Report: Iraq war costs could top $2 trillion

Quick Overview

• YoY Mexican industrial production rose 3 percent in November.
  
  

• An index of leading indicators for Japan dropped from 81.8 to 60.0 in November
  

• A persistent fall in Japanese bank lending slowed in December to its smallest decline in nearly five years, a bright sign for business conditions because of a stronger economy and improvement in banks' financial condition.
  
  

• The U.S. Department of Energy said that:
  Supplies of crude oil were down 2.9 million barrels to 318.7 million barrels.
  Supplies of unleaded gasoline were up 4.5 million barrels
  Supplies of heating oil were up 1.0 million barrels.
  

Drier, Tainted Nevada May Be Legacy of Gold Rush The costs - to Nevada, its neighbors and even to the rest of the country - are only now coming into focus as diminishing ores foreshadow gold mining's eventual demise and a more urbanized West begins to express concerns over water shortages and mining's other legacies.

U.S. can open private mail in terrorism fight
"It was a big surprise," Goodman told Reuters. "The public should know that this is being done. Nobody whom I know had any idea that this was going on. And as far as I know, it's never been announced. It's never been revealed that this is being done."

Quick Overview

• The U.S. Commerce Department said that wholesale sales were down 0.7% in November while inventories were up 0.4%.
  

• U.S. Consumer confidence, steadily improving since last fall, rose in the latest week, ABC News and The Washington Post said on Tuesday.
  

• The national average retail price of diesel fuel rose 4.3 cents to $2.485 a gallon, the Department of Energy reported.
  

• Turkey said that they destroyed 306,000 birds in an attempt to stop the spread of bird flu.
  

• YoY retail sales in the U.K. increased 2.6% in December.
  

• Sales of new cars in Venezuela soared 70 percent in 2005 from a year earlier as the economy expanded 9.4 percent and consumer spending grew, the Venezuelan Automobile Chamber said on Tuesday.

Shanghai now the world's largest cargo port
It only took Shanghai port five years to double cargo handling capacity from 200 million tons to 400 million tons.

Cooling housing market may trigger US recession next year, Soros warns
Soros, the chairman of New York-based Soros Fund Management, said the biggest risk to the US economy was that the Federal Reserve might raise interest rates too high, stifling the housing market. "That's why I expect the recession to occur in 2007."

New call to impeach Blair over Iraq
"To go to war on what turns out to be false grounds is something that no one should be allowed to walk away from," he said.

U.S. Healthcare Tab Grows Faster Than the Economy

America's healthcare bill rose to nearly $2 trillion in 2004, or about $6,280 for every man, woman and child, a team of government economists reported today.

Chart of the day

Dow Theory

Quick Overview

• The Dow-Jones industrial average closed above 11,000 for the first time in more than four years.
  

• Cocoa grindings in Germany totaled 70,332 tons in the fourth quarter of 2005, up 23% YoY.
  
  

• Retail sales in Australia were down 0.1% in November, weaker than expected.
  

• Officials at the G-10 meeting said the world economy is in good shape and may grow more in 2006 than in 2005.
  

• The German government approved a 25 billion Euro spending program designed to give momentum to a weak economic upturn.
  
  

• Japanese Finance Minister Sadakazu Tanigaki urged the Bank of Japan to use caution in deciding when to end its ultraloose monetary policy, even though he expects the nation's economy to shake off deflation in 2006

Chart of the day

NYSE Advancing Issues (Weekly)

Quick Overview

• The unemployment rate fell to 4.9 percent from 5 percent and labor costs rose, the Labor Department said. The December gain followed figures showing 71,000 more jobs than first reported for November and October. For all of 2005, the U.S. gained roughly two million jobs
  

• Bloomberg reported that U.S. consumption of gasoline, heating oil, and other fuels hit a new record high in December. While projections differ, market watchers on average expect oil prices to consolidate around $55 to $60 a barrel this year.
  

• Japan's consumer prices will likely start showing a lasting rise and the economy is making steady progress toward ending deflation thanks to a balanced recovery, the Bank of Japan's chief economist said on Friday.
  
