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Gene Ellis

Investors Seek Yields in Europe, but Analysts Warn of Risk - NYTimes.com - 0 views

www.nytimes.com/...as-its-economies-languish.html

investors europe analysts

shared by Gene Ellis on 22 Jan 14 - No Cached
  • Investors Seek Yields in Europe, but Analysts Warn of Risk
  • Once again, foreign investors are piling into the government bonds of Ireland, Spain and Portugal — countries that got into such debt trouble that they required bailouts. Now these countries are able to sell their bonds at lower interest rates than they have seen in years, renewing hope that Europe has turned a corner.
  • Despite the suddenly easier terms under which Ireland and other recovering euro zone countries can borrow, the fact remains: These countries are still mired in stagnation.
  • ...6 more annotations...
  • Claus Vistesen, the head of research at Variant Perception, a London-based economic research group, sees the ratio of debt to economic output as a continuing threat to a euro zone recovery.“People think growth is coming back,” Mr. Vistesen said, “but at the end of the day, debt is still going up.”
  • For the euro zone at large, though, a step back often follows each step forward. France and Italy, the bloc’s second- and third-largest economies, are increasingly seen as the latest sick men of the Continent. Even Germany, the bloc’s powerhouse, grew only feebly last year, by 0.4 percent.
  • “Sixteen hundred jobs a week were being lost before we took office; we’re now in a position where 1,200 jobs a week are being created, and our consumer confidence numbers have been steadily growing.”
    • Gene Ellis
      Gene Ellis on 22 Jan 14
       
      Do the maths here:  1600 a week jobs being lost equals, what, just over 80,000 jobs a year?  1200 jobs a week now being created, that's what, a little over 60,000 a year?  We've had 5-6 years of recession, so how many years to get back to where we were?  And, of course, the population was growing...
  • In Ireland, more than 80 percent of the investment came from abroad, with banks and pension funds making up 37 percent of the offering and fund managers about half.
  • Mr. Kirkegaard cited “the hunt for yield.”
Gene Ellis

A Multibillion-Dollar Question for Airbus and Its A330 - NYTimes.com - 0 views

www.nytimes.com/...n-for-airbus-and-its-a330.html

shared by Gene Ellis on 05 Feb 15 - No Cached
  • A Multibillion-Dollar Question for Airbus and Its A330
  • While the A330 continues to generate around 40 percent of Airbus’s civilian aircraft profits, new orders for the plane have slowed significantly in recent years.
  • But with the wait times to receive new planes now stretching to more than six years, airlines have been slower to reach for their checkbooks.
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  • Analysts say a revamped A330 would probably not be able to compete with the fuel economy of Boeing’s three-year-old 787 Dreamliner or with the updated 777, which in addition to new engines will have lighter wings made of carbon fiber instead of aluminum.
  • A more attractive price tag, combined with earlier availability — analysts say a revamped A330 could be ready for service in four years — would probably attract a wide range of customers.
  • Still, a revamped A330 would burn around 15 percent more fuel than its newer competitors, meaning that it could be a tough sell, even at a discount.
  • "Will you end up selling any more than you would have if you stuck with the old version and cut the price?” asked Mr. Cunningham, the London analyst. He noted that the current low interest-rate environment was already reducing customers’ sensitivity to list price, while the recent instability in the Middle East was refocusing attention on the risk of rising oil prices.
  • “There is much more fragmentation” of the wide-body jet market, Mr. Lasou said. “Each aircraft type is covering a smaller range of routes. The market is becoming much more specialized.”
Gene Ellis

Tencent, Foxconn & China Harmony Unite to Build Smart Cars - Analyst Blog - NASDAQ.com - 0 views

www.nasdaq.com/...art-cars-analyst-blog-cm458404

shared by Gene Ellis on 25 Mar 15 - No Cached
  • Tencent, Foxconn & China Harmony Unite to Build Smart Cars - Analyst Blog
Gene Ellis

