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Perhaps Barack Obama’s trip to China this month was not such a flop after all.

Obama was criticized for kowtowing to the Chinese and apparently returning empty-handed, but movement from Beijing last week on Iran’s nuclear program and climate change suggests the U.S. president got further than it seemed at first.

Obama went to China with three major issues on the table — economic relations, climate change and denuclearization — and seems to have made progress on at least two of them.

But analysts said it was unclear exactly how much the U.S. leader had actually influenced the Chinese, or what the long-term impact would be of what was announced last week.

“The Chinese were pressed in a very focused fashion on both of those issues,” said Kenneth Lieberthal, director of the John L. Thornton China Center at the Brookings Institution in Washington.

“I think their position does reflect, in fact, the impact of the Obama visit and of American diplomacy,” he said.

China offered rare backing on Friday to a vote by the U.N. nuclear watchdog to rebuke Iran for building a uranium enrichment plant in secret, the first such vote against Tehran in almost four years.

China, like Russia, backed the measure, smoothing its 25-3 passage through the International Atomic Energy Agency and departing from an earlier pattern of blocking global attempts to isolate trading partner Iran.

Obama stressed in Beijing that Iran’s nuclear program could disrupt the Middle East and world energy supplies, experts and administration officials said.

The Washington Post reported that U.S. officials had argued that Israel saw Iran’s nuclear ambitions as an existential threat, and implied Israel could one day attack Iran to disrupt those ambitions. That argument helped bring the Chinese on board to take a firmer line on Tehran, it reported.

“Obama pressed very hard with the Chinese,” Lieberthal said. “And they went the right way today.”

On Thursday, Beijing said Premier Wen Jiabao would go to U.N.-led climate talks in Copenhagen next month and offered its first firm carbon intensity target, pledging to cut the amount of carbon dioxide produced for each yuan of national income by 40-45 percent by 2020, compared with 2005 levels.

‘THESE THINGS ARE INCREMENTAL’

Washington gave only a guarded welcome to China’s emissions announcement, saying the world would watch progress by the top greenhouse gas emitter. Observers said measuring and verifying implementation would be central going forward.

Bonnie Glaser, a China expert and senior fellow at the Center for Strategic and International Studies in Washington, said China’s 40-45 percent reduction target was disappointing, but it was a good sign that they made an announcement at all. 

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Howard Weaver, former vice president for news at The McClatchy Co., has been acting as an adviser for an online news startup by eBay Inc. founder Pierre Omidyar.

Omidyar and Randy Ching, both former eBay executives, established Peer News Inc. in 2008 with the goal of producing original, in-depth reporting and analysis of local issues in Hawaii. The Honolulu-based news service is set to make its debut early next year.

“We’ve been talking to a lot of people in the industry about journalism and how we might be able to have an impact, listening and learning as much as we can,” Omidyar wrote on his Peer News blog. “One of the people who has been a huge help in particular as we began to envision our local news service is longtime industry insider Howard Weaver …”

Peer News has announced it is searching for an editor, and Weaver has said on his blog that he’ll be part of the team looking at candidates. Weaver is not a candidate himself.

Weaver wrote about the startup last week:

“I’m interested for a lot of reasons, but I’d sum it up this way: the new venture intends to demonstrate that a digitally native, technologically fluent Web organization can profitably serve targeted readers who want sophisticated journalism focused on local civic affairs.”

Weaver, who twice led his hometown paper, the Anchorage Daily News, to Pulitzer Prize gold medals, retired from McClatchy (NYSE: MNI) about a year ago. Reached at his home in Sacramento, Weaver said he’s keeping busy in his “next phase” of life. When he’s not advising and blogging, he’s consulting, sitting on a company board of directors, having fun and “trying to write fiction.”

e.Republic takes on ‘Governing’

E.Republic Inc., a Folsom publishing and research company that focuses on government technology news and events for the government and education markets, just made its first acquisition, expanding beyond information technology to government policy.

E.Republic will buy “Governing” magazine from the Times Publishing Co guaranteed approval payday loans. The deal is expected to close Nov. 30. Details were not disclosed.