  

• Canada's unemployment rate rose from 6.4% to 6.5% in December. In 2005, Canada gained 233,000 jobs.
  

• The unemployment rate in the Euro zone was unchanged at 8.3% in November. Unemployment in the EU-25 was also unchanged at 8.5%.
  

• YoY Industrial production in Germany was up 4.7%.
  

Welcome to Mars express: only a three hour trip
AN EXTRAORDINARY "hyperspace" engine that could make interstellar space travel a reality by flying into other dimensions is being investigated by the United States government.

China signals reserves switch away from dollar

The statement comes at a time of growing debate in China on how the reserves are invested. Some economists have called on Beijing to use the funds to finance infrastructure investment and clean up state-owned companies, or to invest in higher-yielding assets rather than financing US borrowing.

Quick Overview

• U.S. Treasury Secretary John Snow said on Thursday the United States was "the picture of economic health" and urged lawmakers to keep taxes low as a stimulant for steady expansion.
  

• The Fed said its overall holdings of Treasury and agency debt kept for overseas central banks rose $1.286 billion in the week ended Jan. 4, to stand at $1.523 trillion
  

• The number of U.S. workers filing initial unemployment benefits fell by 35,000 last week to 291,000, the Labor Department reported Thursday.
  

• The Institute of Supply Management's index of U.S. services increased from 58.5 to 59.8 in December, more than expected.
  

• The U.S. Department of Energy said that:
  Supplies of crude oil were down 1.0 million barrels to 321.6 million barrels
  Supplies of unleaded gasoline were up 1.4 million barrels
  Supplies of heating oil supplies were down 500,000 barrels.
  Supplies of natural gas were up 1 billion cubic feet to 2.641 trillion cubic feet.
  

• An index of services in Australia dropped from 56.5 to 51.6 in December
  

• An index of services in the U.K. increased from 55.8 to 57.9 in December.,
  

• An index of services in the Euro zone increased from 55.2 to 56.8
  

• An index of consumer sentiment in the Euro zone improved from -13 to -11.
  

• Seasonally adjusted retail sales in Germany were down 1% in November and down 0.6% YoY.
  

U.S. to Seek Dismissal of Guantánamo Suits

Secret Surveillance May Have Occurred Before Authorization

Lobbying Plan Was Central to GOP's Political Strategy

Bush could bypass new torture ban
Some legal specialists said yesterday that the president's signing statement, which was posted on the White House website but had gone unnoticed over the New Year's weekend, raises serious questions about whether he intends to follow the law.


Three Automakers To Unveil Hybrid Plans

Quick Overview

• The U.S. Commerce Department said that factory orders increased 2.5% in November, the best jump in three months and roughly as expected.
  

• The dollar slid to two-month lows against the Euro and the Swiss franc on Wednesday, undermined by expectations the U.S. Federal Reserve is nearing the end of its rate tightening cycle.
  

• Consumer prices in Argentina rose 1.1 percent in December, bringing 2005 inflation to 12.3 percent.
  
  

• Brazil's government said the 2005-2006 sugarcane crop totaled 437 million tons, down slightly from their 440 million ton estimate in August.
  
  
  

2006: A Year of Living Dangerously
Eric Margolis

White House to withdraw funding for rebuilding Iraq

Abramoff Pleads Guilty, Will Cooperate

Book: CIA Ignored Info Iraq Had No WMD

Quick Overview

• Federal Reserve policymakers differed last month on how much higher interest rates would need to go, but most believed the end of the rate-hike campaign wasn't far-off.
  

• The Institute for Supply Management's index of U.S. manufacturing dropped to 54.2 from 58.1 in December.

• U.S. Construction spending was up 0.2% from October's pace.
  
  

• Ten years ago, buying a motor scooter in India could take years and a stack of paperwork. These days a buyer can plunk down just $22 and come away with a scooter on credit. Sales of two-wheelers -- a characteristic of India's rising middle class -- jumped 16% YoY.
  

• An index of manufacturing in Australia increased from 44.2 to 53.1 in December.
  

