Eeyore's News and View

Investors dump $89B in U.S. securities in historic fire sale
The deep river of private money that helped knit together the global economy has abruptly dried up, new government figures show.
As the global financial crisis grew more severe this summer, foreigners sold almost $90 billion of U.S. securities — the greatest quarterly fire sale by overseas investors since the government began keeping track in 1960. U.S. investors also are retrenching; they unloaded about $85 billion worth of foreign holdings in the quarter, says the Commerce Department's Bureau of Economic Analysis.
"We've had a global panic. Everyone is pulling their money home," says economist Adam Posen of the Peterson Institute in Washington, D.C.
That's bad for economic growth in the U.S. because it threatens to starve capital-hungry companies and entrepreneurs. But it's especially serious for emerging-market countries that rely heavily on outside financing. Capital flows into countries such as South Korea, Turkey and Brazil were evaporating even before the mid-September Lehman Bros. bankruptcy made things worse.
The reversal of private capital flows signals an abrupt end to a nearly two-decades-long era of financial globalization, says economist Brad Setser of the Council on Foreign Relations. Private flows into and out of the U.S. for purchases of stocks, corporate bonds and federal agency bonds have dropped from around 18% of economic output to near zero "in a remarkably short period of time," Setser says.
The past five quarters — roughly since the August 2007 onset of the financial crisis — private foreign investors have been net sellers of U.S. securities. The turnabout represents a dramatic change from the first half of 2007 when foreign purchases of U.S. securities other than Treasuries averaged about $250 billion per quarter.
The past two quarters also have seen an about-face in cross-border bank flows as institutional investors found lenders unwilling to extend credit. In the first quarter of 2008, foreigners deposited more than $79 billion with U.S. banks. That flow reversed in the second quarter, as foreigners withdrew a staggering $256 billion, and the outflow continued in the third quarter with an additional $147 billion. Likewise, banks in the U.S. brought home more than $151 billion in the quarter, as overseas institutions repaid loans.
"Institutional investors, including banks, across the board are pulling their capital back home," says economist Eswar Prasad of the Brookings Institution.
One bright spot: Foreign central banks continue to spend heavily on U.S. government securities, allowing the U.S. to finance the gap between what it produces and consumes.
http://www.usatoday.com/money/markets/2009-01-04-foreign-investors-us-securities_N.htm

Tuna fetches more than $100K at auction After a spirited auction, AP says bidders ended up paying $104,700 -- about $370 a pound -- for this bluefin tuna today in Tokyo. AFP says the fish, which weighed in at 282 pounds, will be turned into sushi for restaurants in China and Japan.
http://blogs.usatoday.com/ondeadline/

Researchers focus on bringing missing bees back
January 5, 2009 - 3:51am
By GENARO C. ARMAS
Associated Press Writer
STATE COLLEGE, Pa. (AP) - Scientists in the field and the lab are trying to solve a mystery critical to the future of American agriculture: Why are honeybee hives failing at a disturbingly high rate?
Some researchers are studying whether pesticides and other chemicals used in fields and gardens might affect honeybees, as well as bumblebees and other insects that pollinate crops. Other research is focusing on building more habitat _ planting trees, shrubs and flowers that pollinators prefer.
Bees are vital to U.S. agriculture because they pollinate many flowering crops, including almonds, apples and blueberries. The bee pollination is responsible for $15 billion annually in crop value.
Honeybees, a non-native species from Europe, are the pollinators of choice because they are easier to manage and are more plentiful _ a single colony can contain 20,000 workers. By comparison, a bumblebee colony may have only a couple of hundred worker bees.
The honeybees have taken a hit over the years from mites and, most recently, colony collapse disorder, in which beekeepers have found affected hives devoid of most bees. Bees that remain appear much weaker than normal.
Beekeepers in 2006 began reporting losing 30 percent to 90 percent of their hives. Since then the annual loss rate has been roughly 33 percent, according to government estimates.
The first case of colony collapse disorder was officially reported in Pennsylvania, and Penn State University has been spearheading research. Maryann Frazier, a senior extension associate at the school's entomology department, said researchers remain concerned about the number and combination of pesticides that have been detected in decimated hives.
"We realize it's much more complicated than what we thought a year ago," Frazier said recently. "From what we know now, it's not something we'll figure out very, very quickly."
Native pollinators also are being monitored. The National Academy of Sciences in 2006 found declining populations of several bee species, along with other native pollinators like butterflies, hummingbirds and bats.
The report suggested that landowners can take small steps to make sure habitats are more "pollinator friendly," like by growing more native plants.
And that's what scientists appear to be doing on a larger scale across the country in hopes of bringing bees back.
One such track is at the Environmental Research Institute at Eastern Kentucky University, where apiculturalist Tammy Horn oversees an experiment in apiforestation, a term described by the school as a "new form of reclamation focused on planting pollinator-friendly flowers and trees."
The project is in its first year. Horn is working with local coal companies to plant trees, shrubs, and native wildflowers on reclaimed lands that would be attractive to pollinators, rather than the once-typical scenario of planting only high-value hardwoods to establish a timber industry.
There are years of study still to go, though there are no signs of colony collapse disorder so far, Horn said.
Local support from residents and coal companies has been encouraging to Horn. It helps that locals have family ties to beekeeping, with parents and grandparents perhaps dabbling in the hobby before it started to become less popular locally.
The rallying point has been concern about the disappearing bees, she said.
"That's been important for my project to succeed," Horn said in a phone interview. "Even people who don't care about beekeeping show up to (beekeeping workshops) in eastern Kentucky and know it's important. They like showing up on mine sites to see that coal mines care enough to invest in it."
The idea is intriguing enough to draw interest for similar projects in other parts of the country, including California and Pennsylvania.
"The more of these pollinator-friendly areas we have... the more likely we are able to retain bee species," said Karen Goodell, an ecology professor at Ohio State University trying to find the right mix of plants and trees to build native bee populations.
Her project is housed at The Wilds, a private, nonprofit conservation center located on nearly 10,000 acres of reclaimed mine land in rural southeastern Ohio.
"It's not as much a scientific study as a 'Let's do this and see what happens,'" Goodell said.
Though Goodell's work deals with native bees, she said the plight of the honeybees has drawn more attention to her work. Boosting native bees also could end up helping farmers, she added.
"Those populations would then be contributing to colonizing areas that have lost bees because of poor management," Goodell said. "Definitely, these bees will be playing a role in pollination services."
On the Net:

