gorgiashvili, with, one assumes, at least the tacit the consent of his subordinates refused to deploy against peaceful protesters.

He defied orders and remained in barracks.

This is probably significant, the state security apparatus has been a bulwark of Saakashvili rule, but it is by no means an attempt to disrupt the NATO maneuvers or a coup.

There is a Context in Georgia

No Comments

But I am not sure what it is, so the report of a tank battalion mutinies in Georgia is concerning, but I do not know what it means.

I still believe that the Russians have thoroughly penetrated the Georgian state security apparatus, so I don’t see this as being part of a Russian backed coup. It would have been more extensive and better organized if it had.

It is likely, however, that the Russians were aware of what was going on before the Georgians, and certainly they view the events with no small amount of schadenfreude, but I think that whatever happened here had a lot more to do with what is going on in Georgia than with Russia.

That being said, I have yet to see anyone, anywhere give more specifics than, there was a mutiny, and the Georgians accused the Russians.

Perhaps there is something to be found on Georgian or Russian language sites, but I can’t read either tongue.

My guess would be that there are elements in the Georgian military not happy with the NATO exercises, but that is only a very uninformed guess.

Denmark Delays Fighter Purchase

No Comments

It looks like their decision on an F-16 replacement has been pushed to the fall, to allow the formulation of a new National Defense Strategy (basically a budget white paper).

The competitors are the JSF, F/A-18, Gripen, and my guess is there are a number of reasons here, that they want more time to get firmer cost figures on the JSF, which seems to get more expensive daily, and see if they can afford it, and they see the the delay to extract price concessions.

I think that a lot of countries, like Denmark, which were likely JSF buyers, are looking at the numbers, and getting sticker shock.

Friday Night Bank Failures

No Comments

28 so far this year.

America West Bank, Layton, UT

Citizens Community Bank, Ridgewood, NJ

Silverton Bank, N.A., Atlanta, GA

Full FDIC list.

Oh, we also have a German bank, Hypo Real Estate (HRE), that specialized in loans to developers being nationalized by the German government, albeit in a confusing, slow motion sort of way.

And finally, there is Accredited Home Lenders Holding Co., a San Diego, California based mortgage banker filed for Chapter 11 bankruptcy, listing debt of as much as $500 million and assets of less than $50 million.

Spanish Judges Opens Torture Inquiry On Gitmo

No Comments

So, it looks like the Spanish judges are ignoring the recommendation of the Spanish Attorney General, and proceeding with an investigation.

The best outcome of this investigation, IMNSHO, is that this forces the US government to pursue the perpetrators of these crimes, though the fact that this will tend to prevent Bush and His Evil Minions&trade from traveling freely around the world because of concerns regarding torture is an added plus in any case.

Economics Update

No Comments

Great Googly Moogly, the new GDP numbers are in for the first quarter, and they show that the economy contracted at a 6.1% annual rate, which follows a 6.3% rate for Q4 of 2008, the worst contraction for a 6 month period in 50 years.

There is a bright spot, however. As Calculated Risk notes, is that sectors that have been traditionally leading are doing better than those that typically lag a recession, which might point toward a bit of a moderation.

At least we are not Lithuania, whose economy contracted by 12% year over year.

It’s news like this that makes the Federal Open Market Committee (FOMC) statement minor economic news.

Basically, they said, “We think that it’s getting worse more slowly, and we can’t cut rates any more, but we will keep shoveling money out the door, and we are watching inflation, really we are.”

If that means anything, it’s beyond me, but it appears that the
Fed’s aggressive asset purchase program will not be further expanded, which implies that they think that we are at/near bottom.

In other banking news, remember yesterday’s stress test update, which fingered BoA and Citi?

Well, there are now reports that at least 6 of the 19 banking giants are under capitalized, hoocoodanode?

Meanwhile, in real estate, we have mortgage applications falling by 18%, and it appears that there is a tidal wave of troubled commercial mortgages on the horizon, with, “volume of commercial mortgages at risk of default has quintupled since the beginning of 2008.”

One of the interesting things here is that commercial real estate loans are generally short term, 5 years or so, so people who have to refinance into the teeth of the recession and credit crisis may be up a certain creek without a paddle, even though they would be otherwise solvent.

Meanwhile, oil rose on the slightly positive Fed statement and reports of a drop in gasoline inventories, while the dollar fell on on optimism about the world economy.

Swiss Push Back Fighter Deal Competition

No Comments

The official word is that they are looking for more industrial involvement by Swiss industry, but the effect is to push back the date of the decision.

The competitors still standing are the Dassault Rafale, Eurofighter Typhoon, and the SAAB Gripen

Of note is the fact that they are still evaluating noise data, which would tend to favor the smallest aircraft (Gripen), and it looks like they want the Swedes to purchase their Pilatus trainer should they win.

We Need to Be More European

No Comments

Because the EU is proposing a cap on executive compensation:

Bankers’ bonuses and golden parachutes would be capped in all European Union countries under a draft policy circulating in Brussels that amounts to one of the broadest responses yet to concerns about executive pay.

No BS about, “If you participate in this program, you are limited,” it applies to everyone.

They are saying, “Just so much and no more never more than a spot or something may happen, you never know what.”

Even if the bankers were doing a good job, that level of remuneration is immoral, whether its a lawyer or a football player.

Economics Update

No Comments

The British economy just posted its largest quarterly loss since 1979, 1.9 % for the quarter, and 4.1% year over year.

We had Moody’s downgrade American Express debt from A2 to A3, because of lower earnings from fewer purchases made with its cards, and more bad loans.

Unsurprisingly, the same thing is happening with the stress tested banks, where PNC Financial says that bad assets are expected to triple.

We do have some good news with Ford Motors beating expectations, though the numbers are still awful, and corporate borrowing costs falling below last October’s numbers.

In currency, the dollar weakened again, and this had traders bidding up the price of oil.