Italy Falls Back Into Recession, Raising Concern for Eurozone Economy - NYTimes.com - 0 views

www.nytimes.com/...cern-for-eurozone-economy.html

shared by Gene Ellis on 05 Feb 15 - No Cached
  • Italy Falls Back Into Recession, Raising Concern for Eurozone Economy
  • The economic data and news that Russia was massing troops and military equipment on the Ukrainian border caused stock prices to fall across Europe on Wednesday.
  • Analysts surmised that the strained relations with Russia as well as turmoil in the Middle East had undercut demand for Italian exports, in particular fashion and other luxury goods.
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  • “I definitely expect that things will get worse,” he said.
  • The European Union exported agricultural goods worth 11.8 billion euros, or $15.8 billion, to Russia last year, and sales have been rising at a rate of almost 15 percent a year.
  • Some economists argue that the region is already well into a so-called lost decade.
  • Separately, the German Federal Statistical Office reported on Wednesday that new industrial orders in Germany fell 3.2 percent in June compared with May. Analysts had expected orders to increase.
  • For Italy, the deteriorating economy puts greater pressure on Prime Minister Matteo Renzi, who less than a week ago promised not to impose any more government budget cuts and to invest in improving the country’s roads and other infrastructure. Such promises will be difficult to keep if slower growth, which usually translates into higher unemployment and lower corporate profits, limits tax receipts.A slower economy also endangers Italy’s ability to comply with eurozone rules on budget deficits.
  • Italy’s 2.1 trillion euro government debt equals 136 percent of its annual gross domestic product, the second-highest debt ratio in the eurozone, after Greece.
  • They said Italy’s problems stemmed more from its failure make changes needed to improve the performance of its economy.
  • The slow pace of structural reforms is worrisome,” said Paolo Manasse, a professor of macroeconomics at Bologna University. He said there was no sign of progress on necessary steps like selling off state-owned assets or overhauling the labor market or public pension system.
Gene Ellis

With Restructuring Done, EADS Faces New Challenges - NYTimes.com - 0 views

www.nytimes.com/...eads-faces-new-challenges.html

shared by Gene Ellis on 29 Mar 13 - No Cached
  • One of the big arguments being made by the economic ministry is, ‘We give you lots of defense business, so you have got to provide a lot of high-tech jobs in Germany.’
  • EADS’s future in the United States, meanwhile, poses different challenges.
  • Those attempts have included an ultimately unsuccessful bid for a $35 billion aerial refueling tanker contract with the U.S. Air Force as well as the failed attempt last year to merge with BAE, one of the Pentagon’s top 10 contractors.
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  • But with major U.S. players like Lockheed Martin and Northrop Grumman almost certainly out of reach for national security reasons,
  • “I have no illusions about how difficult it is to sell non-American products on the American market,” Mr. Enders said. “We should not even dream about trying to sell a product to a U.S. defense customer if it is not really superior to what our American peers are offering.” Analysts tended to agree.
Gene Ellis

