Battle of the banks looms over ‘throw weights’

As the Euro broke the $1.60 mark, the European Central Bank issued warnings about inflation and said it will look at RAISING interest rates.

Yes, raising, not lowering, as Ben Bernanke, The Worst Fed Head Since Greenspan™, has done. At the least, the ECB will NOT be lowering rates, unlike the Fed, the Bank of England and Bank of Canada.

Ultimately, we’re going to get to see which bank has a better interpretation of today’s global economy, and behind that, to use a Cold War term …

Which bank has a bigger throw weight?

Given that the EU economy officially became larger than the US economy earlier this year, and that dissident OPEC members continue to push for Euro-denominated oil, this is:
A. Going to be a hell of a fight and
B. Probably, if not disastrous, troubling for the US economy.

And, no, I don’t think Bernanke and the Fed will “win” this one. But, in a totally dispassionate sense, it could be fun to watch.

Arianna Huffington disses secularists

While the Divine Ms. A has done a lot of good in supporting the growth of the liberal blogosphere, it comes as no surprise, knowing her NewAgeish tendencies in some areas, to know that she totally misses the boat with her higher-power babble . (Yes, the post is seven years old, but I’ve never heard the Huffmaedchen withdraw her general tenet.)

That, in turn is part of a larger and sadder blank-check support for “faith-based initiatives” in general. (Oh, BTW, what would the Bush Administration, or the Greek Goddess (snark again) do, if a Wiccan or Satanist applied for a faith-based grant?)

Here’s the nutbarrery of her nut grafs, though:

In the same way that astronomy wasn’t able to move forward until Copernicus posited that it was the Earth that revolved around the sun — also an unpopular view at the time — our society will not be able to reclaim its proliferating human casualties until it comes to terms with the fact that healing revolves around the acceptance of a higher power.

Of course, there will always be people who believe there is no God, just as there continue to be flat-earthers, convinced that Copernicus had it all wrong.

So, we’re as stupid and contrary as flat-earthers.

First, possibly the most horrific war in history, in terms of total civilian suffering, was an inter-Christian religious war, the Thirty Years War. Even today, and not just among or by Muslims, or Jews, or Christians, wars are fought in the name of religion.

The Tamil Tiger separatists are Sri Lanka, for example, are mainland-India oriented Hindu “religious nationalists.” (Given the nature of Hinduism, and a comment about to follow, that’s the best handle I can devise.)

Speaking of that, India has its Hindu Nationalist Party. Oh, Goddess, you remember it, don’t you? The party that won Indian parliamentary elections in 1998 on a promise to start nuclear bomb testing? And then doing so.

Or, let’s not forget the Japanese militarists of World War II praying at Shinto shrines, or the kamikazes thinking their missions were divinely supported.

I then got to thinking, I could have updated Arianna’s column myself and fictitiously bylined it under an even bigger rectal irritant’s name. All I had to do was go to Washington Monthly, crib a few quotes from some of Amy Sullivan’s more insipid posts, insert them at the right points in the Divine Miss A.’s original column slap Amy’s byline on it, and, voila!

Oh, and welcome any readers of Kevin Drum’s “liberal, godless blog.” Not.

American Airlines execs bail on company

In what is arguably the latest example that American’s corporate ship is rapidly setting into the sun, top execs of parent company AMR bailed off that ship today like rats afraid of drowning.

AMR Corp.’s top five executives sold nearly 400,000 shares of company stock Thursday – most of about 550,000 shares they had just received that day as part of an executive compensation program from the parent of American Airlines.

CEO Gerard Arpey was a big seller:

Big sellers included AMR chairman Gerard Arpey, who sold 81,520 shares for $695,317. He had received 187,600 shares in the program that rewards executives based on how well AMR stock performs relative to that of competing airlines.

But not the biggest:

Two of Arpey’s top lieutenants surpassed his sales total. Executive vice presidents Dan Garton for marketing and Tom Horton for finance each sold their entire allotment of 103,984 shares, bringing in $886,932 apiece. (Horton is also the company's chief financial officer.)

I want to go back to that second pull quote, and specifically:

The program rewards executives based on how well AMR stock performs relative to that of competing airlines.
Squeeze me?

First, ALL airlines pretty much such on the P-and-L bottom line right now. Shouldn’t every airline exec with a stock-option bonus have to forfeit it on those grounds alone?

Second, Arpey was the CEO who neither flew back to Dallas nor held an impromptu press conference in Los Angeles the day the Federal Aviation Administration announced it was grounding American’s MD-80s. And Garton, not the company’s top safety officer, was the guy who actually got tapped to do the presser tap dance back here in DFW.

Certainly, American’s pilots and their union, which have been so unhappy about the idea of executive bonuses as to make vague strike noises, weren’t mollified by the sell-off, nor were flight attendants:

The airline’s unions, which accepted deep cuts in pay, benefits and working conditions as the airline struggled in 2003, have complained about the stock awards to executives.

Monday, union officials said the quick sales by executives make it appear the top people don’t believe in their own company.

“It just gave me a sick feeling,” said Jim Little, Transport Workers Union international president. “It's almost ‘take the money and run.’”

