Links: 2009-07-02

The Chinese are all over the natural resource sector. CNPC has offered $17 billion for Repsol YPF assets in Argentina. Now CNOOC another Chinese oil company is also interested.

Unemployment is falling in Spain. We saw the 2nd consecutive month of declines in jobless claims in June. This is very good news.

When 21-year-old Rigoberto was working on construction sites in the US, he could earn up to $400 a week. Now that he is back home in Mexico, working as a farmhand, he makes just $65.

Rio Tinto’s $15.2bn rights offer, the fifth-biggest on record, on Thursday generated strong demand from UK investors who snapped up almost 97% of the 524m new shares offered in London at £14 per share – raising about £7.1bn, more than a fifth of its market cap. Rio was also selling 150m new shares in Australia at $A28.29 per share. China’s state-controlled Chinalco confirmed it had taken up its full entitlement to Rio’s issue to maintain its 9% stake in the miner, despite the recent failure of their investment deal.

This is one positive of Obama’s reform package. Hat tip Simon Johnson. "Buried within the 88-page Obama administration proposal to overhaul financial regulation is an overlooked option called a “rapid resolution plan”. It mandates that systemically important financial companies be required regularly to file a “funeral plan”: a set of instructions for how the institution could be quickly dismantled should the need to do so arise."

Americans look set to become better savers than Canadians for the first year in almost four decades as harsh economic times drive them to save their pennies.

"Russian banks may need to raise $60bn (£36bn) in fresh capital if the recession drags on and energy prices wilt again, according to a report by Fitch Ratings."

“We are entering the post-declarative and post-positioning stage of the Obama presidency,” says David Rothkopf, a former Clinton administration official. “How he handles healthcare in practice will be a defining moment.”

Plus ca change.

"An enterprise value of 10 times earnings before interest, taxes, depreciation and amortization is at the higher end of the spectrum for the sector, suggesting good growth and profitability. To keep it simple, this multiple means Facebook needs to generate a nice round Ebitda of $1 billion a year at some point in the future to justify that $10 billion valuation (not including any discounting to account for the time value of money and the risk of not reaching that target)."

"Chetan suggests that interest rates in the region are going to stay low for a while, adding that policy makers should be able to prick any burgeoning bubble with tightened lending standards or other non-monetary policies. Still, the prospect of a new bubble inflating on the other side of the world is a reminder that easy money policies have a way of puffing up riskier asset classes. Yes, we’re looking at you crude oil."

The cultural divide over work and rest is very apparent here. Michelle Obama wanted to shop on Sunday in France. Stores are closed. Now Sarkozy wants tourist area shops open on Sunday and people are unhappy with Michelle Obama for it.

Basically we prefer what we want to hear to the truth. Cognitive dissonance in effect. What is interesting is why some people seek out dissonant views. Take a look.

This is heady stuff. "…proper protein folding over time in long-lived bats explains why they live significantly longer than other mammals of comparable size, such as mice."

"Despite her disastrous performance in the 2008 election, Sarah Palin is still the sexiest brand in Republican politics, with a lucrative book contract for her story. But what Alaska’s charismatic governor wants the public to know about herself doesn’t always jibe with reality."

"Rival factions close to the McCain campaign have been feuding since last fall over Palin, usually waging the battle in the shadows with anonymous quotes. Now, however, some of the most well-known names in Republican politics are going on-the-record with personal attacks and blame-casting."

"Rumsfeld valued his personal fortune at between $50 to $210 million at the beginning of the Bush Administration. The problem was many of the securities he held were in companies that did business with the DOD, which could put Rumsfeld in violation of government ethics rules. So Rumsfeld had to divest some of these assets — a whole lot of them, it turned out. And during that process, which went "slowly," Graham reports, Rumsfeld simply put off canceling any major weapons programs, a move some on his staff apparently expected him to make. Rumsfeld’s specific thinking is unclear."

Things are looking good in China. The question is whether they can de-couple from he West.

This is a more populist take on the latest boom bust cycle that echoes a post I wrote last year. "We became indebted, in large part, because of a structural imbalance in society, one that skewed incomes, redirected wealth, and encouraged companies and individuals to lever up instead of seeking out and earning higher incomes. At the same time, our unwillingness to say no to great society programs, without raising taxes to pay for them, meant that we became beholden to the bond market for funding ongoing operations, this creating an elevated base of required income to service our rising debt."

You know I have gone Keynesian on you and favour the fiscal stimulus. Here is another take via James Pethokoukis, now at Reuters. "Did Team Obama purposely give a bad forecast, or did its old fashioned Keynesian approach merely lead it astray? Good question. Either way, it’s the Obamacrats’ economy now."

This is a masterful piece written a decade ago about how financial globalisation and innovation create the potential for bubbles through the mispricing and shifting of risk to agents which cannot bear it. Buiter warns that bubbles followed by collapse produce a dead-weight loss for society. Very up-to-date.

The breakdown showed that small and mid-sized businesses were the largest job cut contributors with -177,000 and -205,000 respectively. Large businesses accounted for about 91,000 of the cuts.

Raiffeisen Bank pulled a debt offering that makes one wonder whether more trouble is brewing in the world of Austrian banks. Stay tuned

"…now that Michael’s passed away, everyone remembers him for the good, old, unforgettable hits he’d given us in the 80ies. And, apparently, everyone is buying them, because, based on preliminary sales numbers from Nielsen SoundScan, 2.6 million Michael Jackson (his work with Jackson 5 and the Jacksons included) digital downloads were sold in just one week. The week before his death, 48,000 Michael Jackson songs were sold, which makes this week’s numbers a staggering jump."

"The headline manufacturing PMI measure rose to to 47.0 from 45.4 in May. That was the fourth consecutive month of improvement in the index, though any figure below 50 still represents contraction."