E.Republic has about 150 employees and continues to grow, unlike many news organizations that have laid off workers during the recession, said Paul Harney, chief operating officer for e.Republic. He said it’s been a tough year for the company’s print publications, except for “Emergency Management.” But e.Republic’s Web sites are “robust” and sponsorships for the company’s 160 events are strong, Harney said.

“People still want to meet face to face and talk business,” he said.

E.Republic also is home to the 10-year-old Center for Digital Government, which provides market research on technology and trends in local and state government.

Harney said e.Republic will be adding staff from “Governing” but it’s unclear yet how many. “Governing” will remain in its Washington, D.C., offices under the leadership of publisher Fred Kuhn.

Harney said the 80,000-circulation publication has been around for 20 years and has a loyal audience.

Extra! Extra! N&R moving

The Sacramento News & Review is finally making its move out of midtown from a rented space at 1015 20th St. to a once-vacant and dilapidated building at 1124/1132 Del Paso Blvd.

The free alternative weekly newspaper’s 60-member staff is set to move Dec. 10.

The newspaper received about $2 million in grants and loans from the Sacramento Housing and Redevelopment Agency to finance the purchase and renovation of the building, and another $2 million from a Small Business Administration loan. The project has been in the works for several years, said Sacramento News & Review president and chief executive officer Jeff vonKaenel.

“We’re very exciting about moving over,” he said.

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The stimulus cash that helped boost small business lending this year just ran out.

The Small Business Administration said Monday that it has run through all of the $375 million Congress allocated to temporarily waive fees and boost guarantees on loans backed by the SBA’s lending programs. Businesses still hoping for a slice of the pie can get in line, cross their fingers and wait.

The SBA backs loans made by banks to qualifying small businesses. If the business defaults, the government pays the bank back for the guaranteed potion of the loan. Typically, the SBA charges banks for this guarantee, but since February the agency has been using a pool of Recovery Act funds to eliminate those fees. The agency also temporarily increased its cap on the portion of a loan it will guarantee, raising it to 90%.

The move was a popular one with banks — though not popular enough to halt the freefall in small business lending. The stimulus incentives were in place for more than half of the SBA’s 2009 fiscal year (which ended Sept. 30), but the number of bank loans backed by the SBA still fell 36% compared to the previous year.

Still, SBA officials say the decline would have been even sharper without the incentives. Last week, the SBA backed more than $1 billion in small business loans. By comparison, the agency fielded $684.5 million in loans in all of January, the month before the stimulus measures kicked in.

The money running out wasn’t a surprise. The SBA knew its funding was getting low, and SBA chief Karen Mills put out a statement two weeks ago cautioning banks that the well would soon run dry. At the time, she forecast that the money would last into December. But last week, the SBA notified banks that Nov. 23 would be the "transition date" on which it would revert to its old fee and guarantee structure low rates payday advance.

The SBA would like to see Congress allocate money to extend the measures at least through February. "We are going to continue to work with Congress to appropriate funds to maintain the reduce fees and increased guarantee," said agency spokeswoman Hayley Matz.

Loan applications surged last week as lenders tried to push through as many as possible before the deadline. To allocate the last dollars left, the SBA on Monday launched a Recovery Loan Queue. Those left hanging — both business owners and the banks processing their loans — can check online to see where their application stands. Any applications that don’t make it through before the cash is exhausted will need to be resubmitted for a non-Recovery Act loan.

The SBA currently has 148 loans in queue, totaling $80.3 million.

Small business lending has plunged since the recession set in. At a Washington forum SBA Administrator Mills and Treasury Secretary Tim Geithner convened last week to discuss the problem, bankers emphasized the important of continuing the SBA’s enhanced loan guarantees.

David Rader, the head of SBA lending at Wells Fargo (WFC, Fortune 500), pushed for an extension into 2011. Wells Fargo was the top SBA lender last year.

