Republican Panelists Dissent on Causes of Crisis –

Economy Vulnerable to Rare Earth Shortages, Report Says – The United States is too reliant on China for minerals crucial to new clean energy technologies, making the American economy vulnerable to shortages of materials needed for a range of green products — from compact fluorescent light bulbs to electric cars to giant wind turbines.  So warns a detailed report to be released on Wednesday morning by the United States Energy Department. The report, which predicts that it could take 15 years to break American dependence on Chinese supplies, calls for the nation to increase research and expand diplomatic contacts to find alternative sources, and to develop ways to recycle the minerals or replace them with other materials.  At least 96 percent of the most crucial types of the so-called rare earth minerals are now produced in China, and Beijing has wielded various export controls to limit the minerals’ supply to other countries while favoring its own manufacturers that use them.  “The availability of a number of these materials is at risk due to their location, vulnerability to supply disruptions and lack of suitable substitutes,” the report says, which also mentions some concerns about a few other minerals imported from elsewhere, such as cobalt from the Congo.
 
 Greek Strikers Halt Flights, Buses as Bailout Bites – Greek unions grounded flights, kept ferries docked at ports and shut down public services today to protest wage cuts as the government sticks to conditions of an international bailout. Protesters clashed with police in Athens. Air-traffic controllers walked off the job, canceling all flights to and from Athens International Airport. Public transport workers, whose salaries were cut 10 percent under a bill approved early today in parliament, worked on and off between 9 a.m. and 5 p.m. to carry protesters to rallies. About 20,000 people heeded a call from the country’s two biggest union groups to protest in Athens, according to police estimates. Some protesters threw fire-bombs at officers deployed outside parliament and at the Finance Ministry in the center of the capital. Police responded with tear gas and flash grenades. Former transport minister Kostis Hatzidakis was attacked by protesters and led to safety after receiving cuts to the face, television footage showed.

Europe Staggers as Critical Summit Looms – Europe’s smoldering financial crisis flared up on Wednesday, with riots over austerity spending in Greece, new signs of troubles in Spain and little indication that European leaders were moving any closer to agreement on a systemic approach to long-term stability.  The day’s events emphasized the complex social, political and economic challenges facing government leaders at a European Union summit meeting on Thursday and Friday in Brussels. The meeting is expected to focus on the financial crisis, but there was no sign of the emergence of the sort of comprehensive plan that financial experts say is needed to beat back the unfolding turmoil.  In remarks to the German Parliament on Wednesday, Germany’s chancellor, Angela Merkel, tried to reassure the markets and answer some of her own critics by allaying fears about the future of the 16-nation monetary union.  “No one in Europe will be left alone, no one in Europe will be abandoned,” Mrs. Merkel said,“Europe succeeds when it acts together and, I would add, Europe succeeds only when it acts together.”

 
 ‘Avalanche’ of Sales Drives Rates to 16-Month High – Yields on top-rated tax-exempt securities due in 30 years climbed twice as fast as those on U.S. Treasuries, reaching the highest level in almost 16 months. The prospect that tax-free municipal issuance will surge if the Build America Bonds program isn’t renewed after Dec. 31 drove 30-year tax-exempt rates up 20 basis points, or 0.2 percentage point, to 4.84 percent, the highest since Aug. 17, 2009, according to a Bloomberg Valuation index. Bondholders sought buyers for $1.4 billion in debt yesterday, the most since June 15, 2006, according to a Bloomberg bids-wanted index. “Nobody’s bidding,” There’s “an avalanche of bid-wanteds, and there is just not enough liquidity to accommodate this much sell-side pressure.” Amid the rising yields, New York City cut today’s tax- exempt offering by two-thirds to $100 million citing “volatile market conditions,” the Office of Management and Budget said in a press release yesterday.

