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Friday, 16 December 2011

SAUDI OIL PRODUCTION HELPING AVOID A 70′S STYLE STAGFLATION | PRAGMATIC CAPITALISM

The Saudis are the only producer with excess capacity, which puts them in the position of swing producer. They post prices and then let their refiners buy as much as they want at their posted prices. They have no choice but to be price setter, but they also don’t want anyone to know they are simply setting prices, so they talk around it and have obviously done a good pr job in that regard.

So after production spiked due to lost Libyan output, production now seems be falling back to prior level as Libya comes back online. There are other things affecting supply and demand as well, also altering Saudi production accordingly. The Saudis lose control of price on the upside only when they don’t have sufficient productive capacity to meet demand. And they lose control on the downside when they can’t cut sufficiently to address a fall in net demand.

Looks to me like they will remain in that catbird seat for quite a while. And if they keep prices relatively stable there will not likely be a 70′s style global inflation problem.




Fitch cuts ratings on 8 major banks

Fitch Ratings says it has downgraded the viability ratings for eight of the world's biggest banks, citing increased challenges facing the banking sector due to weak economic growth and heightened regulation.

The ratings firm said Thursday it lowered the ratings for Bank of America Corp., Barclays PLC, BNP Paribas, Credit Suisse AG, Deutsche Bank AG, The Goldman Sachs Group Inc., Morgan Stanley and Societe Generale.

It also downgraded its long-term issuer-default rating for most of the banks: Bank of America, Barclays, BNP Paribas, Credit Suisse, Deutsche Bank and Goldman Sachs.

Fitch affirmed its long-term issuer-default ratings for Morgan Stanley, Society Generale and UBS AG.

gulfnews : Revamp of ownership law in UAE urged

The government must revisit company ownership laws that dictate a local partner with 51 per cent share if the UAE's industrial sector is to develop, Abdullah Bel Houl, managing director of Dubai Industrial City, told Gulf News.

Industrial factories make up just 20 per cent of the City since its launch in 2004. Gulf News sat down with Bel Houl to discuss how much DIC is playing a role in attracting investors to the UAE's industrial sector.

gulfnews : Dubai acts to revive freehold projects

The Dubai Land Department (DLD) has introduced two initiatives, Tayseer and Tanmia, to revive and support the real estate market in Dubai.

Tayseer aims to support certain projects in Dubai through the arrangement of financing via local banks. Tanmia — an initiative by Real Estate Investment, and Promotion and Management Centre (REIPMC) under DLD — aims to reduce the number of incomplete projects, reignite stalled projects and improving Dubai's appeal for investment.

Tayseer, launched in July 2010, aims to facilitate financing for purchasers in certain pre-qualified projects in Dubai. The qualification process is essentially as follows:

Turkey: “unstoppable” for long? | beyondbrics – FT.com

Whatever criticisms you can make of what one analyst labels Turkey’s “unstoppable” economy, there’s one thing the country’s economic boom is thankfully free of. It’s not an American style jobless recovery.

Quite the contrary. In the last year Turkey has created some 1.8m new jobs. Figures released on Thursday showed unemployment fell to 8.8 per cent to September, the lowest level since 2005 and down from a 2009 peak of more than 16 per cent.. On a seasonally adjusted basis, unemployment fell to 9.2 per cent, also the lowest level of recent times. But analysts are almost universal in predicting that things won’t stay quite this sweet for long.

Unstoppable it may be for the moment, but just about no one expects Turkey to keep up its current hectic pace of economic expansion – 9.6 per cent for the first nine months of this year compared with the same period in 2010.

Abu Dhabi slowdown « parallel universe

As the global economy imploded — taking Dubai along with it — Abu Dhabi stood almost alone as a place on Earth that was still financially healthy. The financial system, that lubricant of international business, just about nearly ground to a halt but Abu Dhabi was spending cash building whole new cities: a cultural district and new financial center, an island dedicated solely to tourism and amusement.
But since then we’ve seen signs that perhaps the emirate got a little ahead of itself, forgetting the painful lessons taught to Dubai just up the road. Some of the retrenchment and reprioritization is good. In my view, there seemed to be too much focus on high-end housing (despite a chronic need for decent middle-class housing in the emirate) and luxury everything, regardless if that was where the demand would come from. My latest story, this time for Architectural Record, looks at how the latest cutbacks are affecting the design and construction businesses which had regarded Abu Dhabi as a bright spot in troubled economic times.
I don’t agree with the headline — clearly, Abu Dhabi is in no danger of running out of cash any time soon — but the comments to the story offer additional insight into what it’s like working there.

Caspian Basin: As Energy Prices Head North, Democratization Goes South | EurasiaNet.org

Quiz: Over the next three months, three former Soviet republics will hold elections – Kazakhstan, Turkmenistan and Russia. Whose official outcome will most closely resemble the truth?

If you replied Russia's upcoming presidential election, you are correct, which, given the apparent scale of fraud in its December 4 Duma vote, says much about politics on the Caspian Sea oil patch: While Vladimir Putin reluctantly permitted a large election protest in Moscow – and may face more in the coming weeks – the popular will is likely to play almost no role in the voting along Russia’s southern rim. Instead, the rulers of these self-styled sultanates, courted by the West since the 1990s for their hydrocarbons and geostrategic location, will declare outsized victories for their chosen candidates, unruffled by the turbulence that has terrified petrocrats elsewhere.

The rulers of this stretch of land seem to think they will simply hang on. One is led to conclude that they may be right, given the region’s history. Yet, their gamble is considerable – that the influences of the outside world, held at bay for so many centuries, will remain far, far away.