• An index of manufacturing in the U.K. increased from 51.0 to 51.1 in December,
  

• An index of manufacturing in Europe increased from 52.8 to 53.6 in December.
  

• Germany's unemployment rate improved from 11.4% to 11.2% in December.
  

• Singapore's GDP was up 5.7% in 2005.
  

• YoY Brazil December sugar exports are down 17.5%.
  
  

• Hot and dry weather forecasts for Argentina's soybeans pushed soybeans higher.
  
  
  

• The price U.S. motorists paid for gasoline jumped 4.1 cents over the last week

• Legislation introduced in the House of Representatives Dec. 7 would increase by $3,000 the current tax credit for makers and consumers of domestic hybrid vehicles, including commercial trucks.
  

Dollar drop still coming, Buffett and banks agree
Buffett, the chairman and chief executive of Berkshire Hathaway, lost almost $1 billion betting on a decline in the dollar last year against currencies like the pound, which suffered its biggest loss since 1992. Analysts at Deutsche Bank, UBS and Citigroup predicted that the dollar would weaken to a new low against the euro, with the European currency rising to $1.40. Instead, the dollar rose 14.4 percent as the euro fell to $1.1838 at the end of the year. The dollar also ended the year at ¥117.945 in New York, up 14.7 percent against the Japanese currency

Quick Overview

• U.S. Jobless claims increased 3,000 last week to 322,000.
  

• Home resales fell to a 6.97 million seasonally adjusted annual rate last month, a 1.7% decline from October's unrevised 7.09 million, the National Association of Realtors said Thursday. Sales dropped by 2.7% in October. The National Association of Realtors said there are 2.90 million homes for sale in the U.S. -- a five-month supply.
  
  
  

• The National Association of Purchasing Management's Chicago index dropped from 61.7 to 61.5 in December, stronger than expected.
  

• Argentina's central bank forecast on Thursday that Latin America's third-largest economy will expand by 6.2 percent next year, slowing from this year's estimated 8.7 percent growth.
  

• An index of consumer confidence in the U.K. dropped from -8 to -9 in December.
  

• The unemployment rate in France improved from 9.7% to 9.6% in November.
  

• Venezuela's Central Bank on Thursday said it had approved currency transactions in Euros in a move that expands the country's strict foreign exchange controls away from U.S. dollars.
  

• The DOE said that:
  Supplies of crude oil were up 100,000 barrels to 322.6 million barrels.
  Supplies of unleaded gasoline were down 1.2 million barrels.
  Supplies of heating oil supplies were down 1.2 million barrels.
  Supplies of underground natural gas were down 162 billion cubic feet to 2.640 trillion cubic feet. YoY supplies are down 8%.
  
  

• London inventories of copper increased 7,150 tons to 87,750.

Quick Overview

• The Conference Board's consumer confidence index increased from 98.3 to 103.6 in December, its highest level since Hurricane Katrina.
  

• The USDA said there were 61.197 million head of hogs and pigs in U.S. inventory on December 1st, up 0.4% YoY.
  

• The USDA said that YoY U.S. beef production was up 7% in November.
  

• The USDA said that YoY pork production was up 2% in November.
  

• The Dow-Jones Newswires credits a fungus in Brazil and too much rain in Vietnam as two recent supporting reasons for Coffee.
  

• Consumer confidence in Germany increased from 3.4 to 3.8 in December, the highest in six months.
  

• YoY Japan's industrial production was up 1.4% in November.
  

Quick Overview

• ABC News and the Washington Post said their Consumer Comfort Index rose to -10 in the week ending Dec. 25 from -11 the prior week.
  

• The Chicago Federal Reserve's regional index of manufacturing was down by 0.6% in November.
  

• Japan's unemployment rate increased from 4.5% to 4.6% in November, Household spending was down 0.7% Japan's consumer price index was down 0.3% in November -- down 0.8% YoY.
  

• Overall for-hire trucking freight volumes surged 1.9% in November from a month earlier, American Trucking Associations said Tuesday.

Quick Overview

• U.S. Durable goods orders were up 4.4% in November, stronger than expected. Excluding transport, orders were down 0.6%.
  