"We absolutely have increased our lending opportunities with the stimulus programs. The fee waivers for customers, the increased guarantee, is absolutely saving cash for our borrowers — and cash is king," said Rader at the forum. "I think it is imperative for this body to continue the fee waiver and the 90% guarantee stimulus." 

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News Corporation, the media conglomerate controlled by Rupert Murdoch, has engaged in early-stage discussions with Microsoft about a pact to get paid by Microsoft to remove its news content from Google’s search engine and be available on Bing, according to a person briefed on the matter who spoke anonymously to discuss confidential negotiations.

Murdoch has been vocal of late about getting paid for the company’s content online. News Corporation owns many newspapers, including The Wall Street Journal, The New York Post, The Times and The Sun in Britain.

The Financial Times first reported on the discussions, which involve Microsoft possibly paying News Corporation to index its content on Microsoft’s search engine, Bing. The development has the potential for the newspaper industry to finally generate revenue from online news beyond advertising.

A spokesperson for Microsoft was not immediately available for comment. A News Corporation spokeswoman declined to comment.

Microsoft executives have been clear about their intentions to pursue bold measures – and tap into the company’s vast cash reserves – to disrupt Google’s dominant position in the search market.

In a recent interview, Steven Ballmer, the chief executive of Microsoft, noted that Google handled about six times as many search queries as Microsoft, while also producing more than six times as much revenue.

It’s unclear how a partnership with news organizations that fragmented search results and content on the Internet would be received. The notion of walled-off communities on the web falls into a thorny area of debate.

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Hungary’s central bank will probably cut the benchmark interest rate to the lowest in more than three years today to speed the country’s recovery from its worst recession in 18 years, which helps keep inflation in check.

The Magyar Nemzeti Bank in Budapest will lower the two-week deposit rate to 6.5 percent from 7 percent, reducing it for the fifth consecutive month, according to the forecast of 21 economists in a Bloomberg survey. One forecasts a cut to 6.75 percent. The decision will be announced at 2 p.m.

Policy makers shaved 2.5 percentage points off the key rate since July and said there is a room for further cuts as the economic slump blunts price pressures. Hungary was the first European Union country to get an International Monetary Fund-led bailout last year to avert a default during the credit crisis.

“The current market situation still provides sufficient room for the continuation of the easing cycle, without any major threat to financial stability,” Gyorgy Barta and Sandor Jobbagy, Budapest-based analysts at Intesa Sanpaolo SpA, said in a note to clients.

The forint fell to a record low against the euro in March. It has since been the sixth-best performer of the 26 emerging market currencies tracked by Bloomberg in the past six months, having gained 2.5 percent.

GDP Drops

Hungary’s economy contracted an annual 7.2 percent in the third quarter, worse than the 6.6 percent economists estimated, easing from a 7.5 percent slump in the second quarter. The central bank forecasts an economic contraction of 6.7 percent this year, the biggest decline since 1991.

The inflation rate fell to 4.7 percent in October from 4.9 percent in September as the recession muted the price-boosting effect of a July increase in the value-added tax. The central bank expects the rate to “significantly undershoot” its 3 percent target next year as demand falls instant payday loan.

“Cautious” interest rates cuts are “possible and desirable,” central bank Vice President Ferenc Karvalits told reporters on Nov. 16. Forward-rate agreements show investors expect the key rate to fall to 5.8 percent within the next six months.

Hungary’s interest rate cuts are trailing central banks such as the U.S. Federal Reserve and the European Central Bank as well as countries in the region including Poland and the Czech Republic because policy makers looked to defend the forint after investors sold off local assets during the credit crisis.

Poland, Czech Repulic

Poland will keep its benchmark rate at 3.5 percent on Nov. 25, according to all 18 analysts in a Bloomberg survey. The Czech central bank left its key rate at 1.25 percent on Nov. 5.

Hungary in October secured a 20 billion-euro ($29.6 billion) emergency loan from the International Monetary Fund, the EU and the World Bank and the central bank lifted the benchmark rate to 11.5 percent from 8.5 percent to avert a default.

Policy makers rolled back that increase by July, resuming rate cuts after a six-month pause as the forint strengthened from a record low against the euro in March as investor confidence began to recover after the government announced spending cuts.

Prime Minister Gordon Bajnai is cutting 1.3 trillion forint ($7.1 billion) in spending over two years to reduce the country’s financing need, in line with pledges to the IMF to limit the budget deficit. The cuts allow the central bank to pursue a “less restrictive” monetary policy, Finance Minister Peter Oszko said on Nov. 19.

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As I write this from real estate disaster-ridden but still-glorious Los Angeles, I read much speculation that the recession is over.

The stock market has rallied explosively. Foreign markets in both the developing world and the developed world have done spectacularly well. China is unbelievably up after an unimaginably gruesome crash.

Even the poor beaten-to-death REIT sector has gained dramatically lately. Credit is supposedly flowing to at least some sectors (barely mortgages and small business yet), and the big banks look incomparably more solid than we feared just a year ago. Retail is showing signs of life, and even home sales are up and prices look to have stabilized in many areas. Unemployment is still gruesome but it is always the last thing to improve.

So, now, beloved class, what can we say we have learned from this recession, its runup, and its aftermath, if we are in fact in the aftermath?

1. Economic forecasting is still an extremely difficult gambit and nowhere near a science. It is a lot more like astrology than mathematics. As the recession bore down on us, the great majority of economic seers said it was not going to happen or if it did happen, it would be mild.

In fact, the recession turned out to be long-lasting and severe. Not one person I know foresaw that the government would allow Lehman Brothers to fail and thus simply shoot investor, borrower, lender, consumer, and employer confidence in the head. As dismal as Henry Paulson appeared, no one dreamed he would be that foolish.

Perhaps more worrisome, as the recession ground on, the top dogs in economics said it would last indefinitely. Many truly big names said it would turn into a genuine Depression, with prolonged unemployment approaching depression-era levels of one in four or five workers. This now looks extremely unlikely.

Even the auto sector, consigned to the scrap heap not long ago, has rallied, although whether it has legs much beyond the incredible "cash for clunkers" boondoggle is still unresolved. Hardly any of this was foreseen by the powers that be. The realm of economic forecasting is still a murky, lawless place.

2. Financial market forecasting is even more troublesome than economic forecasting. Hardly anyone I am aware of got the recent stock market recovery right. No one saw a recovery of roughly 60% in broad indices in the span from early March to mid-November. To the contrary, even in the spring, I was getting e-mails from people "in the know" seeing a bottomless pit for the stock markets.

3. The amount of lying and deception by the financial sector of this country has been breathtaking. The banks lied about the risks they were taking on, about the amount of their exposure, about how well capitalized they were, and about their prospects for survival. Throughout the financial sector there was similar deceit.

The fact that so much fraud can go on with no one getting punished for it is terrifying to the investor. Major players in finance were playing a truly staggering game of deceit — selling pension funds CMOs while at the same time selling the same instruments or derivatives attached to them short. This is betrayal of trust on a scale that even I, as someone who looks at The Street with a gimlet eye, could scarcely have imagined.

4. The government has no special abilities to forecast or predict a darned thing. Alan Greenspan, former head of the Fed, a truly wonderful man and a smart economist, not only did not see the crash, but did not see the bubble preceding it. Not only did he not see it, he thought it was an economic impossibility.

Ben Bernanke, the current head of the Fed and a helpful man of immense goodwill, did not see the possibility of a housing bubble and a crash when he was chairman of the President’s Council of Economic Advisers. He also did not think the pre-retirees of this country were in any kind of serious trouble. This shows a genuine inability to see the obvious.

Once he got to be head of the Fed, he did not see the severity of the crisis. He especially did not see the disaster that would result from failure to rescue Lehman. This went beyond ordinary mistakes.

As to former Treasury Secretary Henry Paulson, let us say a prayer for people like us who have rulers as arrogant and incompetent as he was. As to the current Treasury Secretary, Timothy Geithner, he also failed to see the crisis coming and failed to see how vital it was to rescue Lehman. He has definitely gotten better on the job, but whether he works for the taxpayers or for Goldman Sachs (GS, Fortune 500) is extremely questionable in my little mind.

Lessons for the investor

There is much more that could be said about the lessons of the crash and the recession, but there are lessons to be learned about individual investor behavior that are critical, too.

One important one: liquidity in a very secure form is a beautiful thing. Those persons who had a lot of cash or Treasury bonds or otherwise insured savings had a much more restful and happier recession than others with almost all of their money tied up in stocks or real estate.

If I had only one lesson to offer investors, it would be to keep invested in both stocks and bonds and keep plenty of liquidity in good times and bad.

Secretary Geithner’s "stress tests" which reassured investors about banks, was a brilliant idea and has worked wonders. But the timing and efficacy of government bailouts is very much in doubt on any short-term basis, and brings up a final important lesson: It is up to the prudence and foresight of the ordinary investor to save the ordinary investor and his or her family. The government will not and cannot do it for you.

You must be diversified between different asset classes and you must maintain liquidity. And you have to assume that the worst can happen and plan accordingly, which means having not just a bare minimum but somewhat more. We have just had a scary episode and a close shave, and we do not know for sure that the nightmare is over.

Learn the lessons and act as if the worst could happen again at any time. It can and it will. Let us pray a recovery is happening — but let us also tighten our helmet straps.

And another little note … my much-missed father used to tell me with great approval Adam Smith’s famous quote regarding prophecies of doom for America, "there is a lot of ruin in a nation."

I was moved to recall this when I saw Warren Buffett’s optimistic read on the economy at a great ‘town hall" he gave with Bill Gates at Columbia recently. In answer to a query about the short-term future of the market, he waved aside "what’s going to happen tomorrow" and instead said, regarding America, something like, "If you have a good farm, with good crops and good soil and you know you’re going to have five droughts in the next fifty years, you don’t let it affect you that much."

I am paraphrasing here, because I saw it on CNBC while eating dinner, but perhaps Buffett’s meaning was, "Don’t sell America short." At least not for the long run.

Ben Stein is a lawyer, actor, writer, and economist, who also appears in commercials as a spokesman for various companies.  

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European oil trader Trafigura Beheer BV said on Thursday the worst of the credit crisis was over, but cautioned that the oil market was still grappling with severe oversupply and current prices were too high.

“As far as we can see, liquidity is back, and there’s a lot of appetite from existing banks and new banks. As they reposition their portfolios, commodities continue to feature quite highly on their agenda,” Trafigura’s Chief Financial Officer Pierre Lorinet told Reuters in an interview.

But he warned that given the ballooning stockpiles of oil products stored on ships, the current crude price of $80 a barrel was not justified cash advance today.

“The level today seems too high compared to the pure fundamentals. But it goes back to how oil is trading today, and oil is trading like a financial asset.”

The severe oversupply would keep the market’s contango structure in place “for a while,” he added.

(Reporting by Jennifer Tan; Editing by Ramthan Hussain)

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Gold is different from other commodities in many ways. Still, the price of the yellow metal depends on the same three factors as oil or wheat: supply, demand, and financial conditions. Put them together, and the 20% increase since August might only be the beginning.

Start with supply. Production from mines totaled 2,414 tons in 2008, worth $88 billion at the November 16 price. There will be more this year, but less from 2010 onwards. It will take years for new mines to come on stream. Recycling from scrap jewelry and official gold sales were worth $40 billion in 2008, but those sources aren’t likely to cough up much more.

One central bank has even become a buyer. India recently purchased 200 tons of gold from the International Monetary Fund. If China decided to put 10% of its $2.3 trillion of official reserves into gold, it would need to buy up almost three years’ worth of production, at the current price.

Such a big move isn’t likely, but smaller shifts from central banks — selling less — could be enough to move the price, as long as other demand keeps up loan till payday. That’s likely. The long period of ultra-easy money may not be undermining the monetary system, but many people fear it might. Some of them will buy some more gold, just in case. With yields on government bonds so low, gold looks like cheap insurance.

