Monthly Archives: December 2005

Italian Industrial Output Falls Sharply

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Well, this was really what I had been waiting for, not that I welcome the news, obviously, but simply that as far as I am concerned it is far from unexpected. People have been ‘writing off’ Italy’s grave structural problems far too easily IMHO:

Industrial production in Italy declined 0.9 percent month-on-month in October for an annual drop of 2.7 percent, national statistics agency ISTAT reported today.

The fall was driven by a 3.6 percent year-on-year drop in intermediate goods production and a 3.1 percent reduction in consumer goods output.

OTOH, the German Investor Confidence Index published by the ZEW Center for European Economic Research spiked dramtically upwards today showing how strong growth in China and the US and the falling euro is boosting expectations in Germany’s export sector. This is, I think, pretty much what we can expect to see from Germany in the months and years ahead: strong export growth when the global economy is booming, and weak domestic demand keeping overall growth tepid.

China: 20% Bigger Than We Thought?

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The Chinese economy could be 20% bigger than previously estimated. Since almost everything about Chinese data should have ‘best guess’ status, this probably hardly comes as a surprise, and indeed the estimate itself should be treated with the customary caution, but yes, that is the conclusion which is apparently being drawn from the latest national economic census conducted by the National Bureau of Statistics earlier this year.

A spokesman for the National Bureau of Statistics said on Tuesday it will announce the findings of the census and its impact on the calculation on gross domestic product at a press conference next week.

The NBS refused to say by how much it would revise the GDP figures, but it is expected that the new measure will show the economy is larger by about 20 per cent.

Also in the news, China has now become the world’s largest exporter of information and communication technology goods, according to an OECD reported out today

China overtook the United States in 2004 to become the world’s leading exporter of information and communications technology (ICT) goods such as mobile phones, laptop computers and digital cameras, according to OECD data.

China exported USD 180 billion worth of ICT goods in 2004, compared with U.S. exports in the same category valued at USD 149 billion. In 2003, the U.S. led with exports of ICT goods worth USD 137 billion, followed by China with USD 123 billion.

China’s share of total world trade in ICT goods, including both imports and exports, rose to USD 329 billion in 2004, up from USD 234 billion in 2003 and USD 35 billion in 1996. By comparison, the U.S. share of total world trade stood at USD 375 billion in 2004, USD 301 billion in 2003 and USD 230 billion in 1996..

Evidently China is still on the up and up, and rather faster than we anticipated. As well as being the number one exporter of ICT equipment, China is also the world’s number one investor, as Stephen Roach reported a few days back:

Despite its relatively small share in the global economy — only about 5% of world GDP (at market exchange rates) — China now spends more on fixed investment than any country in the world. In dollar terms, China’s fixed asset investment was running at an annual rate of close to $1,100 billion in the first three quarters of 2005 (at market exchange rates) — in excess of annualized 2005 investment totals in the US ($987 billion), Japan ($733 billion), and the Euro-zone ($651 billion). If China’s investment boom remains unchecked and its currency continues to appreciate, its dominance in shaping the global investment cycle will only grow.

From Herat: a relief I didn’t know I needed…

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Just a few minutes ago I came back from the so called “Mobile Bar”, the weekly social get together of the internationals working with the different NGOs or other international organizations. And let me tell you something: You would not belief the kind of relief I felt right the minute I came to the rooms of the International Committee of the Red Cross (ICRC), who hosted the event today. People, male and female, were chatting to each other, music was playing loudly, alcohol was served – if you wanted it, and the headscarves were abandoned right at the door.
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Operation Firedump

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Earlier this week, the US Department of the Treasury’s order to freeze the assets of a variety of Viktor Bout companies was extended to the entire world by the UN Security Council’s sanctions committee. All assets belonging to the persons and organisations named in this this list are now subject to confiscation anywhere in the world.

