Brazil muscles in on American beef? Not so fast!

U.S. NEWS: “Brazilian Beef Purchase Is Challenged by the U.S.,” by John R. Wilke and Lauren Etter, Wall Street Journal, 21 October 2008.

The Justice Department and 13 (count ‘em!) states challenge a Brazilian company’s attempt to buy National Beef Packing, cutting in half the JBS’s planned billion-dollar entry into our market. The other half of the planned expansion goes unchallenged.

Point being, we’re not the only ag superpower on the block, and the new kid wants to muscle in.

Lenin is officially spinning in his sarcophagus

MEDIA & MARKETING: "Moscow Starts to Tackle Billboard Buildup," by Daria Solovieva, Wall Street Journal, 7 November 2008.

Story is about cracking down on too many billboards, but the pic that caught my attention showed the wall along the Moscow River that separates Red Square from the water. It now contains a1,300-foot-billboard operated by BMW. It appears to be electronic.

Stunning.

You'd have to imagine something equivalent in the Mall's Reflecting Pool.

Paul Light’s excellent suggestion on fast-track reorganization authority

OP-ED: “Fast Track to Efficiency,” by Paul C. Light, New York Times, 12 November 2008.

From 1932 to 1983, the U.S. president has a fast-track authority for any gov reorganizations, meaning he could present a package, not unlike base closure lists, and the Congress would have a veto (up or down vote) but no line-item capacity to mess with it.

The Supreme Court vetoed the idea of legislative vetoes as unconstitutional in 1983, and Light wants the capacity restored.

He sees it as a key for Obama to fulfill his promise to generate a 21st-century government structure.

Excellent argument.

World Bank on the financial crisis

WORLD NEWS: “World Bank Doubles Its Aid,” by Tom Barkley, Wall Street Journal, 12 November 2008.

Tons of good stuff in a small article.

Assistance to developing countries will be plussed up by more than $100 billion over next few years.

Darkened forecast: global growth this year down from 2.7% to 2.6%, with most experts saying the world needs to grow 3% to avoid falling back, so this year will constitute the first great global recession of the modern globalization age (not in technical terms, but in real terms). 2009 is cut from just-getting-by 3% to 1%.

Hidden in that global average is the prediction that emerging markets grow 6.5% this year and 4.5% next.

Key point, as Zoellick says, is “virtually no country has escaped.” Such is the reality of this globalization of our making.

Scariest prediction: financial flows into developing countries will drop from about $1T this year to $530B next year. This is the real threat to globalization’s overall health and advance.

But again, after a quarter-century bull run we were eventually going to have to experience this moment, so the question isn’t, Will markets/globalization survive? but What new rules emerge from this opportunity?

The over-under on Africa in the financial crisis

BRIEFING: "Africa's prospects: Opportunity knocks; With world markets in turmoil, an unexpected and overlooked continent may benefit from its very isolation," The Economist, 11 October 2008.

WORLD NEWS: "Africa's Potential to Sate World's Oil Demand Dims," by Peter Fritsch, Wall Street Journal, 22 October 2008.

First story notes the usual headlines (insurgency in Nigeria, Mugabe's latest outrage, Sudan's war crimes indictments, Somalia's sad story, and the ANC's sad decline in South Africa), and yet, when you look at the 48 countries as a whole, we're talking a "period of unparalleled economic success."

Most important: "despite the turmoil in the world's financial markets, international investors still think they can make money there."

The uptick due to?

Combo of better macro econ policies locally, big inflows of Western aid and investment, plus some debt relief—plus some untold flow of FDI from Asia (China esp) and the SWFs out of the Gulf.

Taken as total, the IMF says investments and loans in/to Africa balloon from $11B in 2000 to $53B in 2007.

Big push, indeed, and the best kind.

Commodities boom is a major trigger, and so any downturn in demand will eventually hurt the continent, but longer term we see that "China and the Gulf states have been fascinated for some time by Africa, and there is no reason why this should end."

China leads the way, but India is close behind. I write about this in Great Powers, leveraging the recent and most-excellent World Bank report ("Africa's Silk Road"—also cited here). The U.S. is mostly ghettoized in the Gulf of Guinea and Angola, according to the article.

The downside is the continued population growth, so you've got the angry, bored, underemployed male problem. See this in Kenya and Ethiopia. Sub-Saharan Africa is the one area of the world scheduled to have significant growth still through 2030, meaning it keeps a very young profile (unlike the middle-aging Middle East, for example).

Cited as rising stories—sans natural resource wealth—are Ghana, Mozambique.