• The University of Michigan's consumer sentiment index increased from 81.6 to 91.5 in December.
  

• Sales of new homes dropped in November by the largest amount in nearly 12 years. U.S. new home sales were at an annual rate of 1.245 million units, down 11.3% from October's pace, the largest monthly drop since 1994. So far in 2005, new home sales are up 7% from a year ago.
  

• The European Commission announced that they are ending their policy of giving rebates (subsidies) to beef exporters.
  

• The U.S. Department of Energy said that ethanol production reached 269,000 barrels a day in October, a new record high in the U.S.
  

• Germany's inflation rate averaged 2 percent in 2005, its highest level in four years, according to a government estimate released Friday.
  
  

• Canada's GDP was up 0.2% in October and up 3.1% YoY.
  

• China's car production in November grew 52.1 percent from the same month last year to a record 291,900 units, breaking the previous record set in June of 275,100 units, according to data released by the National Bureau of Statistics Friday.

Quick Overview

• Chief executives are optimistic about the direction of the U.S. economy despite high energy prices and rising interest rates, a monthly survey found.
  

• The Conference Board's U.S. index of leading indicators increased 0.5% in November, to 138.8.
  

• U.S. jobless claims were down 13,000 last week to 318,000.
  

• The U.S. Commerce Department said that personal incomes were up 0 .3% in November and consumer spending was up 0.3%. YoY the core rate of personal consumption expenditures index was up 1.9% in November .
  

• The U.S. Department of Energy said that underground natural gas supplies were down 162 billion cubic feet last week to 2.802 trillion cubic feet.
  

• The U.S. Census Bureau said that 151.5 million bushels of soybeans were crushed in November
  

• Mexican consumer prices rose 0.42 percent in the first half of December.
  
  

• YoY New Zealand's GDP was up 2.7% in the third quarter .
  

• YoY the U.K.'s Office for National Statistics kept its GDP growth estimate unchanged at 1.7% in the third quarter .
  

Quick Overview

• The U.S. economy grew at a 4.1% annual rate in the third quarter, lower than the 4.3% rate initially reported in November, the Commerce Department said Wednesday.
  

• The core personal consumption expenditures price index increased at an annual rate of 1.4% in the third quarter, down from 1.7% in the second quarter.
  
  

• The DoE said that :
  Supplies of crude oil were up 1.3 million barrels to 322.5 million barrels
• Supplies of unleaded gasoline were down 300,000 barrels
  Supplies of heating oil were down 1.5 million barrels.
  

• The USDA said that there were 28.7 million pounds of frozen pork bellies in storage as of November 30th, down 16% YoY. Frozen pork totaled 433.6 million pounds, down 1% YoY
  

• The USDA said that, there were 1.03 billion pounds of frozen orange juice in U.S. storage, down 30% YoY..
  
  

• London inventories of copper increased 3,550 tons to 80,600 tons.
  

• Consumer spending in France increased 1.1% in November and 3.2% YoY.
  

• Canada's retail sales were up 0.6% in October and up 4.5% YoY .
  

Quick Overview

• U.S. Consumer confidence, improved last week, ABC News and the Washington Post said on Tuesday.
  

• The U.S. producer price index fell 0.7% in November, the biggest drop since April 2003, as energy prices fell, the Labor Department said Tuesday.
  
  

• U.S. New housing starts rose 5.3% in November, the Commerce Department said Tuesday.
  

• The average retail prices of diesel and gasoline each rose for a second straight week by 2.6 cents, with diesel climbing to $2.462 and gasoline to $2.211 a gallon, the Department of Energy reported.
  

• U.S. Sales of Class 8 trucks jumped 16.6% in November as truck buyers took delivery in a market where freight rates remained strong and truck production showed no signs of letting up, manufacturers said.
  
  

• The Australian Cotton Industry Council estimates the upcoming cotton crop at 2.5 million bales, down from 2.9 million bales this year.
  
  

• Consumer prices in Canada were down 0.2% in November and up 2.0% YoY.
  