The list is, certainly, a little out of date. Several of the operating companies listed have ceased activity, and there is no mention of Phoenix Aviation, Jet Line International, or Aerocom among others. (The delay between the US Treasury’s action and this action is apparently due to the time it took the Office of Foreign Assets Control to pass on documents to the UN, that and Russian objections to the inclusion of Viktor’s brother, Sergei, founder of Air Bas and CET Aviation.) However, a non-trivial number of aircraft continue to fly in the name of firms named by the UN.

This leaves two lines of action: one, to identify the newer firms, and two, to make the UN blacklist a reality. It’s time to find these aircraft and demand their seizure. All bloggers are invited to mirror this and help land them on the fire dump, which is where most of these planes will end up given their age and general condition.

The list is currently as follows, correct as of today:
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Afghanistan, how art thou

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Dusty HeratDust. It’s everywhere. On your body, in your eyes, your hands never feel clean and clean clothes never stay like that for more than an hour. At night, visibility sometimes is less than 50 meters. And during the day, the city vanishes under a cloud of beige.
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Herat, Afghanistan, 4 years after.

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Nation building in failed states can be a little tricky, as not just a few political strategists are realising these days. With respect to Iraq, the deadly result of their misconceptions can be watched on the hour every hour. This, on the other hand, has, for better or worse, reduced the world’s attention devoted to Afghanistan, the other major construction site. Afghanistan is still a country worn and torn by decades of internal and external warfare, ethnic, religious strife, a country where traditional social structures and modernity clashed harshly, wether it was modernity disguised as Imperialism, Communism, or Islamism.
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The Uncertainty Which Surrounds ‘Uncertainty’

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We live, as they say, in an uncertain world. But recently, if you have been noticing, in the economic sphere references to the high levels of uncertainty attached to any forecast have been coming fast and furious. And this warning needs to be taken seriously. The data is very ‘volatile’. Only today there is news that the Japanese recovery may well not be as strong as anticpated. And now we find that:

French industrial production fell by the most in more than six years in October as car sales slumped, suggesting a pickup in Europe’s third-largest economy may lose momentum.

Nothing especially surprising here, and nothing to read to much into, except that we should not be too confident that the eurozone has all the momentum it is claimed to have. Dave Altig at MacroBlog posted yesterday about how some ECB governing council members still think more interest rate rises are a good thing., and the FT states today that “fresh signs of eurozone economic activity picking up emerged on Thursday”. Well that was Thursday, and this is Friday, and it would be a brave man (which I am not) who said that there were fresh signs of economic activity slowing down today. But do remember this: oil is sticking around 60$ a barrell, interest rates are rising (slightly), and Germany’s economy is export and not domestic driven.

By Their Friends Shall Ye Know Them

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And by their enemies. It is now clear that the Iraq and treatment of detainees policy of the current US administration has found little favour down at the Financial Times. The FT is hardly a ‘radical rag’ and views expressed there can hardly be dismissed in the same way some might feel able to lightly-brush-aside opinion expressed in more predictably anti-Bush quarters. Nevertheless, it seems clear to me that the battle for the heart and mind of the Financial Times has now been definitively lost. Some may not care. I beg to suggest they would be making an important mistake.

Today the FT carries prominently on its website this article from the New York Times:


Al-Qaeda link to Iraq tied to coercion claim

The Bush administration based a crucial prewar assertion about ties between Iraq and Al Qaeda on detailed statements made by a prisoner while in Egyptian custody who later said he had fabricated them to escape harsh treatment, according to current and former government officials.

The officials said the captive, Ibn al-Shaykh al-Libi, provided his most specific and elaborate accounts about ties between Iraq and Al Qaeda only after he was secretly handed over to Egypt by the United States in January 2002, in a process known as rendition.

The new disclosure provides the first public evidence that bad intelligence on Iraq may have resulted partly from the administration’s heavy reliance on third countries to carry out interrogations of Qaeda members and others detained as part of American counterterrorism efforts. The Bush administration used Mr. Libi’s accounts as the basis for its prewar claims, now discredited, that ties between Iraq and Al Qaeda included training in explosives and chemical weapons.