Article ends with a nice word for the Millennium Challenge Account.

WSJ story presents the current dark-side economic projection: usual endemic challenges + credit crunch globally will depress Africa's ability to meet its potential on oil production. Africa tends to have shallow basins, and that, plus the high local costs and political uncertainty, when combined with international price swings, always keeps the place in the iffy category.

Right now Africa is about 12% of global production of 85 million barrels a day, and in a tight production environment, every source counts.

Efforts are split between extraregional NOCs (national oil companies) from Asia and the Mideast, the usual Western supermajors and mid-level players, and Africa NOCs (smallest of three).

Lockheed's Net Rises as Sales Fall

EARNINGS: "Lockheed's Net Rises as Sales Fall," by August Cole, Wall Street Journal, 22 October 2008.

Had to update a Lockheed reference in the second pass: talking about its decision to buy Pacific Architects and Engineers (basically, State's KBR), I posited that within a generation's time the division that houses PA&E (Information Systems & Global Services, owned by Linda Gooden) would constitute the primary profit engine of the company.

This article notes that already IS&GS has already become—as of 3Q 2008, the biggest revenue source at LMCO.

Here are the numbers:

IS&GS = $2.95 billion

Aeronautics = $2.92 billion

Electronic Systems = $2.80 billion

Space Systems = $1.91

IS & GS doesn't build any platforms in a conventional sense, just IT platforms and services and systems integration, and already it's the biggest source of revenue of the biggest defense corporation in the world.

Sign of the times and and the world.

August Cole is a great reporter with a nose and a mind for this sort of stuff. He's also one to watch.

Signal received, Azerbaijan thinks ahead

INTERNATIONAL: "A Northern Neighbor Growls, and Azerbaijan Reassesses Its Options," by Sabrina Tavernise, New York Times, 23 October 2008.

The dance gets trickier for Baku, but not really any different: courting the West but not in any formal way that will bring Moscow's displeasure.

So yeah, given few to no alternatives, Azerbaijan takes up Gazprom's offer to buy its natural gas and pipe it westward, possibly killing the planned Nabucco pipeline.

As one Azeri political commentator in Baku put it realistically: "You can't have a foreign policy that goes against your geography. We have to get along with the Russians and the Iranians."

So Baku also accepts Moscow's offer to mediate on Nagorno-Karabakh, and we see the enduring political realities of the so-called near abroad.

While the oligarchs gently weep

ARTICLE: "Russia and the crisis: Kremlinomics; Why the Russian markets have fared worse than others," The Economist, 18 October 2008.

ARTICLE: "Empires Built on Debt Start to Crumble: Tycoons With Kremlin Ties Shoulder a Heavy Burden As Russian Markets Fall," by Andrew E. Kramer, New York Times, 18 October 2008.

ARTICLE: "Ruble's Fall Puts Russia On Defense Amid Crisis," by Alan Cullison and Gregory L. White, Wall Street Journal, 24 October 2008.

So much for Medvedev's dream to turn Moscow into a global financial center any time soon.

Russia has lost more value market as a percentage than other emerging economies, giving the lie to any notion that it is somehow insulated by its energy wealth—anything but.

So far, what the Kremlin has done well is to insulate the average person from any downturn. What has mostly been trimmed is the extravagant expectations that Putin's business-masquerading-as-a-government model will be able to export anything anywhere save oil and gas.

The Russian success story as of late was highly reliant on foreign capital—as in, magnificently leveraged. Now, the Kremlin must bail out all its oligarchic network, lest they turn on it.

Never confuse a bull market with strategic genius. Rory MacFarquhar, a sharp observer on Russia at Goldman Sachs, says "This could be a game changer for a lot of very, very large players. The ground is shifting beneath them.

Estimates on top-25 oligarchs' wealth now peg them collectively at $140B, meaning they've lost five times what Buffett is worth in the past few months—or $230B!

So with the Russian market 70% off its peak, Moscow's mountain of reserves shrinks daily, even as Moscow scrambles to take its ruble profits and turn them into dollars and Euros—quick! The hardest hit tycoons tend to be the ones closest to Putin.

But sure, call it a post-American world if you must.

Golden age over already for U.S. ag?

U.S. NEWS: "Glory Days Fade for U.S. Farmers: Plunging Crop Prices and Higher Costs Cloud Horizon for '09 Profits and Land Sales," by Scott Kilman, Wall Street Journal, 22 October 2008.

