On Greece
I spoke with someone from Athens today. It's not a pretty picture.
Issues related to subsistence have replaced the fervor for demonstrations. This may not last according to this resident.
The closing of stores and shops is escalating. Apparently, 20% of all retail establishments are shuttered. Nearly every block has one reminder of the ongoing depression in the economy.
The Greek Diaspora is in full swing. People are leaving the country, old and young alike. They are going to Europe, where the prospects of jobs stink, but not as badly as in Greece. They are also fleeing to America (family members in the US have been helping out), Australia (where some are welcome) and South America.
The talk is that the Greeks are becoming the new Palestinians. They leave their homes, as there is no future there, but all the time they wish they never left.
As the shops close and the people leave, the economy shrinks. My Greek friend is convinced that government revenues are collapsing as a result. Whatever estimates the Troika were looking at six-months ago are pure fantasy today. The country is imploding.
People are feeling hopeless, and the situation is getting worse. In this fellow’s opinion, there is not a chance in hell that Greece will avoid a default. Two years ago there was a general belief that Greece could manage through a crisis, and avoid defaulting and sustain the link to the Euro. That is no longer the case.
This friend understands that a transition from the Euro to the Drachma would cause huge additional pain. It would devalue the pensions of every citizen by at least 50%. He understands that a default would mean that Greece would be a debt pariah. In spite of this, he prefers that it would come sooner rather than later. He thinks this is the prevailing sentiment in the country. There is nothing desirable about this choice. It’s now just inevitable.
On Cement
The big Swiss cement company Holcim announced a charge to assets as a result of a write down of fixed assets. Here's the headline and a look at Holcim’s stock performance. Note that the stock got clipped for a 1/3 of it value about 8 months ago.
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The large cement producers from France and Germany also had their stocks whacked at about the same time.
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Actually there is not much good news for the cement boys anywhere:
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A question for readers: How big is China when it comes to cement? Keep in mind that the EU and the USA have GDPs of about $15T apiece. China is much smaller and has a GDP closer to $6T. Knowing that, what’s your guess on how China stacks up in the world of cement? I would have thought that China was as big as the US or EU. The economy is smaller, but they are building so much, my guess was about equal.
Wrong. wrong. wrong. I must admit, I was blown away by this:
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China is 25 Xs larger than either the US or EU! When it comes to cement, forget the rest of the world and focus on what is happening in the country with a 54% market share.
China’s cement production has been on a tear for years. But it's slowing down. The production for 2011 will come in at 1.88mm metric tones, an increase of only 6% over 2010 (the slowest in 15 years). The Cement Association of China is forecasting that 2012 total production will be “about the same as 2011”. We shall see. I saw this article on cement pricing in Sichuan province.
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Since 2004 China' GDP has doubled. So has its cement production. That's not a coincidence. The forecast for unchanged production in 2012 is inconsistent with high growth in GDP. What does zero growth in cement production translate into Chinese economic growth? My guess is that 4% GDP would be a good result. That would be well below stall speed for China.
On Continuing Resolutions
The CBO sent a memo [19] to the House and the Senate. It was reminder of all of the stopgap measures that are in place. The government is running on a series of continuing resolutions. How big a deal is this? Potentially, it’s a very big deal. The amount involved is $969B!
There are two lists. This first one looks at the spending for which the necessary enabling legislation has already expired:
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This one is for those expenditures whose authorizations expire on or before September 30 of this year:
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You might rightly ask, “What’s that big chunk of money being spent on?” The biggest chunk is the military (68%). Even with partisan politics and an election year, the military will likely get its money without much of a fight. The CBO report spells out what the rest of the dough is being spent on. (It runs 100 pages.) Some snippets:
General Administration
Unauthorized FY 2012 Appropriations: 11,519,966,000
United States Marshals service
Unauthorized FY 2012 Appropriations: 11,806,793,000
National Institutes of Health
Unauthorized FY 2012 Appropriations: 30,689,990,000
Western Hemisphere Drug Elimination
Unauthorized FY 2012 Appropriations: 1,061,000,000
Operations of the Peace Corps
Unauthorized FY 2012 Appropriations: 375,000,000
Migration and refugee assistance
Unauthorized FY 2012 Appropriations: 1,639,000,000
Department of State diplomatic and consular programs
Unauthorized FY 2012 Appropriations: 8,275,386,000
Section 8 tenant-based housing assistance
Unauthorized FY 2012 Appropriations: 18,914,369,000
Low-income home energy assistance
Unauthorized FY 2012 Appropriations: 3,478,246,000
Noxious Weed Control and Eradication
Unauthorized FY 2012 Appropriations: Not Available
Brown Tree Snake Control and Eradication
Unauthorized FY 2012 Appropriations: Not Available
Assistance to trafficking victims in the United States
Unauthorized FY 2012 Appropriations: 9,794,000
Administration on Aging programs
Unauthorized FY 2012 Appropriations: 1,473,703,000
Bureau of Labor Statistics
Unauthorized FY 2012 Appropriations: 610,224,000
National Endowment for the Arts
Unauthorized FY 2012 Appropriations: 292,510,000
Pandemic and All-Hazards Preparedness Act
Unauthorized FY 2012 Appropriations: 62,700,000
Project Bioshield
FY 2012 Appropriations: Not Available
Strategic Petroleum Reserve
FY 2012 Appropriations: 192,704,000
National Highway Traffic Safety Administration
FY 2012 Appropriations Authorized 24,693,000,000
Federal Trade Commission operations:
Unauthorized FY 2012 Appropriations: 311,563,000
Centers for Disease Control programs regarding infertility and sexually transmitted diseases
Unauthorized FY 2012 Appropriations: 964,855,000
Corporation for Public Broadcasting
Unauthorized FY 2012 Appropriations: 445,000,000
Administrative expenses for Government National Mortgage Association guarantees of mortgage-backed securities
Unauthorized FY 2012 Appropriations: 19,500,000
Funds appropriated to the President for international assistance.
Unauthorized FY 2012 Appropriations: 16,462,253,000
Secretary of Health and Human Services refugee and entrant assistance programs
Unauthorized FY 2012 Appropriations: 769,789,000
Pacific Salmon Treaty
Unauthorized FY 2012 Appropriations: 123,566,000
Nutria Eradication and Control Act
Unauthorized FY 2012 Appropriations: Not Available
Bureau of Land Management
Unauthorized FY 2012 Appropriations: 973,552,000
Paperwork Reduction Act of 1995
Unauthorized FY 2012 Appropriations: Not Available
Renewable energy research and development
Unauthorized FY 2012 Appropriations: 963,000,000
Appropriations for the Coast Guard
(1) Operation and maintenance
Unauthorized FY 2012 Appropriations: 7,051,054,000
(2) Acquisition, construction, rebuilding, and improvement
Unauthorized FY 2012 Appropriations: 1,403,924,000
(3) Retired Pay
Unauthorized FY 2012 Appropriations: 1,400,700,000
Specialty crop research initiative
FY 2012 Appropriations Authorized 100,000,000
Food animal residue avoidance database program
FY 2012 Appropriations Authorized 2,500,000
National Sheep Industry Improvement Center
FY 2012 Appropriations Authorized 10,000,000
Block grants for energy efficiency
FY 2012 Appropriations Authorized 2,000,000,000
Central Intelligence Agency Retirement and Disability Fund
FY 2012 Appropriations Authorized 514,000,000
Have a look at the report. There are hundreds of line items for expenses. Something for everyone to hate.
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