Op-Ed Columnist - The Euro Trap - NYTimes.com - 0 views

www.nytimes.com/...30krugman.html

krugman euro trap nytimes

shared by Gene Ellis on 24 Apr 13 - Cached
  • The fact is that three years ago none of the countries now in or near crisis seemed to be in deep fiscal trouble.
  • And all of the countries were attracting large inflows of foreign capital, largely because markets believed that membership in the euro zone made Greek, Portuguese and Spanish bonds safe investments.
  • Then came the global financial crisis. Those inflows of capital dried up; revenues plunged and deficits soared; and membership in the euro, which had encouraged markets to love the crisis countries not wisely but too well, turned into a trap.
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  • During the years of easy money, wages and prices in the crisis countries rose much faster than in the rest of Europe. Now that the money is no longer rolling in, those countries need to get costs back in line.
  • Now that Greece and Germany share the same currency, however, the only way to reduce Greek relative costs is through some combination of German inflation and Greek deflation. And since Germany won’t accept inflation, deflation it is.
  • The problem is that deflation — falling wages and prices — is always and everywhere a deeply painful process. It invariably involves a prolonged slump with high unemployment. And it also aggravates debt problems, both public and private, because incomes fall while the debt burden doesn’t.
  • Earlier this week, when it downgraded Greek debt, Standard & Poor’s suggested that the euro value of Greek G.D.P. may not return to its 2008 level until 2017, meaning that Greece has no hope of growing out of its troubles.
  • Until recently, most analysts, myself included, considered a euro breakup basically impossible, since any government that even hinted that it was considering leaving the euro would be inviting a catastrophic run on its banks. But if the crisis countries are forced into default, they’ll probably face severe bank runs anyway, forcing them into emergency measures like temporary restrictions on bank withdrawals. This would open the door to euro exit.
Gene Ellis

How Apple and Other Corporations Move Profit to Avoid Taxes - NYTimes.com - 0 views

www.nytimes.com/...ove-profit-to-avoid-taxes.html

shared by Gene Ellis on 03 May 13 - No Cached
  • It got so bad that late last year Starbucks promised to pay an extra £10 million — about $16 million — in 2013 and 2014 above what it would normally have had to pay in British income taxes. What it would normally have paid is zero, because Starbucks claims its British subsidiary loses money. Of course, that subsidiary pays a lot for coffee sold to it by a profitable Starbucks subsidiary in Switzerland, and pays a large royalty for the right to use the company’s intellectual property to another subsidiary in the Netherlands. Starbucks said it understood that its customers were angry that it paid no taxes in Britain.
  • “It is easy to transfer the intellectual property to tax havens at a low price,” said Martin A. Sullivan, the chief economist of Tax Analysts, the publisher of Tax Notes. “When a foreign subsidiary pays a low price for this property, and collects royalties, it will have big profits.”
  • it is especially hard for countries to monitor prices on intellectual property, like patents and copyrights.
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  • The company makes no secret of the fact it has not paid taxes on a large part of its profits. “We are continuing to generate significant cash offshore and repatriating this cash will result in significant tax consequences under current U.S. tax law,” the company’s chief financial officer, Peter Oppenheimer, said last week.
Gene Ellis

Greece Exceeds Debt-Buyback Target - WSJ.com - 0 views

online.wsj.com/...4024004578173080175399670.html

greece target wsj com

shared by Gene Ellis on 12 Dec 12 - No Cached
  • The buyback is the latest attempt to squeeze debt relief from Greece's private creditors. But Greece may yet face a further restructuring down the road, observers and analysts say—possibly involving official-sector creditors, including other euro-zone countries.
  • Greece's official creditors—the euro zone, the European Central Bank and the IMF—now hold roughly four-fifths of the country's debt, but have been reluctant to accept losses that would hurt taxpayers.
  • The bond buyback is a central element of a plan aiming to reduce Greece's debt to 124% of gross domestic product by 2020. The IMF insists debt must be reduced to that level, and well below 110% of GDP two years later, to continue handing out loans to Greece. The buyback seeks to retire about half of the €62 billion in debt that Athens owes private creditors.
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  • However, as of last week, the country's four biggest banks had committed to sell just 67% of their total portfolio, hoping to hold on to the balance. This amount now is believed to have increased to almost 100% as they receive bonds issued by the European Financial Stability Fund—the euro-zone's temporary rescue fund—in exchange for Greek debt. "Greek banks were under pressure from the European Central Bank to take part in the buyback," said a senior official at one of the Greek banks. "Now the bonds they will use to borrow money from the ECB will be EFSF bonds, which means that the central bank is reducing its exposure to Greece."
Gene Ellis

