SAR #8164

If love is blind, why is lingerie so popular?

Clarification: Yesterday we noted the US was seeking permanent bases in Iraq. The Bush administration does not seek permanent bases; it seeks to rent them indefinitely. We apologize for the confusion.

Size Distance Matters: Global retailers are cutting orders from the Orient and sourcing goods closer to the markests in the developed world, as oil prices eat away at the edge low wages have given Asian producers.

Tripling Threat: The continuation of the recent rapid sea ice loss in the Arctic will triple the warming of northern Alaska, Canada, and Siberia. The largest danger is the thawing of the permafrost and widespread release of methane, and then much faster warming of the Arctic than previously predicted. Ahhhh, the beaches of Kamchatka.

Sternly Bearish: JP Morgan now claims US house prices will fall another 25 to 30% over the next 4 years.

Road Trip: Understand this: the CDS collapse will not be a spectator sport. Not just the Fed, but most of the large Central Banks in the world will try to salvage the system, with taxpayer money, with newly printed money, with liquidity, liquidity, and the sound of helicopters. It'll make Bear Stearns look like the out-of-town try-out it was. Some think the rescue has already begun.

The Heat, 'Gotta be the Heat: Dubai is planning to open the world's largest airport, capable of handling 120 million passengers a year, by the end of 2009. Larger than O'Hare and Heathrow combined. Why, Dubai?

Yes, But... BP's annual review reports that global oil production fell 0.2% in 2007 to 81.53 million bpd, and that proven reserves did not increase. Meanwhile BP CEO Peter Sutherland said there is no problem with supplies.

Burn Bag: US torturers interrogators have been instructed to destroy the evidence, but in the age of cell phone cameras, MP3 jpgs and flash drives, why in the world does the leadership think any cat can be kept in any bag?

Mirrors and Tinfoil Hats: Research and reality both show that Asset Back Securities (ABS) fail to perform far more often than corporate bonds of the same rating. Yet banks were (are?) required to hold 80% less capital against ABS than against corporate bonds. How can they blithely talk about re-regulation when apparently there wasn't any regulation in the first place?

Practicing Misery: A planned delivery tanker drivers' strike this weekend will shut down 10% of British petrol stations. Seem to be planning a revival of The Road Warrior.

This Side of the Rainbow: 'Home sales are rebounding.' 'Prices have bottomed out.' 'The check's in the mail.' Banks cannot take 50% losses on mortgages very long, yet they are facing this and worse for as far ahead as the red ink flows. Banks will fail. Small ones, big ones, some the size of your head. Leverage works both ways and at 25, 35 even 40 to 1 the economic destruction is going to be Biblical. Know anyone who lives on a farm?

Making friends: The US military has killed 11 more Pakistani soldiers. The hearts and minds thing apparently only applies to the enemy, not to US allies.

Porn O'Graph: Ben's qualified to fly this helicopter, right?