Finance / the Economy

• NORWAY: Investors Balk at Government Indifference

  Bottom Line: Norway’s pending plans to cut tariffs on gas transport by 90% will reduce income for pipeline investors by as much as $7 billion, adding to the lingering anxiety after a 2011 move to pull support from AAA lender Eksportfinans ASA and reduce it to a junk-rate lender. Norway feels emboldened by its status as the world’s largest wealth fund and home of Europe’s largest oil and gas reserves--enough so that it feels it can demonstrate selective indifference to investors.  Analysis: Norway still enjoys a stable AAA rating and status as the smallest default risk country in the world,…

• Russian Oligarchs to (Involuntarily) Fund Cyprus Bailout

  Negotiations for Cyprus’ bailout, which has hinged largely on its hydrocarbons future, have ended with Russia missing the chance to swap aid for offshore exploration licenses and the Greek Cypriots agreeing to an EU bailout package that hits at the Russian oligarchy by shutting down the island’s second-largest bank. Over the course of last week, Greek Cypriots were shuffling back and forth to Moscow in an attempt to lure Russia into a bailout package that would have given it a stake in the island’s estimated 60 trillion cubic feet of natural gas offshore—but it wasn’t a big enough stake to…

• IMF Provides Silver Lining to Iraq Debate

  The International Monetary Fund offered a silver lining to the otherwise scathing barrage of reports out last week critical of the U.S. experiment in Iraq. The IMF said oil production for 2013 should increase roughly 10 percent from last year to 3.3 million bpd. Meanwhile, economic growth for the year should stay strong at 9 percent for the year. The 10-year U.S. military engagement accomplished little in terms of grand political achievements or internal stability. But if economic progress is any benchmark, then Iraq could be on the right path, relatively speaking, despite medium-term challenges.The United States declared war on…

• Iceland Credits Green Energy for GDP Growth

  Iceland's president told members of the Organization for Economic Cooperation and Development that his economy was well-suited to serve as a laboratory for competing economic models. More than four years ago, the country's banking system collapsed as the global economy fell into recessionary turmoil. Now, the president said he's been able to boast of a turnaround without using conventional Western models for economic recovery. He said there's now a lesson to be learned from failure amid new opportunities for a sustainable and low-carbon economic future.Icelandic President Olafur Rangar Grimsson told OECD ambassadors in Paris that his country's experience with a…

• 12 Negative Aspects of Globalization

  Globalization seems to be looked on as an unmitigated “good” by economists. Unfortunately, economists seem to be guided by their badly flawed models; they miss real-world problems. In particular, they miss the point that the world is finite. We don’t have infinite resources, or unlimited ability to handle excess pollution. So we are setting up a “solution” that is at best temporary.Economists also tend to look at results too narrowly–from the point of view of a business that can expand, or a worker who has plenty of money, even though these users are not typical. In real life, businesses are…

• Beijing's Push for Higher GDP Threatens Success of Green Agenda

  When poor farmers in Ningbo, one of China’s oldest and richest cities, barricaded a road near a controversial petrochemical refinery in October, they triggered a series of protests that ran for three days and culminated in a mass demonstration in the city’s central square. Riot police had to use tear gas and clubs to disperse an angry mob throwing bricks and bottles.Protestors said Sinopec, which operates the refinery, colluded with local government officials to conceal incriminating health and environmental data gathered to assess a planned multi-billion dollar expansion.The big concern was paraxylene (PX), a highly toxic chemical the facility produces…

• Why have GDP Growth and Energy Growth Separated?

  On Friday I put up the following chart, and invited readers to comment on what's wrong with it.From Bloomberg's Sustainable Energy In America 2013 Factbook. Due to the massive government stimulus of 2009, both GDP and energy consumption grew together in 2009-2010. As the stimulus petered out, energy consumption fell off dramatically but GDP continued to grow (black circle). Click to enlarge.For your convenience, I have circled the suspicious anomaly—economic growth has radically departed from growth in energy consumption since 2010. That trend flies in the face of everything we know about economic expansion and energy consumption—they are inseparable, at…

• Where's the Crash?

  That was the questions traders were scratching their heads and asking this morning in the wake of this morning's shocking Q4, 2012 GDP figure.While most analysis were expecting the government to report a more robust 1%-2% number we got negative -0.1%, the worst since 2009. With growth flipping from a positive 3.1% figure in Q3 many thought that a Dow down 500 points was in the cards. Instead we pared back a modest 44 points. What gives?Ahhh, the devil is in the details. The main culprit was in defense spending, down a mind numbing 22.2%, the worst since the wind…

• Egypt's Revolution Going Nowhere Fast

  The Egyptian currency this week hit a record low as the country grapples with post-revolution frustrations. That means it's becoming more expensive for the government to handle imports. Meanwhile, public disdain continues to mount as much of the country's population lives below the poverty line. Egyptian President Mohamed Morsi met this week with German Chancellor Angela Merkel in a visit shortened by national turmoil. Last month, the German government delayed a move to forgive $324 million in debt because of disappointment with Egypt's political development. That same month, it emerged that Egypt would soon switch to a net natural gas…

• Using Electricity Usage Data to Determine China's Real Growth Figures

  China`s 4th Quarter China`s economy grew 7.9% for the fourth quarter of 2012, signaling to some that China might be rebounding from a two-year downtrend in economic growth. When it comes to Chinese data though, transparency issues always rear their ugly head.  As a result, many analysts look to Electricity usage to confirm the economic numbers. Many times the electricity numbers are at odds with the stronger economic numbers coming out of China, and analysts believe that during this downturn, the actual growth numbers were much lower than those published officially.They pointed to lower electricity numbers that have dropped off…