Author Archives: Doug Merrill

About Doug Merrill

Freelance journalist based in Tbilisi, following stints in Atlanta, Budapest, Munich, Warsaw and Washington. Worked for a German think tank, discovered it was incompatible with repaying US student loans. Spent two years in financial markets. Bicycled from Vilnius to Tallinn. Climbed highest mountains in two Alpine countries (the easy ones, though). American center-left, with strong yellow dog tendencies. Arrived in the Caucasus two weeks before its latest war.

Another Ripple

Posted on by

From the AP via CNN:

Anti-flood measures will be reviewed in all Dutch regions below sea level in light of Hurricane Katrina’s aftermath to ensure they would be adequate in an emergency, the government said Sunday. …

The government is planning to spend $3.7 billion over the next ten years on new projects against the threat from river floods, in addition to the $620 million spent annually on maintaining the current system in the country.

Can’t remember where I read this, but one report said that until the mid-20th century, Dutch dikes were built to withstand a 100-year flood. After a serious event, they decided to raise the standard to a 10,000-year flood. I don’t know if that’s even possible to calculate, but it sure sounds good.

Katrina and the Waves

Posted on by

As Edward suggests below, the macroeconomic effects of Katrina are just now becoming known, much less felt or sorted out.

One item that will be much more widely reported is that in addition to all of the petrochemical industry located there, New Orleans was the linchpin of the Port of South Louisiana. The port is the largest in the United States by tonnage, and the fifth largest in the world. Only Rotterdam, Singapore, Shanghai and Hong Kong are larger.

Stratfor reports, “Fifteen percent of all US exports by value go through the port. Nearly half of the exports go to Europe.” Anything from Montana to Ohio that’s sent to the world in bulk passes down the Mississippi River and past New Orleans. Virtually all of it is loaded onto oceangoing vessels at the PoSL. The port is expected to be closed for at least three months. This is a significant disruption in world trade.

The refinery outage is a serious issue. Even if they were not damaged by the storm, their staffs are probably scattered throughout the region, and not all will have survived. The refineries are also built to be run continuously and brought offline rather slowly. The rapid shutdown and long-term power outage may have done more damage than the storm itself. And they were all running flat-out before the storm to meet high demand.

The big question is consumer spending and demand. If gas prices take enough household income to cause cutbacks in other areas, what will that mean for the American economy? How sharp a drop in growth should we expect? And can the global economy run without the great engine of American consumer demand?

We may be about to find out.

Little Bits of Asia

Posted on by

A while back I asked about EU policies toward China. There’s now a section on the Europa server devoted to just that question.

“There will soon be more people living in the city of Bombay than on the continent of Australia. … Bombay is the future of urban civilisation on the planet. God help us.” (p. 3)

“[W]orldwide, a billion more people a year buy tickets to Indian movies than to Hollywood ones. … When every other country’s cinema had fallen before Hollywood, India met Hollywood the Hindu way. It welcomed it, swallowed it whole and regurgitated it. What went in blended with everything that had existed before and came back out with ten new heads.” (p. 321)

“What is a South Asian? Someone who watches Hindi movies. Someone whose being fills up with pleasure when he or she hears, Mere Sapnon ki rani or Kuch Kuch Hota Hai. Here is our national language; here is our common song.” (p. 323)

“A wide assortment of cousins and uncles peoples the marriage. One works on an oil rig in Abu Dhabi; another is a property dealer in Bombay who spent six years in Nigeria getting rich off the currency scam in the 190s.” (pp. 430-31)
— From Maximum City: Bombay Lost and Found by Suketu Mehta

“[Ms. Zhang] has come to realize what all people who want to change China eventually learn: the current system is at a dead end, but its death is not in sight.” (p. 273)
— From Wild Grass by Ian Johnson

“Anita Jain reported in the Financial Times last week that India has ’10 discount airlines planning to enter the market over the next 18 months.'”
— From Slate

“On July 18th, Shanghai’s first budget airline made its maiden flight from Shanghai?s Hongqiao Airport.”
— From the Economist’s August 2005 Shanghai update

And finally, back on July 9, the perceptive Mark Leonard had a terrific article in the dead-tree edition of the Financial Times on China’s role in global economics and politics. It’s online here.

Unocal Update

Posted on by

Following up on Edward’s post from last month.

Chinese interest has gained Unocal’s shareholders at least $400m extra from Chevron and its shareholders. Whether having regulatory clearance is worth $1.5bn (the remaining difference between the Chevron and CNOOC bids) is an open question. Since Unocal closed at $64.99 per share yesterday, $1.99 per share above Chevron’s bid, the market clearly expects a higher offer from Chevron or a choice in favor of CNOOC.

Unocal’s board of directors has endorsed a sweetened, $17 billion takeover bid from Chevron, rejecting a higher offer from one of China’s state-owned oil companies. …

Chevron boosted its offer by $2 per share to $63 per share — or $17 billion overall — shortly before the Unocal board met Tuesday night. CNOOC Ltd., an affiliate of China National Offshore Oil Corp., has an $18.5 billion offer on the table for the El Segundo-based company. Unocal’s board had previously also endorsed Chevron’s lower offer over the higher CNOOC bid.

More.

Russian Demographics

Posted on by

Just wanted to add a small note to Edward’s ongoing demographic discussion. Lance Knobel quotes Murray Feshbach, an honest-to-goodness expert on Russian demography.

If anything I would now say that I was underestimating the losses to the population of Russia in the future. The current official projection (medium) by the Russian State Statistical Agency is some 101 million in 2050. [July 2005 estimate of current population is 143 million.] My expectation is that the number will be closer to 75-80, approximately the level of worst-case scenario. The current and imminent number of deaths from HIV/AIDS is much worse than anticipated, as well as the number of deaths from tuberculosis. In addition, hepatitis C deaths will, ceteris paribus, begin to be devastating at the end of the next decade. None of these health factors were incorporated into the projection model of the Statistical Agency.

On the other hand, a company I write about is working on a hepatitis C vaccine that, if all goes well, could enter the market shortly after 2010. Still, the outlook for Russia is rough.

Narodwagen?

Posted on by

BusinessWeek spills a lot of ink on the rise of the car industry in Central and Eastern Europe. The idea that a lot of manufacturing is headed east is nothing new, but to see the numbers and changes laid out so explicitly gives a much clearer idea of the challenges that Western societies are facing.

Volkswagen [in Germany has] the highest labor costs in the industry — close to $50 an hour for a 28-hour workweek, some 20% over the already high average wage for German auto workers. In contrast, Slovaks [at another VW factory] cost $6 an hour and work a 40-hour week, netting VW annual personnel cost savings of $1.8 billion, according to analysts at Germany’s Bank Sal. Oppenheim. If [Thomas] Schmall [chairman of VW Slovakia] needs to boost production suddenly to meet a surge in demand, the new shifts can be arranged overnight. In Germany, negotiations with unions to alter work-time models can take up to six months and cost more in overtime premiums.

Ouch.
Continue reading →