“The question is, how much should the investors feel the executives are committed to this company?” said pilots’ union spokesman Karl Schricker.

He said (the) company’s board should have taken into account the airline’s dismal record on customer service and other areas when it decided on the stock awards.

“If you judge our management team on their performance, there should have been no bonuses this year of any kind,” said Mr. Schricker, an American pilot.

The Association of Professional Flight Attendants has said the top five executives should resign because they took the shares.

That’s all right.

Surely, Arpey et al will earn those stock-option bonuses by meeting an FAA May 30 deadline to complete 19 overdue inspections:

The inspectors will be looking at American's manuals and programs to make sure they comply with federal regulations, not doing hands-on inspections of aircraft.

American claims it’s not worried:

The inspections, which are unrelated to the earlier maintenance problems, “have a very low probability of impact as far as operations go,” said Tim Wagner, an American spokesman. “We understand they’ll complete them by the end of May.”

Yeah, sure.

Meanwhile, cross-Metroplex rival Southwest Airlines supposedly still hasn’t completed four similar inspections itself, according to Inspector General Calvin L. Scovel III.

I have blogged more than once about taking that summer vacation early. If American has planes stuck in the hangar at the start of Memorial Day weekend, you’re going to wish you had considered that!

Murdoch lie about ‘hands off WSJ’ exposed

Marcus W. Brauchli is resigning as managing editor of the Wall Street Journal.

Why?

Reportedly, frustration over some of the changes Murdoch has made since acquiring the Journal, plus losing some control since the takeover.

And, (shock me), because Murdoch wants a quick payback on his purchase by lopping heads:

Journal newsroom employees say that Mr. Murdoch and the publisher he installed, Robert J. Thomson, have made it clear that they think the paper has too many editors, and have instructed Mr. Brauchli to thin the ranks, potentially making room in the headcount for more reporters. Two people briefed on Mr. Brauchli’s thinking said that had become a major point of contention.

Supposedly, he also doesn’t like Thompson looking over his shoulder as a “supereditor.” Well, since Thomson came from the Murdoch-decimated Times (of London), that’s probably not unexpected either.

Jubak says $180 a barrel oil is coming

Jubak, my personal No. 1 financial analyst with MSN, expects oil prices to keep climbing for two more years. And yes, we would have $180/bbl oil at the end of that.

Besides any Peak Oil issues, he notes cold, hard cash — or the lack thereof in Mexico, Nigeria and Russia — is part of the problem. Russia is the kingpin of oil-supply scenarios, as I blogged last week. Jubak says that makes its decline more worrisome:

Any decline would mark a huge turnaround. Russian production has grown steadily over the past 10 years, and in its supply-and-demand projections the International Energy Agency has been counting on growth in Russian production of 5 percent by 2012 to offset big declines in older fields in the North Sea and Mexico.

The money problem is different everywhere.

In Russia, it’s windfall profits taxes that hit a “windfall” level of 80 percent at just $27/bbl. It’s no wonder Lukoil, et al, want relief.

In Nigeria, it’s the government failing to put money into joint ventures with private companies. The situation is similar in Mexico. Mexico could be a net importer in a decade or so unless it can gin up production. Here’s the problem there:

About 40 percent of total government revenue in Mexico comes from Pemex. And as a symbol of the country's economic independence from the United States, Pemex is prohibited from signing joint-production agreements that would let the company trade oil for the technology and investment it needs.

Well, the Mexican government, if it doesn’t want rebellious, welfare-deprived peasants storming Mexico City, is going to have to force Pemex to bite the joint- production bullet, as I’ve blogged long ago.

Oh, and those new oil finds in Brazil? Even if they pan out, they won’t hit the market for a decade.

‘Aggressive’ CAFÉ standard is not

Only under the aegis of the Bush Administration could an increase in fuel economy standards that has no legal teeth for seven years be called “aggressive.”

The nation’s fleet of new cars and trucks will be required to achieve 31.6 miles per gallon by 2015, the Bush administration said Tuesday.

Transportation Department Secretary Mary Peters outlined the plan on Earth Day, setting a schedule that was more aggressive than initially expected by industry officials.

Peters said the proposal was “an aggressive but achievable standard. I think we’ve got something that is going to significantly save fuel and help clean our air.”

Let me do the math for you that Mary Peters didn’t.

The current CAFÉ standard is 27.5 mpg. So, we have an increase of 4.1 mpg over 7 years. That’s a whopping 0.6 mpg per year.

Meanwhile, assuming that the formerly Big Three are wrong in betting on biofuels rather than hybrids, they’re in trouble, ranking last in hybrids. And, the continued lethargy in Detroit could become an ever-bigger self-inflicted wound:

"I think the car companies that decide to do the minimum to comply with the CAFÉ (fuel economy standards) won't be in business by the time that the CAFÉ schedule is over," says Environmental Defense Fund President Fred Krupp.

Dinosaurs, indeed. I mean, how many more employees can the Big Three cut? I don’t care how many new execs Ford brings in to promote car quality, if it ain’t doing car efficiency, it won’t get much traction.