Shanghai Smog Syndrome and PRC Pollution – Aside from becoming the world’s largest carbon emitter over the intervening years, China’s problem with keeping its major cities liveable has taken many lumps. Beijing’s famously bad air was dealt with by implementing fairly draconian measures like closing down adjacent factories and limiting automobile traffic during the 2008 Beijing Olympic Games. Shanghai put similar measures in place during the just-concluded Shanghai Expo 2010, some clamping down on construction activity. With that event coming to an end, however, it seems Shanghai is back to its old smoggy ways–and worse. From our favourite official publication, the China Daily: China’s largest metropolis has suffered from high levels of pollution since early November, with pollution index figures far higher than those recorded during the six months of the World Expo. As of Wednesday, the city has witnessed its air pollution index passing 100 for eight days this month, the worst readings in the past five years. China’s environmental standards rate a reading below 50 as "excellent", from 50 to 100 as "good" and above 100 as "polluted". The latest pollution occurred on Monday when the index reached 107. On Nov 13 it skyrocketed to 370, the highest level in the past decade.
Running on empty? – Empire asks what will happen when the world runs out of oil. – video – Al Jazeera English
Serial Bailouts Mean Diminished Euro.- THE EURO IS NOT DEAD, but it may be fatally wounded as a viable alternative global reserve currency. For now, the dollar reigns supreme, by default, in every sense of the word. Almost immediately after Ireland acceded to a bailout from the European Union and the International Monetary Fund, the international bond markets have set their sights on Spain as the next crisis point, sending its government bonds plunging and the cost of insuring its sovereign debt soaring. "With Ireland moving toward bailout, bond vigilantes apparently have decided to skip over the Portugal domino and target Spain," writes Uwe Parpart, Cantor Fitgerald’s chief economist and strategist for Asia. Spain’s credit default swaps hit a record, topping 300 basis points (a premium of $300,000 to insure $10 million debt), to 305 basis points. The yield on 10-year Spanish government bonds has soared a full percentage point as their spreads over German bunds hit a record.
Irish bonds at 9%, Portuguese bonds at 7% – and Weber pours oil in the fire – Analysts now speculate how long it would take for the crisis to spread to France; the panic was provoked by comments from Axel Weber, who said that the EU would increase the ceiling of the EFSF if necessary; Weber’s comments are based on a calculation, assuming a total possible default mass in the eurozone of €1070bn; German finance ministry rejects calls to increase ceiling; the European Commission is also pondering on raising the size of the fund; France and Germany agreed on terms of bail-in proposal; The EU presses Portugal to accept money from the fund; Robert von Heusinger praises Merkel for engeneering a fall in euro exchange rate; Michael Petis, meanwhile, says that Europe will end up either as a unified country or totally fragmented with little chance of reunion. [more]
Will the Irish crisis spread to Italy? – Here we go again with talks of the end of the euro. This time, however, the trouble was stirred by President of the European Council himself, Mr. Van Rumpuy. The reason for alarm is well known. As soon as it became clear that Greece would miss, albeit slightly, the deficit reduction targets agreed with the IMF and the EU, the nightmare situation of Irish – and possibly Portuguese – default began to materialise. The EU, together with the European Central Bank and IMF are now keen to draw a reluctant Ireland into accepting a life-jacket package (with strings) of €80-€90 billion, that would stop, in the EU’s mind, the disease from spreading to other vulnerable countries. If it spreads to Italy, that could spell the end.
Fed Hawks To Get A Boost On 2011 FOMC – Dissenting voices at the Federal Reserve are set to get a boost in the 2011 voting rotation for the Federal Open Market Committee.Every Fed policymaker, including regional bank presidents, get a voice at the table during FOMC meetings. But regional bank presidents draw more attention than usual when they’re voters, as Kansas City Fed President Thomas Hoenig has found with his dissents for all seven votes this year. Four presidents of regional Fed banks will step into the rotation at the Fed’s policy meeting in late January: Charles Evans of Chicago, Charles Plosser of Philadelphia, Richard Fisher of Dallas and Narayana Kocherlakota of Minneapolis. They’ll join the eight permanent voters on the FOMC: seven Fed governors (one of which is now vacant) and the New York Fed president. In the 2011 lineup, Evans will bring a dovish voice to the FOMC table, arguing for strong action from the Fed to combat a deflation threat. Most attention among regional bank presidents will likely go to Plosser and Fisher, two policymakers who have not been shy about casting dissenting votes. Fisher dissented five times in 2008, joined twice by Plosser, as inflation pressures emerged with the spike in oil prices.
Fed Sends $56.5 Billion to US Treasury From Income on Assets – The Federal Reserve transferred $56.5 billion to the U.S. Treasury from January until September from interest earned on its expanding securities portfolio, the central banks said in a report. The Fed’s total assets stand at $2.32 trillion, up from $883 billion at the end of November 2007 when the financial crisis began to unfold. U.S. central bankers decided to increase their balance sheet further Nov. 3 with $600 billion in additional purchases of U.S. Treasury bonds. The Fed released its monthly balance sheet report for November in Washington today, 11-24.