Euro Zone Interest Rate Remains Unchanged - NYTimes.com - 0 views

www.nytimes.com/...st-rate-remains-unchanged.html

euro zone interest interest rate rate remains nytimes nytimes com com

shared by Gene Ellis on 08 Nov 12 - No Cached
  • But some analysts warn that the calm could prove temporary because the underlying causes of the crisis remain: too much debt and poorly performing national economies. “The E.C.B. has been very active since Mr. Draghi has been president, and this has been a major factor contributing to stabilize financial markets and thereby avoid much worse outcomes for the euro zone,” Marie Diron, an economist who advises the consulting firm Ernst & Young, said in a note.
  • “But the E.C.B. is not the sole actor and cannot save the euro on its own,” Ms. Diron said. “Ultimately the sustainability of the euro zone is down to structural changes at the country and European levels that are beyond the E.C.B.’s remit.”
  • Banks in the euro zone can borrow unlimited funds from the E.C.B. at the benchmark rate, provided they post collateral. But banks are not obligated to pass that rate on to their customers and might not do so in countries like Spain where banks are already struggling with large numbers of bad loans.
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  • Meanwhile, interest rates may be too low for countries like Germany, helping to fuel a rise in real estate prices, Dirk Schumacher, an economist at Goldman Sachs in Frankfurt, said. “Cutting rates in the current environment of segmented markets is likely to boost growth in those places where it is needed least,” he wrote in a note to clients before the rate decision.
Gene Ellis

Euro crisis deepens as time starts to run out for Spain's banks and regions | Business ... - 0 views

www.guardian.co.uk/...spain-crisis-eurozone-valencia

shared by Gene Ellis on 21 Jul 12 - No Cached
  • But the shortcomings of the agreement have once again undermined renewed confidence in the eurozone and sent the bond yields of several countries higher, including Spain and Italy.
  • The Spanish government said a predicted rise in GDP next year of 0.4% had proved optimistic, and the economy would suffer another year of recession.
  • Regional governments deliver the key parts of the welfare state, including health, education and social services.
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  • Eastern Valencia said it was asking for central government help as it could not refinance loans that must be paid off this year.
  • Valencia, which has long been run by Rajoy's PP, is emblematic of Spain's current crisis. A property crash has hit both regional government income and the region's banks, with its three main banks having to be rescued. Local politicians, meanwhile, have a growing reputation for corruption and frivolous spending.
  • Valencia mopped up a quarter of the €17bn (£13.2bn) of extra money made available by central government in April to pay a backlog of regional government bills.
  • Last year the regions not only failed to meet government-set deficit reduction targets, but actually increased their joint deficit.
  • Analysts believe most regions will miss this year's 1.5 percent deficit target. The government last week asked at least eight of them to revise their 2012 budgets, threatening to take over the finances of some of them.
  • it was startling to see international investors fearful of getting their money back from members of the single currency.
  • He said the eurozone's total public sector debt will reach 90% at the end of the year compared to 106% in the US and 235% in Japan.
Gene Ellis

Spain to Test Bond Markets as Economy Minister Warns on Debt - NYTimes.com - 0 views

www.nytimes.com/...daily-euro-zone-watch.html

shared by Gene Ellis on 17 Jul 12 - No Cached
  • the country’s economy minister, Luis de Guindos, warned Tuesday that European debt markets were not working properly because foreign investors were being deterred by the euro zone’s slow and complex decision-making procedures.
  • In recent weeks the interest demanded by investors on longer-term debt has crept up around 6 percent for Italy and 7 percent for Spain, close to the level that analysts say could make government finances unsustainable in the medium term.
  • In an interview in the Spanish daily La Vanguardia, Mr. de Guindos said that foreign investors were increasingly staying away from bond auctions, leaving only domestic buyers.
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  • Debt auctions in Italy at the end of last week came off better than some observers had expected and, although borrowing costs remain high, the successful debt sale has increased the prospect that the euro zone can avert another crisis during the summer break.
  • Mr. de Guindos said that debt purchases between countries within the 17-nation single currency area had virtually ground to a halt.
  • The ministers are expected to hold talks on Friday to agree to extend 30 billion euros for the rescue by the end of the month. By agreement of European Union leaders last month, the debt will go direct to banks, rather than being added to the Spanish government’s finances, once plans for a new regulatory structure for Europe’s banks is put in place.
Gene Ellis

