A Wall Street Journal article published today (1/7/09) talks about recent efforts of steel producers around the world to open up select mills, in a sign that the market for steel may have bottomed. From their mid-2008 highs, steel and iron ore prices have slipped 40% as a weakening global economy and financial crisis has slowed demand for cars, houses and other durable goods. However, there are many factors that suggest that this commodity, so heavily correlated to economic activity, may have bottomed and may gain steam in 2009.Since the decline in global steel prices, producers have been quick to cut production. Several global steel/iron ore producers such as ArcelorMittal (MT), AK Steel Holdings (AKS), BHP Billiton (BHP) and Baosteel Group have cut 2009 production by 25-30%, hoping to stem further price deterioration.Producers have been opening mills back up selectively, ...

by Edward Hugh: Barcelonabr /br /Yesterday's comments by Bank of Japan Governor Masaaki Shirakawa that conditions in Japan's economy are severe and that monetary conditions are rapidly tightening should not be taken lightly in my opinion. Viewed alongside last weeks data revision which showed that Japan’s gross domestic product contracted much more rapidly in the third quarter than initially thought, and the recent admission by Japan’s Finance Minister Shoichi Nakagawa that employment conditions are also nowbecoming “severe.” it is clear that we are in the process of settling-in for what promises to be quite a long and hard recession.br /br /Revised data released last week showed that gross domestic product fell on quarter-by-quarter basis by 0.5 percent during the three months up to September, as compared with the preliminary estimate of only a 0.1 per cent decline. Year on year, the economy is now thought to have also contracted by ...

by Edward Hugh: Barcelonabr /br /br /This, it seems, is the question of the day. a href="http://www.imf.org/external/np/ms/2008/120908.htm"According to the IMF/a Spain’s economy faces a contraction of at least one percent next year. And the IMF stress that the risks to this forecast “remain on the downside” since the country’s real-estate market is “in full correction,”. Also, horror of horrors (and we will return to this). The government’s budget deficit will exceed five percent of gross domestic product next year, the Fund forecast.br /br /While the IMF seem to be more aware of the scale of the problem than the Spanish government currently are, they do seem to be putting all of the emphasis for recovery on some much needed labour market reforms, but personally I don't think even these are playing in the right ball park, we need a big picture "breakout" escape plan, to cut loose from the pincers ...

The current market turmoil has been particularly brutal in the oil space, with all sub-sectors getting down to levels not seen in years. While expectations of softening oil demand over the coming quarters and broad credit-market concerns have been the primary reasons for the sector's woes, the sell-off has by all measures been overdone.

This indiscriminate sell-off has made the risk-reward trade off of a number of sub-sectors very compelling, in our view. Our best ideas are in the integrated, oilfield service and offshore drilling sub-sectors.

* While downside risks still remain, particularly if the global economic weakness turns out to be more protracted than currently anticipated, oil prices are expected to consolidate around current levels. * We are strong believers in the secular underpinnings of the oil cycle -- the current downturn is just a pause in a long secular cycle that still has plenty of

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The current market turmoil has been particularly brutal in the oil space, with all sub-sectors getting down to levels not seen in years. While expectations of softening oil demand over the coming quarters and broad credit-market concerns have been the primary reasons for the sector's woes, the sell-off has by all measures been overdone.

This indiscriminate sell-off has made the risk-reward trade off of a number of sub-sectors very compelling, in our view. Our best ideas are in the integrated, oilfield service and offshore drilling sub-sectors.

While downside risks still remain, particularly if the global economic weakness turns out to be more protracted than currently anticipated, oil prices are expected to consolidate around current levels. We are strong believers in the secular underpinnings of the oil cycle -- the current downturn is just a pause in a long secular cycle that still has plenty of room to go. The large-cap ...

