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Gene Ellis

Tunisia enters 'phase of absurdity' - FT.com - 0 views

www.ft.com/...da-11e2-8189-00144feab49a.html

tunisia phase absurdity com

shared by Gene Ellis on 05 Feb 13 - No Cached
  • “No development model will be able to find a solution to unemployment,” he says bluntly, citing the grim reality that at about 800,000 are already unemployed and another 100,000 enter the labour force every year. “The best we can do is create 100,000 jobs a year but you still have the 800,000. The solution should be immigration. There’s no other way.”
  • But to where?
  • The government also has raised with European partners the prospect of absorbing some of the highly skilled graduates. But while immigration could alleviate some of the pressure, surely it cannot be the solution.
Gene Ellis

Greece's Bogus Debt Deal by Ashoka Mody - Project Syndicate - 0 views

www.project-syndicate.org/...-sovereign-debt-by-ashoka-mody

greece debt deal project syndicate

shared by Gene Ellis on 12 Dec 12 - No Cached
  • The economist Larry Summers has invoked the analogy of the Vietnam War to describe European decision-making. “At every juncture they made the minimum commitments necessary to avoid imminent disaster – offering optimistic rhetoric, but never taking the steps that even they believed could offer the prospect of decisive victory.”
  • Instead of driblets of relief, a sizeable package, composed of two elements, is the way forward.
  • A simple structure would be to make all debt payable over 40 years, carrying an interest rate of 2%.
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  • The second element of the debt-relief package would be more innovative: If Greece’s economy performs well, the generous extension of maturities can be clawed back or the interest rate raised. A formula for this could be linked to the debt/GDP ratio
  • Why bother? Because the very premise of the current deal and the expectations it sets out are wrong. First, the notion that there is a smooth transition path for the debt/GDP ratio from 200% to 124% is fanciful. Second, even if, by some miracle, Greece did reach the 124% mark by 2020, the claim that its debt will then be “sustainable” is absurd.
  • Make no mistake: policymakers’ track record on forecasting Greek economic performance during the crisis has been an embarrassment. In May 2010, the International Monetary Fund projected – presumably in concurrence with its European partners – that Greece’s annual GDP growth would exceed 1% in 2012. Instead, the Greek economy will shrink by 6%. The unemployment rate, expected to peak this year at 15%, is now above 25% – and is still rising. The debt/GDP ratio was expected to top out at 150%; absent the substantial write-down of privately held debt, which was deemed unnecessary, the ratio would have been close to 250%.CommentsView/Create comment on this paragraphIn September 2010, four months after the official Greek bailout was put in place, the IMF issued a pamphlet asserting that “default in today’s advanced economies is unnecessary, undesirable, and unlikely.” The conclusion was that official financing would carry Greece past its short-term liquidity problems. Calls for immediate debt restructuring went unheeded. Six months later, after substantial official funds had been used to pay private creditors, the outstanding private debt was substantially restructured.CommentsView/Create comment on this paragraphSuch were the errors committed over short time horizons.
  • And, again, even if Greece somehow did achieve the 124% milestone, its debt would still not be sustainable.
  • Staying the course, as Summers warns, will lead only to “needless suffering” before that course inevitably collapses, bringing Greece – and much else –­ crashing down.
Gene Ellis