Gas Prices Moving Away From Link to Oil - NYTimes.com - 0 views

www.nytimes.com/...ing-away-from-link-to-oil.html

oil

shared by Gene Ellis on 10 Jan 14 - No Cached
  • That leaves buyers with enormous risk. Oil, which sold for as little as $10 a barrel in the 1990s, when some current contracts were agreed, now costs about $100 per barrel,
  • “Anyone with standard oil-linked contracts is likely losing money in Europe and specifically Italy,
  • Gas bought under such contracts can be 10 percent to 15 percent more expensive than gas bought at spot market prices, he said. Over the past year, Eni's gas and power unit has reported an operating loss of about €812 million, or $1 billion.
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  • “These are not easy discussions,” Mr. Alverà said. “Most sellers are reluctant to sit down and give you big discounts. The more they wait the more they increase their profits.”
  • Still, analysts say it may take decades for Asia to switch from oil linkage to market pricing.
Gene Ellis

Utilities Switch Off Investment in Fossil Fuel Plants - NYTimes.com - 0 views

www.nytimes.com/...ent-in-fossil-fuel-plants.html

utilities switch investment fossil fossil fuel fuel plants

shared by Gene Ellis on 10 Jan 14 - No Cached
    • Gene Ellis
      Gene Ellis on 10 Jan 14
       
      Note:  a LARGE power station =s 40 direct jobs.
  • workers at the large power station known as Keadby 1 are preparing to shut it down at the end of the summer, with the loss of about 40 jobs.
  • fluctuations in global energy markets have made the natural gas power plant unprofitable
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  • It has also delayed new energy investments and is planning to close almost a quarter of its fossil fuel power plants,
  • European energy companies, struggling to respond to weak demand in a flatlining economy, say they need guaranteed pricing to keep open unprofitable plants or to invest in new ones.
  • Their revenue is being hit by dwindling demand for electricity and by new wind and solar projects that undercut the price of the energy produced from many fossil fuel plants.
  • At the same time, record-low prices on carbon emissions trading markets, which were introduced to encourage clean and efficient energy production and use, have perversely become a disincentive to investment.
  • Many of the Continent’s aging power stations, particularly those that burn highly polluting coal, are earmarked for closure by 2020 to meet stringent local environment regulations.
  • Without these investments, industrial companies in Europe may face higher energy prices when local economies eventually recover,
  • “Energy utilities are facing a perfect storm,”
  • In a bid to generate 20 percent of the European Union’s electricity from renewable sources by 2020, Germany, Spain and other E.U. countries have provided hefty subsidies to wind and solar farms, which now constitute a sizable minority of daily electricity generation, often surpassing the 20 percent target.
    • Gene Ellis
      Gene Ellis on 10 Jan 14
       
      In effect, a cheaper overall form of energy (non-renewables) had to compete with heavy subsidies to renewables, which, once built, had low operating costs.  They cannot compete and do not invest, and there are major problems w/investing more in renewables (they are overall more expensive, and they have built-in faults, producing electricity erratically, or during the wrong times.)  The high costs of energy also lie with government, who cemented long-term deals with the ex-USSR linking other energy prices to the price of oil.  In short, they shot themselves in the foot.  Several times.
  • Despite the upfront costs associated with green energy projects, they are inexpensive to run. In contrast, Europe’s gas and coal plants, which also provide backup power when renewables cannot operate, need constant spending on fossil fuels.
  • European utilities like E.On of Germany have announced plans to shut down less-polluting natural gas-fired plants that have been undercut by dirtier coal-burning generators benefiting from a flood of low-cost coal imports and low carbon emissions prices.
  • Policy makers are debating a system of support payments to keep uneconomic power plants open,
  • “Without long-term signals of energy prices, investment won’t happen.”
  • Some analysts also expect domestic regulators to eventually create financial incentives for companies
Gene Ellis

