From Volume 8, Issue 14 of EIR Online, Published Apr. 7, 2009

Global Economic News

While the G20 Fiddles, the Real Economy Burns

April 1 (EIRNS)—The situation of the real economy, which is not on the agenda of the London G20 summit, is highlighted by some new data from Germany. March production of trucks and commercial vehicles dropped by 61-68% (depending on the category), compared to March 2008. Daimler-Benz, which produces a lot of these vehicles, will extend shortwork schedules beyond June, and go for deep cuts in wages and expenses.

Thyssen-Krupp is being forced to sell its Industrial Services division, which has suffered badly because of its high dependency on production for the auto, chemical, and machine-building sectors of German industry. Thyssen already sold some of its maglev patents to China some weeks ago.

Also, for the first time since 1928, March showed no Spring recovery of the labor market in Germany, but, on the contrary, a net increase of unemployment.

World Farming Capacity 'Scaling Back' to Food Catastrophe

April 2 (EIRNS)—From the drop in prospects for Spring planting in the U.S., to the decline in fertilizer use worldwide, all reports add up to a scaling back of agriculture capacity to the point of guaranteeing food catastrophe in the near future. Farmers are at best, trying to "wait and see," cut expenses, and seek any tricks to stay in operation. Inputs are costly; prices for output low and unstable. Some of the latest updates:

* The "Prospective Plantings" Report for 2009 from the U.S. Department of Agriculture (USDA) was released March 31, stating that U.S. farmers are "cutting back" in their crop plans. Acreage planted to corn may drop 1% from last year. Other surveys estimate a 3+% decline. Wheat acreage may be down 7%. Cotton acreage is down 7%. Area planted to soybeans—which needs no nitrogenous fertilizer—may go up.

* The Potash Corporation of Saskatchewan, the world's largest fertilizer company, reports that February shipments of potash in North America were down by 80% over last year at the same time. The company is drastically curtailing production in 2009.

* Worldwide, the grain harvest is expected to drop 3.4% in the year July 2009-June 2010, from the prior year, according to the March projections of the International Grain Council.

* Milk and meat production capacity is also contracting. In the U.S., a dairy cow slaughtering drive is underway, politely termed the "Herd Retirement Program," under the sad falsehood that reducing production will drive up the raw milk price to the farmer, by the "law of supply and demand." A farmer receives about $10 for 100 pounds of raw milk today, far below his costs of maintaining a milking herd. A year ago, he got $18 for 100 lbs. Five years ago, in 2003, 5% of U.S. milk production was exported, which shot up to 12% in early 2008, and now that has plunged, as part of the chaos in commodities of all kinds during the crash. The cow kill-off, billed as the solution, is proceeding.

In 2008, 88,000 animals and 1.6 billion pounds of milk production were eliminated. Since January, the rate of herd kill-off is even greater. California is especially hard hit. "2009 will be one of the worst for dairy farmers in years, if not decades," said Peter Vitaliano, a vice-president of National Milk Producers Federation, in the leading farm magazine, Hoard's Dairyman.

South Africa and China Join Forces in Development of Pebble Bed Nuclear Technology

March 30 (EIRNS)—A memorandum of understanding (MOU) was signed in Beijing on March 26, between the Chinese and the South African developers of high temperature reactors (HTR) using pebble bed technology. Pebble Bed Modular Reactor (Pty) Ltd (PBMR) of South Africa has been developing the pebble bed technology in parallel with the Institute of Nuclear and New Energy Technology (INET) of Tsinghua University and Chinergy Co. Ltd of China, whose pebble bed concept is based on a 10 MW (thermal) research reactor that was started up in Beijing in December 2000, and achieved full power operation in January 2003. INET is a top nuclear research and experimental institute in China.

With this MOU, South Africa and China hope to pursue collaboration in a number of strategic and technical areas relating to HTR in both countries. Pebble bed technology is used to make a reactor inherently safe. In pebble bed designs, the physics of the fuel pebbles is such, that a runaway rise in temperature in the reactor only causes it to shut down before it has increased much. It does so without a separate safety system with its own risk of failure.

Prof. Zhang Zouyi, director of INET, says that the MOU was the result of natural synergies between the South African and Chinese HTR project teams, which were highlighted at an HTR conference in Washington, D.C. in 2008. The Washington meeting was followed by a visit to South Africa by representatives from INET and Chinergy Co., Ltd., earlier in 2009, in order to devise a framework for cooperation.

PBMR CEO Jaco Kriek welcomed the collaboration with China. He said the MOU will create interesting opportunities for the future commercialization of the technology and strengthen supply chains in both countries, with the support of both governments. Both South Africa and China have extensive energy requirements and emphasize increasing the role of nuclear energy in the energy mix.

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