What If We Never Run Out of Oil? - Charles C. Mann - The Atlantic - 0 views

www.theatlantic.com/...4

oil

shared by Gene Ellis on 15 Jan 14 - No Cached
  • In most cases, mining tar sands involves drilling two horizontal wells, one above the other, into the bitumen layer; injecting massive gouts of high-pressure steam and solvents into the top well, liquefying the bitumen; sucking up the melted bitumen as it drips into the sand around the lower well; and then refining the bitumen into “synthetic crude oil.”
  • Economists sometimes describe a fuel in terms of its energy return on energy invested (EROEI), a measure of how much energy must be used up to acquire, process, and deliver the fuel in a useful form. OPEC oil, for example, is typically estimated to have an EROEI of 12 to 18, which means that 12 to 18 barrels of oil are produced at the wellhead for every barrel of oil consumed during their production. In this calculation, tar sands look awful: they have an EROEI of 4 to 7. (Steaming out the bitumen also requires a lot of water. Environmentalists ask, with some justification, where it all is going to come from.)
  • To obtain shale gas, companies first dig wells that reach down thousands of feet. Then, with the absurd agility of anime characters, the drills wriggle sideways to bore thousands of feet more through methane-bearing shale. Once in place, the well injects high-pressure water into the stone, creating hairline cracks. The water is mixed with chemicals and “proppant,” particles of sand or ceramic that help keep the cracks open once they have formed. Gas trapped between layers of shale seeps past the proppant and rises through the well to be collected.
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  • Several researchers told me that the current towel-snapping between Beijing and Tokyo over islands in the East China Sea is due less to nationalistic posturing than to nearby petroleum deposits.)
  • Today, a fifth of U.S. energy consumption is fueled by coal, mainly from Appalachia and the West, a long-term energy source that has provided jobs for millions, a century-old way of life
  • and pollution that kills more than 10,000 Americans a year (that estimate is from a 2010 National Research Council study).
  • Roughly speaking, burning coal produces twice as much carbon dioxide as burning the equivalent amount of natural gas. Almost all domestic coal is used to generate electricity—it produces 38 percent of the U.S. power supply. Fracking is swiftly changing this: in 2011, utilities reported plans to shut down 57 of the nation’s 1,287 coal-fired generators the following year. Largely in consequence, U.S. energy-related carbon-dioxide emissions have dropped to figures last seen in 1995. Since 2006, they have fallen more than those from any other nation in the world.
  • In the sort of development that irresistibly attracts descriptors like ironic, Germany, often touted as an environmental model for its commitment to solar and wind power, has expanded its use of coal, and as a result is steadily increasing its carbon-dioxide output. Unlike Americans, Europeans can’t readily switch to natural gas; Continental nations, which import most of their natural gas, agreed to long-term contracts that tie its price to the price of oil, now quite high.
  • Water-assisted fracturing has been in use since the late 1940s, but it became “fracking” only recently, when it was married with horizontal drilling and the advanced sensing techniques that let it be used deep underground. Energy costs are surprisingly small; a Swiss-American research team calculated in 2011 that the average EROEI for fracked gas in a representative Pennsylvania county was about 87—about six times better than for Persian Gulf oil and 16 times better than for tar sands. (Fracking uses a lot of water, though, and activists charge that the chemicals contaminate underground water supplies.)
  • In mid-March, Japan’s Chikyu test ended a week early, after sand got in the well mechanism. But by then the researchers had already retrieved about 4 million cubic feet of natural gas from methane hydrate, at double the expected rate.
  • What is known, says Timothy Collett, the energy-research director for the USGS program, is that some of the gulf’s more than 3,500 oil and gas wells are in gas-hydrate areas.
  • In Dutch-disease scenarios, oil weakens all the pillars but one—the petroleum industry, which bloats steroidally.
  • Because the national petroleum company, with its gush of oil revenues, is the center of national economic power, “the ruler typically puts a loyalist in charge,” says Michael Ross, a UCLA political scientist and the author of The Oil Curse (2012). “The possibilities for corruption are endless.” Governments dip into the oil kitty to reward friends and buy off enemies. Sometimes the money goes to simple bribes; in the early 1990s, hundreds of millions of euros from France’s state oil company, Elf Aquitaine, lined the pockets of businessmen and politicians at home and abroad.
  • How much of Venezuela’s oil wealth Hugo Chávez hijacked for his own political purposes is unknown, because his government stopped publishing the relevant income and expenditure figures. Similarly, Ross points out, Saddam Hussein allocated more than half the government’s funds to the Iraq National Oil Company; nobody has any idea what happened to the stash, though, because INOC never released a budget. (Saddam personally directed the nationalization of Iraqi oil in 1972, then leveraged his control of petroleum revenues to seize power from his rivals.)
  • “How will the royal family contain both the mullahs and the unemployed youth without a slush fund?”
  • It seems fair to say that if autocrats in these places were toppled, most Americans would not mourn. But it seems equally fair to say that they would not necessarily be enthusiastic about their replacements.
Gene Ellis

Syriza and the French indemnity of 1871-73 | Michael Pettis' CHINA FINANCIAL MARKETS - 0 views

blog.mpettis.com/...he-french-indemnity-of-1871-73

shared by Gene Ellis on 06 Feb 15 - No Cached
  • Fundamental to the argument that Spain (or Greece, or anyone else) has a moral obligation to repay in full its debt to Germany are two assumptions. The first assumption is that “Spain” borrowed the money from “Germany”, and that there is a collective obligation on the part of Spain to repay the German collective. The second assumption is that Spain had a choice in what it could do with the German money that poured into the country, and so it must be held responsible for its having mis-used hard-earned german funds.
  • There was plenty of irresponsible behavior in every country, and it is absurd to think that if German and Spanish banks were pouring nearly unlimited amounts of money into countries at extremely low or even negative real interest rates, especially once these initial inflows had set off stock market and real estate booms, that there was any chance that these countries would not respond in the way every country in history, including Germany in the 1870s and in the 1920s, had responded under similar conditions.
  • The winners have been banks, owners of assets, and business owners, mainly in Germany, whose profits were much higher during the last decade than they could possibly have been otherwise
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  •  Second, it is the responsibility of the leading centrist parties to recognize the options explicitly. If they do not, extremist parties either of the right or the left will take control of the debate, and convert what is a conflict between different economic sectors into a nationalist conflict or a class conflict. If the former win, it will spell the end of the grand European experiment.
  • First, as long as Spain suffers from its current debt burden, it does not matter how intelligently and forcefully it implements economic reforms. It will not be able to grow out of its debt burden and must choose between two paths
  • Most currency and sovereign debt crises in modern history ultimately represent a conflict over how the costs are to be assigned among two different groups
  • Gene Ellis on 06 Feb 15
     
    Highly recommended!
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