The tragedy of Argentina: A century of decline | The Economist - 0 views

www.economist.com/...hat-went-wrong-century-decline

shared by Gene Ellis on 19 Feb 14 - No Cached
  • The tragedy of Argentina A century of decline
  • In the 43 years leading up to 1914, GDP had grown at an annual rate of 6%, the fastest recorded in the world.
  • The country ranked among the ten richest in the world, after the likes of Australia, Britain and the United States, but ahead of France, Germany and Italy.
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  • Its income per head was 92% of the average of 16 rich economies
  • Its income per head is now 43% of those same 16 rich economies; it trails Chile and Uruguay in its own back yard.
  • The election of 1989 marked the first time in more than 60 years that a civilian president had handed power to an elected successor.
  • the repeated recessions of the 1970s and 1980s, the hyperinflation of 1989-90, the economic crisis of 2001 and now the possibility of another crisis to come.
  • But three deep-lying explanations help to illuminate the country’s diminishment. Firstly, Argentina may have been rich 100 years ago but it was not modern. That made adjustment hard when external shocks hit. The second theory stresses the role of trade policy. Third, when it needed to change, Argentina lacked the institutions to create successful policies.
  • Railways transformed the economics of agriculture and refrigerated shipping made it possible to export meat on an unprecedented scale: between 1900 and 1916 Argentine exports of frozen beef rose from 26,000 tonnes to 411,000 tonnes a year. But Argentina mainly consumed technology from abroad rather than inventing its own.
  • External shocks duly materialised, which leads to the second theory for Argentine decline: trade policy.
  • Argentina raised import tariffs from an average of 16.7% in 1930 to 28.7% in 1933. Reliance on Britain, another country in decline, backfired as Argentina’s favoured export market signed preferential deals with Commonwealth countries.
  • an existing policy of import substitution deepened; the share of trade as a percentage of GDP continued to fall.
  • High food prices meant big profits for farmers but empty stomachs for ordinary Argentines. Open borders increased farmers’ takings but sharpened competition from abroad for domestic industry.
  • “One-third of the country—the commodities industry, engineers and regional industries like wine and tourism—is ready to compete,” says Sergio Berensztein, a political analyst. “Two-thirds are not.”
  • Property rights are insecure
  • Statistics cannot be trusted: Argentina was due this week to unveil new inflation data in a bid to avoid censure from the IMF for its wildly undercooked previous estimates.
  • hort-termism is embedded in the system
  • “We have spent 50 years thinking about maintaining government spending, not about investing to grow,” says Fernando de la Rúa, a former president who resigned during the 2001 crisis.
  • The country’s Vaca Muerta (“Dead Cow”) shale-oil and gasfield is estimated to be the world’s third-largest. If Argentina can attract foreign capital, the money could start flowing within a decade.
Gene Ellis

The iEconomy - Nissan's Move to U.S. Offers Lessons for Tech Industry - NYTimes.com - 0 views

www.nytimes.com/...lessons-for-tech-industry.html

shared by Gene Ellis on 29 Oct 13 - No Cached
  • The federal government would give Foxconn tax breaks, subsidized loans and special access through customs and lower tariffs for imported parts if it started assembling Apple products in Brazil, where Foxconn was already producing electronics for Dell, Sony and Hewlett-Packard.
  • Apple products remain expensive; the latest iPad, for instance, costs about $760 in Brazil, compared with $499 in the United States. But because those devices are made in Brazil and lower tariffs are charged on parts used to assemble them, Foxconn and Apple are pocketing larger shares of the profits, analysts say, offsetting the increased costs of building outside China.
Gene Ellis

