The Financial Times on page one and the Journal on B1 write that Chinese steelmakers agreed to increase what they pay for iron ore by an average 85 percent, stoking inflation worries. The FT says its a record increase.
The rise suggests that demand for commodities from emerging economies remains strong, in spite of the US slowdown, fuelling fears that global inflation will continue to rise.
For steelmakers, the news isn’t good, though it wasn’t entirely unexpected. There are just three major mining companies. The dozens of steelmakers face more competition and thus have little leverage on prices.
Regulating energy traders
In other commodities news, several hedge-fund managers and oil analysts testified to Congress yesterday that regulation of energy speculation could send prices tumbling back to more reasonable levels, the Journal says on A3.
Many legislators are seeking to curtail—or, in some cases, outright ban—swaps and bilateral trading in the energy futures markets, and set limits on investments on foreign exchanges operating in the U.S.
House Energy and Commerce Committee Chairman Rep. John Dingell, (D., Mich.), said lawmakers should set firm limits on the size of energy speculators’ positions, require full disclosure of all energy trading from investment banks; and prevent pension funds from investing in commodities as they seek to diversify their holdings.
The Journal on A4 says coal miners are having trouble keeping up with demand because of “a lengthy permitting process, lack of capital investment and a shortage of skilled miners.”
The Washington Post’s Dana Milbank reports on climate-change martyr James Hansen’s tour of the capital yesterday. He says forget about cutting oil use, stop coal now! Asked if he’s gotten to talk to the president, Hansen gave our Quote of the Day:
Hansen laughed at the thought. “Unfortunately, no, I’ve not had a chance to talk to the president,” he said. “I know that Michael Crichton did.”
The Journal’s page-one “ahed” notes that some in San Diego are making runs across the border to Tijuana to get subsidized Mexican gas. It says that “Mexicans aren’t happy about the gringo invasion and the long lines at filling stations near the border.” Ironic.
Baby with the bathwater?
The Journal reports on C1 that the Securities and Exchange Commission will propose rules that diminish the importance of credit-ratings firms like Moody’s and Standard & Poor’s, whose dismal performance in rating mortgage-backed securities and the like helped set off the credit bust.
The renewed effort is part of a wide-ranging regulatory push in the U.S. and Europe amid the credit crunch that has devastated many banks and investors.
The SEC will allow money-market funds to buy short-term debt regardless of what it’s rated by the credit-ratings folks. That’s one of a dozen changes, including one to “diminish the importance of credit ratings in determining the amount of capital that investment banks are required to hold.”
The question is: Is it better to have no ratings requirements at all or regulate them (largely by ending their huge conflicts of interest) to try to ensure their ratings are actually, you know, accurate? We’d say it’s the latter.
Google News gets beat
The paper writes that Google News hasn’t changed much since it was launched, but contradicts that down low in the story when it rattles off several new features. It says the service can be slow, as when it was an hour behind everybody else on Tim Russert’s death with its computer-generated news-placement algorithm. That algorithm is pretty much why it’s so feared and loathed in the news business.
The Times quotes “people close to the company” saying Google doesn’t put ads on the site so as not to tick off news companies. It notes Europe has ruled the company has violated copyright laws by publishing links to news without permission and that Tribune owner Sam Zell has said it steals his company’s content.
Green Houses for gray heads
The Journal on A1 reports on a move to end the nursing-home business in favor of smaller facilities. It says the $10 billion Robert Wood Johnson Foundation is “throwing its considerable weight” behind the cause, dropping $15 million.