Just got a speaking gig not too far from the Twin Cities in MN for the middle of January, that will be open to the public, for those of you looking to catch either the last time I give the old brief or one of the first times I give the new one (haven't decided, but assume the latter).

Not surprising, given the rise in food prices, as suddenly people recognize it as a strategic issue worth thinking through.

But just at the dawning of this alleged golden decade, the global economic downturn now clouds the vision of higher crop prices, due in part to reduced demand and higher costs of inputs (fertilizer especially).

Interesting chart showing steady and steep rise in net farm income in U.S.—as in from around $20B in 1980 to almost $100B in 2008. Not surprisingly, the debt-to-assets ratio decline from low 20s (%) to under 10% over the same time frame, and the price of farmland increases anywhere from 4-to-5-fold.

So much for the death of ag in America (no, I forget that we're really supposed to boo-hoo the loss of the small farmer).

So, even while we're looking at a small cliff here, I guess I would have to say that the long-term forecast still seems amazingly strong.

But short-term ups and downs are nothing new to farmers—hence the reliance on futures markets to smooth out.

Mexico wising up on oil-sector FDI

WORLD NEWS: "Mexico Is Near Easing Oil Laws in Bid to Attract Foreign Firms," by David Luhnow and Peter Millard, Wall Street Journal, 22 October 2008.

Inevitable and predicted by everyone—including me—for a while: Mexico has to open up it's NOC known as PEMEX (Petroleos Mexicanos) to foreign direct investment, otherwise it's simply lead goose for Venezuela's and Iran's and Russia's similar stupidity (and declining production rates).

Mexico is down to just 2.72 mbd (million barrels per day), its lowest total since 1995, meaning they're going back in time—duh!

Mexico's government gets almost 40% of its federal budget from oil exports.

Aging fields inside Mexico need to be augmented with "vast untapped fields in the deep waters of the Gulf of Mexico," but that takes money and technology.

Without both, Mexico becomes a net importer in half a decade.

Little offered by, but then again, little expected from global summit

EDITORIAL: "Redesigning global finance: Government leaders cannot rewrite the rules this weekend. But they can still do some useful things," The Economist, 15 November 2008.

BRIEFING: "The global economic summit: After the fall; On November 15th world leaders are due to sit around a table in Washington DC to fix finance. They have their work cut out," The Economist, 15 November 2008.

Believe it or not, I am finally caught up on my blog pile of clipped articles! We have a huge backlog of posts, which Sean will dish out over the next few days.

Got to these just now, and they're instructive to read regarding the Core's future efforts.

No, it's hard to get too disappointed about the summit, because Obama took an FDR-like pass and so nothing much could happen except for the G-20 to feel revitalized and somehow credentialized in a new manner.

And those are good things in and of themselves.

The Economist calls "nonsense" any talk about creating a Bretton Woods sequel pronto, because the original required two years of intense planning.

Still, the Economist is enthused to see the G20 step up a bit in its self-awareness, especially since the IMF is so tiny, resource-wise, compared to today's global economy.

Yes, competing rule sets lead to "regulatory arbitrage." And all those emerging markets, having stocked up on foreign currency reserves (mostly dollars) to protect themselves from speculative runs, did help trigger the global credit bubble (a one-bad-thing-leading-to-a-good-fix-and-then-a-new-problem, as I argue in Great Powers).

So rather than any great scheme, says the Economist, better to work on bolstering transparency wherever possible on inter-market financial flows. Simply put, the agenda right now is too vast and there are two many competing great powers for any one solution to apply.

So expect a boom market for new rules over the next few years, but no one great pact.

Viewed in this light, you take the meager results of the recent summit in stride.

Good news for the Dems; bad news for America

OP-ED: “Darkness At Dusk: Republicans have lost, but they have not learned,” by David Brooks, New York Times, 11 November 2008.

Brooks posits a struggle between the Traditionalists (“cut government, cut taxes, restrict immigration,” etc.) and Reformers (moderates), and says the Traditionalists are convinced they did not lose over the issues, but because they presented themselves badly. This is basically Bill Bennett’s analysis on CNN.

Brooks says the Traditionalists are missing the realignment, an argument you see refuted in op-ed after op-ed in the WSJ.

Brooks thus opines:

In short, the Republican Party will probably veer right in the years ahead, and suffer more defeats. Then, finally, some new Reformist donors and organizers will emerge. They will build new institutions, new structures and new ideas, and the cycle of conservative ascendance will begin again.

This is why I predict Obama gets two terms.

Technologizing ahead on global warming

THE FOOD CHAIN: "Less Water, More Biotech: Drought Resistance Is the Goal, But Methods Differ," by Andrew Pollack, New York Times, 23 October 2008.