German unemployment extended its decline in November, withstanding the worst recession in 12 years, as employers continue to retain and even recruit staff even as orders slump. The number of people out of work, adjusted for seasonal variations, dropped a further 10,000 in November to reach 3.15 million, following a 26,000 fall in October, according to data from the Federal Labor Agency out today (Thursday). The adjusted unemployment rate held at 7.5 percent, a 16- year low. br /br /br /a href="http://2.bp.blogspot.com/_ngczZkrw340/SS6dZ5gWymI/AAAAAAAALlE/9UbfR71hm14/s1600-h/germany+unemployed.png"img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 320px; height: 198px;" src="http://2.bp.blogspot.com/_ngczZkrw340/SS6dZ5gWymI/AAAAAAAALlE/9UbfR71hm14/s320/germany+unemployed.png" border="0" alt=""id="BLOGGER_PHOTO_ID_5273325281956252258" //abr /br /The German labour market normally follow broader economic trends only with a time lag - sometimes of as much as nine months, according to research by the Cologne-based IW economic institute. Since Germany’s recession began in the second quarter we may well only see the unemployment numbers begin to respond at the start of ...

I am seeing a flurry of stories that base metals miners are rushing to shut down. Just look at some of the headlines from the past couple days:brbra style=font-family: verdana; href=http://www.mineweb.net/mineweb/view/mineweb/en/page36?oid=73829sn=DetailZambian copper workers face layoffs/a ... a style=font-family: verdana; href=http://www.mineweb.net/mineweb/view/mineweb/en/page72102?oid=73815amp;sn=DetailIndefinite shutdown for world top /aa style=font-family: verdana; href=http://www.mineweb.net/mineweb/view/mineweb/en/page72102?oid=73815amp;sn=Detailtantalum miner/a ... a href=http://www.mineweb.net/mineweb/view/mineweb/en/page504?oid=73832amp;sn=DetailMwana Africa shuts Zimbabwe nickel mines/a ... a style=font-family: verdana; class=SmallGrayLink title=http://www.resourceinvestor.com/pebble.asp?relid=48281 href=http://www.resourceinvestor.com/pebble.asp?relid=48281Denison Mines delays uranium project/a ... a style=font-family: verdana; href=http://www.theaustralian.news.com.au/business/story/0,28124,24703432-5005200,00.htmlNorilsk Idles Two Mines/a ... I could go on, but you get the picture. This is happening because the global economy is tumbling into recession (See the China story linked below). But down the road, this is also setting up a supply squeeze and subsequent rebound.brbrAnd it's not just base metals: a href=http://www.miningweekly.com/article.php?a_id=148236 target=_blankAustralia's 2008 gold output may fall to lowest level since '89 /a.brbrIn Other News ...brbra href=http://network.nationalpost.com/np/blogs/tradingdesk/archive/2008/11/25/gold-equities-expected-to-pay-off-for-the-patient.aspxGold equities expected to pay off for the patient /ablockquotep style=font-family: verdana;Scotia Capital analyst Trevor Turnbull remains ...

The OECD has just released its forecasts. This follows the recent updated IMF forecasts. Growth is evaporating the industrial countries. What is to be done?

Figure 1: From visualization of OECD Economic Outlook 84 [link]. Blue is negative growth, darkest blue is -9.335%; orange is positive growth, most orange is +9.335%. White is zero; gray is "no forecast". Table from press conference for the release of OECD Economic Outlook 84 (25 November 2008). Table from IMF WEO Update (November 6, 2008).

With the industrial economies, representing a very large chunk of world GDP, all colored varying shades of blue and entering a period of slowdown, it seems like we need to think not only about macro policy in the US, but also abroad (and what those policies mean for the US).

There is

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Paulson reworks financial bailout: New targets for investment… even you can apply! Markets plummet… Bill Bonner on when stocks will be cheap enough to buy. OECD predicts global recession… Germany admits contraction has already begun. Wall Street CEOs forecast “rapid,” “deep” U.S. recession. Joel Bowman on a peculiar hissing sound emitting from the Middle East.

For an erudite debate over the Paulson doctrine, we turn to our friends at The Onion this morning:

The Money Hole.

It’s not any more complicated than that, is it?

Indeed, Paulson and company announced a TARP switcheroo yesterday. Now the Treasury’s Troubled Asset Recovery Program (TARP) is suffering a serious case of the STD “mission creep.”

Instead of purchasing troubled assets from banks, the Treasury,

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According to the French Organization for Economic Cooperation and Development (OECD), the developed countries of the world are now facing a deeply-troubling recession that the group expects to last “at least through the first half of 2009″. Rapidly contracting GDPs are just one effect of the crisis, although, while the OECD says that “projections point to a protracted downturn”, it has been indicated that the group believes the U.S. to be the nation that will ultimately deliver the global economy from a frightening reality.

Let us hear your thoughts below: