Monday, February 2, 2015

Fwd: Russia

'With oil prices down more than 50 percent in the past year and still falling, the ruble having lost more than half its value, a recession looming and the country already dipping into its rainy-day funds, the Russian economy is in a race against time. But one would be hard pressed to grasp the depth of the troubles from the Kremlin's prescriptions.

After Anton Siluanov, the finance minister, laid out the government's long-promised "anti-crisis" package in a live broadcast on state television last week, economists unanimously dismissed as inadequate his laundry list of half-measures and a vague promise of a 10 percent budget cut.

"That plan is nonsense," the Russian oligarch Aleksandr Y. Lebedev said in an interview, describing it as throwing away money to rescue some of Russia's worst companies. "Lots of words and little specific."

President Vladimir V. Putin weighed in briefly, repeating that along with keeping tight control over government finances, "We need to change our economy's structure."

Yet a wide array of business owners, economists and former senior government officials said in interviews that they expected the Kremlin to react to the crisis the way it had in 2008, the last time it faced a precipitous decline in oil prices — with disaster management, but no fundamental changes.

"They are trying to get by, manage it strategically and hope that oil prices rise, hope they can make a few adjustments and it will all go away," said Kenneth S. Rogoff, an economics professor at Harvard University who recently attended a high-level economics conference in Moscow. "There is no appetite for fundamental reform. They are just going to wait."

http://www.nytimes.com/2015/02/03/world/europe/russia-details-plans-to-bolster-its-economy-but-experts-scoff.html?_r=0


Sunday, February 1, 2015

Fwd: Oil

'Oil output, however, is still at a record level. In the week that ended on Jan. 2, when the number of rigs also dropped, it reached 9.13 million barrels a day, a 44-year high.'

Fwd: India

'The World Bank on Tuesday said that the Indian economy is witnessing a slow recovery, aided by improved export momentum and a steep decrease in inflation, which could allow for a rate cut by the Reserve Bank of India (RBI).

The World Bank has projected the Indian economy to grow at 6.4% in 2015-16 from an estimated 5.6% in 2014-15. India's GDP is expected to surpass that of China's by 2017.'

http://nationalinterest.org/feature/the-trillion-dollar-question-are-low-oil-prices-here-stay-12029?page=2


Fwd: China

'Chinese stocks dived the most in over six years Monday, with a wide sell-off sweeping across the financial sector as investors turned jittery over the latest move by securities regulators to clean up the margin-trading business.

The benchmark Shanghai Composite Index SHCOMP, -7.70%   plunged 7.7% to close at 3,116.35, posting its biggest daily percentage decline since June 2008 . Prior to Monday's heavy loss, the index was up 4.4% for the month to date, extending gains after finishing 2014 with a sharp 53% advance.

The plunge in mainland China helped to push Hong Kong's benchmark Hang Seng Index HSI, -1.51%  down 1.5%, with the Hang Seng China Enterprises — which tracks Hong Kong-listed mainland Chinese companies — off 5%.

The China Securities Regulatory Commission, the nation's top market watchdog, announced Friday that a dozen brokerage firms had been punished for violations of margin-trading rules after a two-week overhaul. Infractions included allowing customers to delay margin repayments by longer than currently allowed. '

http://www.marketwatch.com/story/china-stocks-plunge-amid-regulator-crackdown-on-margins-2015-01-19


Fwd: China

'China's economy grew at its slowest pace in 24 years in 2014 as property prices cooled and companies and local governments struggled under heavy debt burdens, keeping pressure on Beijing to take aggressive steps to avoid a sharper downturn.

For investors worried about growth in China and the world this year, the data poses two questions:

Will the soft numbers and expectations of further weakness force the central bank to pump hundreds of billions of dollars into banks system-wide to prop up growth? And if so, what does that mean for Beijing's attempts to reform its economy?'

http://www.theglobeandmail.com/report-on-business/chinas-2014-economic-growth-misses-target-hits-24-year-low/article22532444/


Fwd: Again

'Wallison traces the policy mistake back to 1992, when Congress passed a law requiring the GSE's to purchase a certain percentage of its mortgages granted to low- and moderate-income homebuyers--30 percent originally, later adjusted up to 56 percent by the Department of Housing and Urban Development.

Previously the GSE's bought only mortgages in which the buyer made 10 to 20 percent down payments. That was revised downward to 3 percent and even zero. Such subprime mortgages proliferated until in 2008 when they accounted for more than half of U.S. mortgages, 76 percent of which were on the books of the GSE's or government agencies such as the FHA.

This was in line with the policy priorities of the Clinton and Bush administrations. They hailed the increase of homeownership from the 64 percent that prevailed from the mid-1960s up eventually, and temporarily, to 69 percent.

They emphasized the importance of increasing homeownership by blacks and Hispanics who did not qualify as creditworthy under traditional credit standards, which were treated as superstitions.

The result was a house price bubble of unprecedented magnitude. Low-down payment mortgages inflated housing prices because buyers could afford a larger house with the same down payment. Above-average households, though not the intended beneficiaries of lowered mortgage standards, took advantage of them by converting inflated housing values into cash by refinancing their mortgages.

The problem metastasized into large financial institutions because of imperfect information and perverse government regulations. Fannie and Freddie classified as subprime only those mortgages they bought through traditional subprime lenders -- an action for which their officers were later sued by the Securities and Exchange Commission…

 

Could it happen again? Wallison points out that government regulators are once again reducing the credit standards for mortgage seekers. The argument, as in the 1990s and 2000s, is that traditional standards are misleading and unduly prevent low-income and minority households from buying homes.

Fannie and Freddie are now purchasing the large majority of mortgages and announced last month they would buy mortgages with only 3 percent down payments. The qualified mortgage standards laid down by HUD and other regulators in October allowed for mortgages with zero down payments.

That sounds like a recipe for another housing bubble -- and for mass foreclosures, which hurt the policies' intended beneficiaries -- and perhaps for another financial crisis as well. '

http://www.realclearpolitics.com/articles/2015/01/20/government_created_the_housing_bubble_and_financial_crisis_--_and_could_be_doing_so_again_125310.html


Monday, January 26, 2015

Fwd: Economics

'We have of late received a real-life crash course in basic economics, with the lessons imparted at the highest levels of the global economy. We are all seeing the laws of supply and demand in action, with their manifold implications, and we are learning that it is impossible to circumvent those laws without paying a high price. Wherever we look, the attempts of the state to outsmart markets are showing their limits, and more often than not ending in utter fiasco.

Let us begin with a look at the free-falling oil market. Oil-producing countries would of course like to reverse the current trend. Some would curtail production to push prices up, but the rest have learned from experience that collective restrictions only benefit the countries that do not comply. Like it or not, intergovernmental decisions won't alter the factors underlying the fall in the price of oil. One key element is the global deceleration of economic growth, particularly in China, a large energy consumer. Add to this the entry of fracking into the oil game, notably in the United States - just one factor expanding the global supply of energy.

These joint developments substantially push down the demand for, and consequently the price of, oil - so much so that financial economist Anatole Kaletsky asserts that $50 for a barrel may well become a price ceiling rather than a floor...

The same inability to bypass market laws is at work in China. There, the problem stemmed from a centralized frenzy to promote investment without due consideration of expected returns. Thus, Chinese economists estimate that "ineffective investment" reached the astronomical figure of $6.8 trillion between 2009 and 2013.

http://www.realclearworld.com/articles/2015/01/22/a_global_lesson_in_basic_economics_110924.html


Fwd: Oil well

'OPEC has had its foot on the throat of the oil market for months, but the chief of the cartel thinks a rebound might now be at hand, according to news reports.

"Now the prices are around $45-$55, and I think maybe they reached the bottom and will see some rebound very soon," OPEC Secretary-General Abdulla al-Badri said on Monday, according to Reuters.

If that wasn't enough to put oil bears on the back foot, at least temporarily, Badri also said it would be possible to see crude climb to $200 a barrel or higher "if you don't invest in oil and gas," Bloomberg reported.

That is an interesting scenario, since shale production is seen as relatively resilient, with firms able to ramp production up in relatively short order as prices rise.

It also stands in contrast to remarks by Prince al-Waleed bin Talal, the billionaire Saudi businessman, who earlier this month predicted oil would never again trade north of $100 a barrel'

http://www.marketwatch.com/story/opec-chief-sees-chance-of-oil-zooming-to-200-a-barrel-2015-01-26?link=MW_latest_news

 

 

Wednesday, January 14, 2015

Fwd: Subprime

Any serious effort to understand the crisis would have asked at this point why government agencies held so many subprime and other risky mortgages, and that inquiry would have turned up the affordable housing goals, adopted by Congress in 1992. These required Fannie and Freddie, when they bought mortgages from banks and other originators, to meet a quota: 30 percent of those mortgages had to be made to borrowers at or below the median income in the communities where they lived. Data from HUD, which administered the goals, would have shown the administration and Congress, had they been curious, that HUD had gradually increased the quota to 50 percent in 2000 and to 56 percent in 2008.

Saturday, December 27, 2014

Fwd: Oil

'OPEC produced more than its 30 million-barrel daily target in each of the past six months, data compiled by Bloomberg show. Non-OPEC production will expand 2.3 percent next year to 57.84 million barrels a day after climbing 3.5 percent this year, the International Energy Agency forecast in a Dec. 12 report.