• The Chinese government discovered $280 billion of national income to add to its 2004 GDP figures. The 2004 growth rate is now 16.5%, higher than previously reported.
  

• Today's news on inflation sent June gold down $9.10
  

JibJabs Year-End Round-Up !

The Symbiosis Trap
Stephen Roach

Quick Overview

• The Conference Board's leading economic indicator for Mexico was unchanged in October following four months of gains, the U.S.-based private business research group said on Monday.
  

• Canada's sales at large retailers were down 1.0% in October, but up 5.9% YoY. Wholesale sales were up 2.2%.
  

• Industrial production in the Euro-zone was down 0.8% in October.
  

• The Japanese government expects GDP to increase 2.7% in 2005-2006 and 1.9% in 2006-2007.

Quick Overview

• The U.S. current account gap narrowed in the third quarter to $195.8 billion.
  

• YoY consumer prices in the Euro zone were up 2.3% in November.
  

• Statistics Canada reported that the government debt is half of Canada's GDP, the lowest in twenty years.
  

• YoY industrial production in Argentina rose 8.9 percent in November.
  
  

• German business morale jumping to its highest level in nearly five and a half years.

Quick Overview

• U.S. industrial production was up 0.7% in November and up 2.8% YoY, more than expected. Capacity utilization rate increased from 79.8% to 80.2% last month.
  

• A record drop in energy costs pushed consumer prices down at the fastest pace in 56 years. The CPI was down 0.6% in November but up 3.5% YoY. Excluding food and energy costs, prices were up 0.2% in November and up 2.1% YoY.
  

• A softening U.S. housing market poses the greatest risk to economic growth next year as fallout from a housing slowdown would hurt consumer spending, Merrill Lynch said in its U.S. economic and financial markets forecast for 2006.
  

• U.S. jobless claims were up 1,000 last week to 329,000.
  

• The U.S. Treasury said that foreigners purchased U.S. securities totaling $110.3 billion in October
  

• Manufacturing growth in New York state rose at the fastest pace in 17 months as factories paid less for materials and demand rose, according to a monthly survey by the Federal Reserve Bank of New York released Thursday.
  
  

• The DoE said that underground supplies of natural gas were down 202 billion cubic feet to 2.964 trillion cubic feet. Supplies are down 6% YoY.
  

• The rate of fatalities last year in crashes involving large trucks fell to its lowest level since the Department of Transportation began keeping records in 1975, according to DOT figures.
  

• The Green Coffee Association said that U.S. coffee stocks dropped 292,512 bags in November to 4.875 million bags.
  
  

• Retail sales in the U.K. were up 0.7% in November, the best gain in five months.
  

• The Swiss National Bank increased its key interest rate from 0.75% to 1.0%, the first change in over a year.
  

Quick Overview

• The U.S. trade deficit grew to a record $68.9 billion in October, as crude oil prices surged and exports dropped by the most in four years. U.S. exports were up 1.6% in October to $107.5 billion and imports were up 2.7% to $176.4 billion.

• The Business Roundtable's Economic Outlook Index improved to 101.4, up from Septembers 88.2
  
  

• The U.S. Department of Energy said that:
  Supplies of crude oil were up 900,000 barrels to 321.2 million barrels.
  Supplies of unleaded gasoline were up 1.8 million barrels
  Supplies of heating oil supplies were down 400,000 barrels..
  
  
  

• Japan's Tankan index, a confidence index of large manufacturers, increased from 19 to 21 in the fourth quarter, the highest in twelve month.

• Delinquencies on U.S. home mortgages rose in the third quarter due to the displacement of people by Hurricane Katrina but they fell from a year earlier as the economy improved, an industry group said on Wednesday.

Chart of the day

The price of corn adjusted by the CPI (Consumer Price Index)

Quick Overview

• Blue-chips jumped and the broader market inched higher after the Fed boosted the Fed Funds rate as expected, while hinting that an end to the rate-hiking campaign could be in the works. The Fed dropped a reference to “accommodation” in a statement that followed the 13th straight increase in their target rate to 4.25%. The change suggested that central bankers see rates as high enough to avoid spurring inflation.
  