Pollinator Partnership: http://www.polinator.org/

http://wtop.com/?nid=111&sid=1564467

Banks defy Brown call to free up creditLoans for business increasingly scarce and outlook bleak, says Britain's banks are defying the government by starving businesses and households of loans and warning that credit will become even scarcer in the first three months of this year.
A Bank of England survey found that in spite of Gordon Brown's call for more loans, lenders had further reduced the amount of credit available in the last three months of 2008 and warned that they planned to continue to pare back. Banks and building societies are being deterred from lending by the worsening economic outlook and the fall in house prices and other assets against which loans are secured.
The dire picture painted by the quarterly survey was reinforced by separate data yesterday showing a record low for new mortgages being granted and figures from Halifax, the UK's biggest mortgage lender, that showed house prices in December were down 16% on a year earlier.
Labour backbench MPs seized on the figures to put more pressure on Brown and Alistair Darling to take action to kick-start lending in the face of what economists warn could be a deep and painful recession. Interest rates are already at a 58-year low and are expected to fall even further from their current 2% after Thursday's meeting of the Bank's monetary policy committee.
Despite a £37bn bail-out package to buy shares in Royal Bank of Scotland and the soon-to-be-merged Lloyds TSB and HBOS, there are concerns that lenders are not heeding government demands to keep competitively priced loans available.
The government insisted it would "take whatever action is necessary to ensure the availability of new lending". Options presented to the Treasury are thought to include injecting more cash into the economy and buying banks' "toxic" assets.
"As the chancellor has said, he is prepared to look at further measures to make it more likely that banks will lend, but banks have to understand that with billions of pounds of taxpayers' money invested, or being made available as a guarantee, the public and businesses are looking for something in return," a Treasury spokesman said.
Major banks claimed that they were heeding the government's demands to maintain lending. They put the blame on the departure of Icelandic and Irish banks from the market for the reduction in credit reported by the Bank of England.
"The banks and Nationwide are approving one-third more loans as 12 months earlier but specialist lenders and small building societies have virtually disappeared from the market," the British Bankers' Association said.
That is unlikely to ease pressure on Brown from his own backbenchers. Nick Raynsford, who represents the views of many moderate Labour MPs, called on Brown to give "a touch on the tiller towards more prudent lending in the new year".
John McFall, Labour chairman of the Commons Treasury committee, said: "While I can see that individual banks might think it prudent to cut back on lending, it would be collective madness for their country if they all decide to do this."
The chief executives of the banks are expected to be called before the committee in February to face further questioning on why they have taken so little action to help business and creditworthy individuals.
The Conservative leadership blamed the prime minister yesterday for the figures, saying they proved government action had failed.
http://www.guardian.co.uk/business/2009/jan/03/banks-credit-house-prices