 
Germany is rising up against Merkel’s euroscepticism – An extraordinary debate in the Bundestag yesterday: A united opposition attacks Merkel over her complacent crisis resolution policy; Green leader calls her a “Teutonic Savings Monster”; Steinmeier says she is turning ECB into a bad bank; the Left says see is mixing up Germany’s interest with those of its banks; criticism undermines Merkel’s position at today’s EU summit, as Spain will push for an extension of the ceiling and remit of the EFSF; Der Spiegel calls on Germany to “dare more Europe”; Mohamed El Erian says Germany should adopt a holistic approach to crisis resolution; Kevin O’Rourke says resolution must combine restructuring, fiscal burden share, and ECB support; Willem Buiter says resolution must include a massive increase in EFSF ceiling and big-league bank restructuring; Calculated Risk calls the eurozone a slow motion train wreck; Moody’s issues downgrade warning for Spain amid concerns over funding pressures next year, sending the euro lower against the dollar; violent protests erupt in Athens against austerity; in 2015, meanwhile, southern Europe will adopt the silvio as its new currency, according to a scenario game by FT Deutschland. [more]
 
Republicans Make Good On Threat To Force Lame Duck Spending Showdown – Before the midterms, conservative leaders were warning that they’d force a showdown over federal spending much earlier than expected: in the lame duck session, before the newly elected Republicans come to Washington. They weren’t joking. Republican and Democratic leaders are now engaged in a brinksmanship that could result in a temporary shutdown of the federal government. After the election, Republicans voted among themselves to eschew all earmarks for two years, and now they have to make good on their pledge. Yesterday, Democrats’ chief appropriator, Sen. Daniel Inouye (D-HI) unveiled what’s known as an omnibus spending bill — a bundled up package of appropriations legislation, earmarks, and other measures — which would keep the government running for a year.  In response, most Republicans — even those whose multimillion dollar earmark requests are included in the legislation — are saying, "Hell no you can’t!"  That puts them all in an awkward position. At a press conference this morning, Sens. John Cornyn (R-TX) and John Thune (R-SD) were at pains to explain away why they requested earmarks that appear in the bill they’re now railing against. But it also sets the two parties up for a standoff — and one side must blink by this weekend, or the lights will start going out in the federal government.
 
Can economists make the system for organ transplants more humane and efficient? – The Council of Europe’s allegations about Kosovo Prime Minister Hashim Thaçi’s involvement in kidney harvesting are as grisly as they are startling: "When the transplant surgeons were confirmed to be in position and ready to operate, the [Serbian] captives were brought out of the ‘safe house’ individually, summarily executed by a KLA gunman, and their corpses transported swiftly to the operating clinic," the report says, according to the Guardian. Though these allegations are unusually grotesque, a black market for kidneys thrives—and not only in poor or lawless nations. Last month, for instance, a private South African hospital group admitted taking about $500,000 from an organ trafficking syndicate. Brazilians and Romanians, including five children, were reportedly paid $6,000 each to give up a kidney. Selling your organs—eyes, bone marrow, parts of livers, skin, or, yes, kidneys—is illegal in every country except Iran. But the World Health Organization describes the black market as massive and estimates one in every five kidneys transplanted per year comes from it.
 
Republican Panelists Dissent on Causes of Crisis –The Republican members of the commission appointed by Congress to investigate the causes of the financial crisis plan to release on Wednesday a document that assigns government housing policies substantial blame for the origins of the 2008 financial crisis.  The release of the 13-page document is an indication of a major partisan division within the 10-member Financial Crisis Inquiry Commission, which was required to deliver its report on Dec. 15 but has pushed that deadline back to January. Two people close to the work of the commission provided copies of the document to The New York Times on Tuesday.  The Republican members of the panel were angered last week when the commission voted 6 to 4, along partisan lines, to limit individual comments by the commissioners to 9 pages each in a 500-page report that the commission plans to publish next month with Public Affairs, an imprint of the Perseus Books Group, one Republican commissioner said.  The Government Printing Office will publish an official version of the report that will contain the full comments of each commissioner, but the commercially available version is the one likely to get the most visibility,
 
Economy Still Fragile, Dallas Fed, National Economic Update: Economic indicators released early in November suggested that the U.S. economic outlook was brightening. Since then, releases have been mixed. Real activity appears to be gaining momentum, yet not rapidly enough to provide consistently strong job gains. Growth of real gross domestic product (GDP) was revised up to 2.5 from 2.0 percent annualized in third quarter 2010. Contributions from consumption, net exports and government were larger than initially reported, while inventory investment was revised downward, increasing final demand growth to 1.2 percent annualized from the original 0.6. This is encouraging because the possibility of slow growth after the temporary impetus from the inventory cycle fades remains a predominant concern for the recovery.
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