"Irresponsible production from outside OPEC is behind the fall in prices," Mazrouei said. "We call on all other producers to stop the increase." …

Crude tumbled into a bear market this year as oil extraction soared at shale formations in Texas and North Dakota

http://www.bloomberg.com/news/2014-12-21/non-opec-producers-called-on-to-cut-oil-output-amid-oversupply.html

Tuesday, December 23, 2014

Fwd: China

'China is stepping up its role as the lender of last resort to some of the world's most financially strapped countries.

Chinese officials signaled Saturday that they are willing to expand a $24 billion currency swap program to help Russia weather the worst economic crisis since the 1998 default. China has provided $2.3 billion in funds to Argentina since October as part of a currency swap, and last month it lent $4 billion to Venezuela, whose reserves cover just two years of debt payments. '

http://www.bloomberg.com/news/2014-12-22/yuan-ruble-swap-shows-china-challenging-imf-as-emergency-lender.html

 

 




--

Tuesday, December 16, 2014

Fwd: Oil and the dollar

'Commodity prices are inversely correlated to the dollar. The oft-cited rationale is that a stronger currency makes dollar-priced commodities more expensive to buyers using other currencies.

The ICE dollar index DXY, +0.12% a measure of the currency against a basket of six major rivals, is up more than 10.8% since the beginning of the year. Moreover, the index is up more than 10.3% since the beginning of May.

Binky Chadha, chief global strategist at Deutsche Bank, argues that the strong dollar is the primary factor in oil's decline. After all, oil supplies have been building for a long time. It's hard to believe that investors just "suddenly woke up" to the oil glut at midyear, he said.

http://www.marketwatch.com/story/here-are-the-reasons-oil-is-plunging-toward-60-2014-12-10


Thursday, December 11, 2014

Fwd: Airbus

'Airbus raised the prospect of discontinuing its A380 superjumbo as soon as 2018, the first admission that it may have misjudged the market for the double-decker after failing to find a single airline buyer this year.'

Monday, October 13, 2014

Fwd: Oil


'Indeed, this July the United States replaced Saudi Arabia as the world's No. 1 oil producer, and virtually every industry study indicates that the trend will continue through the next two decades and beyond. 

 

http://www.nationalreview.com/energy-week/388610/americas-new-oil-weapon-arthur-l-herman

 

Monday, June 23, 2014

Tim Cook is setting Apple up for its next big hit and he isn’t getting the credit he deserves

The Returned (They Came Back) * * *

They Returned.

They Returned is the 2003 French movie that inspired the better 2012 French TV
series "The Returned". The point of both shows is that society must cope
with a large number of dead people coming back to life. The movie version
is slower and the ending lacks any clear resolution, but I still found it
entertaining. The ending is way too understated but it also sort of
makes sense.

They Returned might try the patience of some who would prefer a more
exciting movie.

The movie is less about the resurrected dead than it is about how the living
react to their presence. If there is any point to the film at all, and it is
not clear that the movie has a point, it is about how society integrates a large
number of immigrants or refugees who are dramatically different than the rest
of the population. (This has been a problem for Europe in general.) In this
movie the dead seem like mere echoes of their former selves who are less
capable of original thought. For this reason they are difficult to integrate
into society and can only work menial jobs.

But the dead in this movie have their own agenda. They aren't very
interested in the living. They secretly collude among themselves and make
plans. This leads to violent conflict between the living and the dead.

In a couple of scenes we see reflections of female beauty in a mirror and in
a window. In the first scene the reflection is covered by fog and in the
second scene we briefly see reflections of breasts. This seems like some
sort of symbolism because the dead are like poor reflections of their former
selves.

Sunday, June 15, 2014

Learning

'This is my 3,000th column. I've learned a tremendous amount in writing about investing and the economy. Here are a few of the big lessons….'

 

http://www.fool.com/investing/general/2014/06/11/im-just-now-realizing-how-stupid-we-are.aspx

Sunday, June 1, 2014

Fwd: Skype translation


'Skype hopes to make its international connections easier — though perhaps still a little awkward — with a new feature that automatically translates conversations almost in real time.

 

Parent company Microsoft unveiled the new technology at the Code technology conference on Tuesday, where Skype vice president Gurdeep Pall made small talk in English with a German-speaking Skype manager in Europe.

 

After saying a sentence in English, an automated voice translated his words into German. (You can watch the video here.)'

 

http://www.forbes.com/sites/parmyolson/2014/05/28/microsoft-unveils-near-real-time-language-translation-for-skype/