• YoY, U.K.’s consumer prices were up 2.1% in November, down from a 2.3% gain in October.
  

• Canada's composite index of leading indicators was up 0.3% in November.
  

• The International Energy Agency predicted that world oil demand will increase by 1.9 million barrels per day through 2010.
  

• The International Coffee Organization predicted that the world 2006-2007 coffee crop will total 120 million (60 kg) bags. They estimate consumption at 118 million bags.

• J.P. Morgan said there continues to be a bull case for silver and it deserves to trade on a different outlook. All thanks to a growing number of industrial applications such as biocides, solar power, electronics and a potential ETF launch.
  

Quick Overview

• The federal government's budget deficit rose sharply in November as spending raced ahead of tax receipts. The Treasury Department reported Monday that the deficit totaled $83.1 billion, the highest imbalance ever recorded in November.
  
  

• The Federal Reserve is widely expected to raise official interest rates again at its next policy meeting on Dec. 13, which would be the 13th straight increase.
  

• Mexico cut its economic growth estimate for 2005 to about 3 percent from 3.5 percent, hurt by weakness in the manufacturing sector.
  

• Japan's current account surplus widened by 2.6% to 1.38 trillion ten ($11.4 Billion) in October.
  
  

• India's industry grew in October at 8.5% the fastest pace in four months as rising incomes and consumer borrowing spurred sales.
  

Quick Overview

• The University of Michigan's index of consumer sentiment increased from 81.6 to 88.7 in December, more than expected.
  
  

• The USDA's 2005-2006 U.S. ending stocks estimate for:
  Corn was increased from 2.319 to 2.419 billion bushels.
  Soybeans were increased from 350 to 405 million bushels.
  Wheat was unchanged at 530 million bushels.
  Sugar was increased from 667,000 to 1.395 million tons.
  Cotton was increased from 6.50 to 6.90 million bales.

• The USDA's 2005-2006 world ending stocks estimate for:
  Corn was increased from 114 to 119 million tons.
  Soybeans were increased from 47 to 48 million tons.
  Wheat was increased from 140 to 143 million tons.
  Cotton was increased from 50 to 51 million tons.
  

• The USDA estimates the 2005-2006 Florida orange crop at 162 million boxes, down from last month's estimate of 190 million boxes. The projected juice yield was lowered from 1.58 to 1.55 gallons a box.
  The Brazilian government estimated its 2006-2007 coffee crop at 42.0 million bags, up from 36 million bags this year
  
  

• Canada's labor productivity was up 0.8% in the third quarter and up 1.3% YoY.
  

• Japan's GDP was up 0.2% in the latest quarter, down from an earlier estimate of 0.4%.
  
  

• Brazil inflation eased in November, official data showed on Friday, reinforcing bets the central bank will cut interest rates next week.
  

• Industrial production in France was down 2.5% in October, the biggest monthly drop in six years.
  

• Mexico's central bank, with inflation at record lows, cut a key interest rate by 50 basis points.
  

Jim Rogers likes commodities

JIM ROGERS: If you look at most agricultural commodities - nobody has been planning new acreage or new plantations in many years. Wheat hectares have been declining for 30 years, and that’s true of everything. As the world gets more prosperous people consume more - it’s the natural state of the world, and that’s going to continue for the next several years until somebody brings on some new supplies. You can’t just snap your finger and bring on a lot of new supply - I would point out that we haven’t had any big droughts anywhere in the world for over five years. We used to have droughts all the time - they may start coming back. I’m not investing in commodities because of weather - that would be an absurd thing to do - but it’s another reason that you’re going to see higher prices for agricultural commodities.

Quick Overview

• U.S. jobless claims were up 6,000 last week to 327,000.
  

• The U.S. Department of Energy said that underground natural gas supplies were down 59 billion cubic feet last week to 3.166 trillion cubic feet. Supplies are now down 2% from a year ago.
  

• The unemployment rate in Australia dropped from 5.2% to 5.1% in November
  

• Industrial production in Germany increased 1.1% in October
  

• Japan's machinery orders rose 4.8% in October, providing more evidence of firms' strong desire to invest as they enjoy brisk profits and benefit from a steady recovery in the economy.
  