New bird flu cases revive fears of human pandemic
Just when you thought you could scratch bird flu off your list of things to worry about in 2009, the deadly H5N1 virus has resurfaced in poultry in Hong Kong for the first time in six years, reinforcing warnings that the threat of a human pandemic isn't over.
India, Bangladesh, Vietnam and mainland China also experienced new outbreaks in December. During the same period, four new human cases -- in Egypt, Cambodia and Indonesia -- were reported to the World Health Organization. A 16-year-old girl in Egypt and a 2-year-old girl in Indonesia have died.
In India In IndonesiaThe new cases come after a two-year decline in the number of confirmed human deaths from H5N1 bird flu and as fewer countries are reporting outbreaks among poultry. A United Nations report released in October credits improved surveillance and the rapid culling of potentially infected poultry for helping to contain and even prevent outbreaks in many countries.
Yet H5N1 has continued to "at the very least smolder, and many times flare up" since the chain of outbreaks began in 2003, said Michael T. Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota in Minneapolis.
The year-end uptick is a reminder of how quickly the situation can turn as long as the H5N1 virus is still out there, Osterholm and other scientists said. "What alarms me is that we have developed a sense of pandemic-preparedness fatigue," he said.
H5N1 already has been a disaster for poultry farmers in Asia. Public health officials estimate that as many as half a billion fowl have been killed by the virus or culled to contain its spread, causing enormous economic strain and food shortages. But the bigger fear has always been that H5N1 would give rise to a human pandemic like the so-called Spanish flu of 1918, which killed an estimated 50 million people worldwide.
It was in Hong Kong in 1997 that the H5N1 virus was first observed to jump from chickens to humans, infecting 18 people and killing six of them, raising fears of a worldwide catastrophe. Hong Kong ordered its entire poultry population, estimated at 1.6 million birds, destroyed within three days.
A more recent chain of poultry outbreaks began in South Korea in 2003 and spread over the years to 61 countries in Asia, Africa and Europe.
To fuel a pandemic, a virus must be able to both infect humans and spread readily from person to person. The currently circulating H5N1 strain does neither well.
The total number of verified human cases since the 2003 outbreak began is 391, of whom 247 died. After peaking in 2006 at 115 human cases with 79 deaths, human infections dropped to 40 in 2008, with 30 deaths, according to a World Health Organization update in mid-December.
Most of the human cases were traced to direct contact with poultry, especially in Southeast Asia where many people have backyard flocks and few wear gloves or masks while handling them. The few suspected human-to-human transmissions occurred in those who were closely involved in caring for an infected relative.
But as long as the virus continues to circulate, the threat that it could mutate to pass more easily among humans remains, according to the U.N. report.
The Hong Kong poultry outbreak last month is significant because the government thought it had stamped out H5N1 in the Chinese territory after an outbreak in 2003. Since then, Hong Kong has vaccinated poultry against the virus and strictly regulated farm sanitation.
The government ordered the slaughter of 80,000 fowl at two large farms after the latest outbreak killed 60 chickens at one of the farms. Investigators are looking for the source of the infection and testing the effectiveness of the vaccine used since 2003 to inoculate chickens, geese and ducks against H5N1.
Hong Kong uses a vaccine that protects poultry against several flu subtypes. But some scientists believe that the H5N1 virus may have mutated to break through the vaccine. Flu viruses change constantly, which is why human vaccines for seasonal flu are modified every year, said Scott P. Layne, a professor of epidemiology and environmental health sciences at UCLA.
Mainland China is using a newer poultry vaccine developed specifically for H5N1. But vaccination programs there and in Vietnam have not eliminated outbreaks.
The vaccine itself could be the problem, said Robert Webster, a virologist and avian flu expert at St. Jude Children's Research Hospital in Memphis, Tenn.
Vaccines should be used only in areas where the virus is out of control, and then only temporarily, he said. That is because routinely administering the vaccine encourages the evolution to resistant strains.
Some countries have managed to stop the virus by culling infected poultry flocks. Japan, South Korea and Malaysia are considered to be free of H5N1, according to the World Health Organization.
But the virus appears to be entrenched in Indonesia, parts of China, Vietnam, Egypt and other countries where backyard flocks are more difficult to regulate than commercial chicken farms, according to the United Nations' Food and Agriculture Organization.
Though bird flu viruses are common, highly pathological ones such as the 1918 virus and H5N1 -- which has been lethal to 100% of chickens infected and 63% of humans known to be infected -- are rare.
Scientists have little experience with which to gauge how H5N1 will evolve.
But, Webster said, "We still have to treat this as a potentially very, very dangerous virus."
http://www.latimes.com/news/nationworld/world/la-fg-birdflu4-2009jan04,0,3010223.story