This stuff will become so important on food security in the future, as the closer you live to the equator, the harder it will become to grow food due to droughts.

Neat fact: people drink only about two quarts a water a day but they eat food each day that requires—upstream—of 2-3,000 quarts, driving home the reality that ag use is the King Kong of water depletion.

Thus the key of "more crop per drop" for ag firms like Monsanto.

The OSCE's human rights effort --> USSR fall --> Sakharov Prize --> China targeted

ARTICLE: "Leading Chinese Advocate of Democracy and Human Rights Wins European Prize: A recognition despite strong warnings from Beijing," by Jim Yardley, New York Times, 24 October 2008.

China lobbied hard, but the award was given anyway. Hu Jia doesn't argue against China's territorial integrity (touchier) but more about the need for human rights, democracy, and protection of the environment inside China—along with the rights of AIDS patients.

It's perfectly fine to recognize that struggle from outside, much like Helsinki did during the Soviet era.

The Chinese government will get all mad, but this sort of thing will never go away.

The U.S. cavalry stuck defending a fort in the middle of nowhere—cue music (please!)

ARTICLE: “G.I.’s in Remote Afghan Post Have Weary Job, Drawing Fire,” by C.J. Chivers, New York Times, 10 November 2008.

Seriously, cue something, because these guys are subsisting on little down time and no amenities typically afforded our troops in battlezones.

The storyline comes right out of some Alamo-like remembrance of fights past:

The small stone castle, sandbagged and bristling with weapons and American soldiers, rises from a rock spur beside the Landai River. Mountains lean overhead.

Once a hunting lodge for Mohammad Zahir Shah, Afghanistan’s last king, the castle is home for a year for an American cavalry troop, an Afghan infantry company, a Navy corpsman and two American marines.

Naturally, they are nearly surrounded by insurgents hiding in caves and local villages. One soldier says their mission is to serve as “bullet sponge.”

Injun country indeed.

French mediation

ARTICLE: Russia Backs Off on Europe Missile Threat, By STEPHEN CASTLE, New York Times, November 14, 2008

Per my column yesterday, Sarkozy is offering both sides a way out of this foolish pseudo-conundrum.

(Thanks: ROVER Fixer)

The New Core wants to move up from the G-20 kiddie table

NEWS ANALYSIS: “Demand for a Say on a Way Out of Crisis: Bitterness at a meeting of finance ministers,” By ALEXEI BARRIONUEVO, New York Times, 10 November 2008.

The non-G8 members of the G-20 are getting tired of just advising at the ministerial level and being excluded from the adults’ table. So at this G-20 meet, the BRIC finance ministers get together and make their own recommendations.

Get used to seeing that.

The IMF chief was blunt enough:

So it is just fair to look at this growth coming from emerging countries and to try to support it because it is the only growth that we will have.

So yeah, the coupling is there, with the Old Core able to harm the New Core and the New Core able to sustain the Old Core.

Jones for State?

OP-ED: Worldview: Secretary of State deck has wild card, By Trudy Rubin, November 16, 2008

Good commentary on why all the names so far for SECSTATE seem weak and why General James Jones becomes an interesting dark horse.

I gotta admit: Jones + Gates would be formidable.

(Thanks: Michal Shapiro)

Give us Gates for 20 more months

OP-ED: A Military for a Dangerous New World, New York Times, November 15, 2008

Nice editorial from the Times that I obviously agree with.

In my mind, as I've told many audiences: if you give us Gates for 20 more months, much of this deal is sealed so long as he retains a free hand.

(Thanks: pilgrimstevec)

I can't believe I gave my tix away!

Actually, decided a couple months back to give my Lambeau seats for the Bears game to my bro-in-law and his son for my in-law's birthday. Todd is a huge Packer fan who lives in Chicagoland, so a special game for him.

37-3, though. Ouch! Hard to miss that one.

Already have seats for Soldiers Field game in Dec. Hoping that one will matter plenty. Vikes with two division losses, so we run table on Lions and Bears and we'll win the tie-breaker.

And yes, I do expect the standings to be that close.

Nice to get a big win after two heartbreakers in a row that we should have won.

I listened to the game on the web while cleaning my wife's rather large pantry.

Almost like being there.

But I'll need the game more in December. Being "paper pregnant" on the book, I find myself increasingly unsettled. The wait is no fun.

Good news: I get a PDF "ultrasound" on the 24th. Will have to DVR the Pack in Big Easy that night.