Indeed, financial conditions favor all commodities, gold included. Interest rates are low and banks are more willing to support investors and speculators than to lend to businesses and consumers. Besides, commodities look like a good store of value in the midst of unprecedented fiscal and monetary stimulus in a world of still significant imbalances.

When money is easy and demand moves much faster than supply, prices can explode. In 18 months from July 1978, gold went from $185 per ounce to $850. That’s $2,400 in today’s dollars. And interest rates then were much higher than now. A similar price rise from here would bring gold to more than $5,000 per ounce. 

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The U.K. inflation rate rose more than economists forecast in October, climbing for the first time in eight months as fuel costs and air fares climbed.

Consumer prices gained 1.5 percent from a year earlier, compared with 1.1 percent the previous month, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 30 economists was 1.4 percent. On the month, prices rose 0.2 percent.

Bank of England policy maker Andrew Sentance said in an interview yesterday that there may be “volatility” in inflation, which risks exceeding the 2 percent target after two years. He said it is still too soon to consider tightening policy after the central bank expanded its bond-purchase plan to 200 billion pounds ($336 billion) to combat deflation.

“This is the first of a period of sharp increases in headline inflation over the next few months,” James Knightley, an economist at ING Financial Markets in London, told Bloomberg Television. “Given the spare capacity in the economy, there’s no real need to tighten monetary policy any time soon. Inflation is likely to move quite sharply lower again through the back end of next year.”

The yield on the two-year government bond slipped 1 basis point to 1.32 percent. The pound fell 0.1 percent to $1.6788 as of 11:36 a.m. in London.

Bond Purchases

Policy makers decided this month to increase their program to buy bonds with newly created money by 25 billion pounds as they left they key interest rate at a record low of 0.5 percent. Bank of England Governor Mervyn King said last week that he has an “open mind” on whether to expand it further installment payday loans.

The inflation rate increased as prices of fuels and lubricants fell less this year than they did in the same month a year earlier, the statistics office said. The cost of second- hand cars increased by a record on the month because of a shortage of stock, while air fares climbed this year compared with a drop in 2008.

EasyJet Plc, Europe’s second-biggest discount airline, said today revenue per seat at constant currency, a proxy for ticket prices, rose 4.1 percent in the year ending Sept. 30 as the recession buoyed demand for low-cost carriers.

The Bank of England published new quarterly growth and inflation forecasts Nov. 11 showing the inflation rate won’t return to the 2 percent target until 2012, though will rise above the goal around the turn of the year as a temporary cut in value-added tax expires.

Inflation Pressure

“In the short term, inflation is likely to be below target, though we’re also likely to see a bit of volatility,” Sentance said in an interview with Bloomberg Television. “As the recovery develops, there will be some upward pressures on inflation.”

By contrast, Federal Reserve Chairman Ben S. Bernanke said yesterday that inflation “seems likely to remain subdued for some time” as reduced bank lending and a weak labor market restrain the pace of growth. The Fed’s preferred inflation gauge, which excludes food and energy prices, rose 1.3 percent in September from a year earlier, below the 2 percent goal preferred by the majority of Fed policy makers.

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FedEx Corp shares, which have more than doubled since a low in March, may climb further given the delivery company’s growing exposure to overseas markets such as China, Barron’s reported on Sunday.

FedEx shares benefited from cost cutting over the last 18 months and, as the economic recovery revives the company’s transportation business, the shares could get a boost of more than 20 percent to trade as high as $100, the newspaper reported.

The company is well-positioned to make the most of the economic recovery, and its considerable operating leverage means that when its revenue starts to rise, costs won’t rise as quickly, according to the newspaper.

FedEx, which reported a profit of $3.67 a share for its most recent fiscal year, could earn $7 to $9 a share as markets recover, Barron’s said, citing Rob Pickels, a senior analyst at Manning & Napier.

FedEx shares closed at $81.97 on Friday on the New York Stock Exchange.

(Reporting by Elinor Comlay; Editing by Leslie Adler)

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