• New Zealand raised its key interest rate to 7.25% from 7%.
  

• In the most recent quarter South Africa's gold production was down 3.4%.
  

• Twelve-month inflation in Mexico fell to a historic low in November, and below the central bank's target for the first time ever.

Quick Overview

• The U.S. House of Representatives on Wednesday approved legislation to make sure that millions of Americans will not be forced to pay the alternative minimum tax next year.
  

• The Federal Reserve said that total consumer debt fell by $7.20 billion in October to $2.157 trillion, a record decline for the month.
  
  

• The U.S. Department of Energy said that:
  Supplies of crude oil were up 2.7 million barrels to 320.3 million barrels.
  Supplies of unleaded gasoline were up 2.7 million barrels
  Supplies of heating oil were up 700,000 barrels.
  
  

• Australia's GDP grew 0.2 percent in the third quarter, the slowest pace in a year.
  

• Japan's Cabinet Office said that its index of leading indicators jumped from 41.7 to 80.0 in October, a sign of optimism for the economy.
  

• Canada's 05/06 wheat crop totaled 26.8 million tons, up 3.5% YoY
  

Cheers! It's party time as Japan economy recovers
Some 63 percent of Japanese workers in a survey plan to let their hair down at traditional year-end parties with their colleagues this year, up from 49 percent last year, an indication that if not exactly rolling, the good times may be back

Housing Bubble Bursts in the Market for U.S. Mortgage Bonds
Bonds backed by home loans to the riskiest borrowers, the fastest growing part of the $7.6 trillion mortgage market, have lost about 2.5 percent since September on concern an 18-month rise in interest rates may force more than 150,000 consumers to default.

Quick Overview

• The Labor Department said that business productivity was up an annual rate of 4.7% in the third quarter, the best quarterly gain in two years. The U.S. productivity growth is surging, but the wage increases that typically come with such gains have eluded American workers.
  
  

• U.S. factory orders were up 2.2% in October. Excluding transportation, orders were up 0.6% on the month.
  
  

• Industrial production in the U.K. was down 1% in November. YoY retail sales were p 4.6% in November.
  
  

• The Bank of Canada increased its overnight rate from 3.00% to 3.25%.

Five Risks
Stephen Roach

The annual year-end forecasting ritual has begun. For us, it is always sparked by the extension of our forecast horizon to another year -- in this case, our first official glimpse at 2007. We also take an in-depth look at our calls for the year nearly completed (2005) as well as for the 12 months lurking just ahead (2006). It is as close to soul searching as the heartless macro prognosticator ever gets.

Quick Overview

• The Institute for Supply Management's services index fell to 58.5 in November from 60.0 in October, below forecast of 59.0
  

• President Bush called on American businesses on Monday to live up to their pension promises.
  

• FedEx Corp. announced it will raise the standard rates for FedEx Ground services next year by an average of 3.9%.
  

• Gasoline pump prices continued to drop in the two weeks ended Friday, falling 11 cents to an average $2.16 a gallon for all grades, analyst Trilby Lundberg reported in her latest survey of filling stations.
  

• A European index of services increased from 54.9 to 55.2 in November, the best reading in over a year.
  

• Gold finished near a 23-year high on Monday spurred by worries over inflation.

Is Mankind a Mistake?
When we are functioning as individuals – whether at work, in the marketplace, among friends, or driving on the freeways – our behavior toward one another tends to be peaceful and respectful. Few of us would be willing to personally inflict, even upon strangers, the brutalities that so many eagerly cheer on when performed by agents of the state with which we identify ourselves. We would quickly find ourselves without friends were we to behave toward them in ways that emulate Dick Cheney’s or Donald Rumsfeld’s recommended treatment of Iraqis. How welcome would a Madeleine Albright be in your community were she to announce that the brutal deaths of neighborhood children was a price she was willing to pay for the advancement of her career? How long would you continue working for an employer who hired Lynndie England as your immediate supervisor?