Ukraine crisis: Gas prices leap on Russia's Crimea move - FT.com - 0 views

www.ft.com/...f2-11e3-9685-00144feab7de.html

shared by Gene Ellis on 25 Apr 14 - No Cached
  • Ukraine crisis: Gas prices leap on Russia’s Crimea move
  • “Gazprom’s Nord Stream pipeline has an additional 32bn cubic metres of unused capacity, based on last year’s operating levels, meaning that half of Ukraine’s gas volumes could be substituted into this pipeline,” wrote analysts at Bernstein Research in a report.
Gene Ellis

Russia restricting Austria's gas supplies - The Local - 0 views

www.thelocal.at/...tricting-austrias-gas-supplies

shared by Gene Ellis on 05 Feb 15 - No Cached
  • Russia restricting Austria's gas supplies
  • According to the energy regulator E-Control, Gazprom supplied Austria 15 percent less gas than had been previously agreed. Similar issues have hit Poland, which has seen their supplies cut by 45 percent, and Slovakia, which has ten percent less gas than expected for the period.
  • Poland on Thursday accused Russia's Gazprom of slashing gas deliveries by half, which analysts said was likely aimed at sending a message to the EU amid tensions over the Ukraine conflict.
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  • "There's no risk to Polish clients," PGNiG spokeswoman Dorota Gajewska said, but added that it was forced to suspend its so-called "reverse flow" transfers to Ukraine.
  • The move caused the Russian ruble to plunge to another record low against the dollar on Thursday.
  • "It also can be seen as a kind of response to EU sanctions, targeting the smaller EU members in Moscow's former sphere of influence, not its larger Western partner." "But it's a risky policy, as it further undermines Moscow's credibility in Western Europe. It's not the best idea: either you're a reliable supplier of gas or you're not," he said.
Gene Ellis

Oversize Expectations for the Airbus A380 - NYTimes.com - 0 views

www.nytimes.com/...tions-for-the-airbus-a380.html

shared by Gene Ellis on 18 Feb 15 - No Cached
  • this aircraft, which can hold more than 500 passengers. The plane dwarfs every commercial jet in the skies.
  • Its two full-length decks total 6,000 square feet, 50 percent more than the original jumbo jet, the Boeing 747.
  • The A380 was also Airbus’s answer to a problematic trend: More and more passengers meant more flights and increasingly congested tarmacs. Airbus figured that the future of air travel belonged to big planes flying between major hubs.
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  • Airbus has struggled to sell the planes. Orders have been slow, and not a single buyer has been found in the United States, South America, Africa or India.
  • While the A380 program has been a boon for the European aerospace industry, Airbus is unlikely to recover its research and development costs. The best it can now expect is to break even on production costs, according to analysts, provided that it can keep orders going.
  • Airbus made the wrong prediction about travel preferences. People would rather take direct flights on smaller airplanes, he said, than get on big airplanes — no matter their feats of engineering — that make connections through huge hubs.
  • “It’s a commercial disaster,” Mr. Aboulafia says. “Every conceivably bad idea that anyone’s ever had about the aviation industry is embodied in this airplane.”
  • Airline executives were wary of expanding their fleets aggressively, especially for a costly, four-engine fuel hog.
  • And there are a fair number of those routes. Around 15 of the 20 largest long-haul routes by passenger volume in the world today are slot-constrained,
  • “The A380 is not made for every route, but it is ideal for high-traffic routes, high-volume routes that are congested, or where there are flying constraints,”
  • A little more than a decade ago, the two dominant airplane makers, Boeing and Airbus, looked at where their businesses were headed and saw similar facts: air traffic doubling every 15 years, estimates that the number of travelers would hit four billion by 2030 — and came to radically different conclusions about what those numbers meant for their future.
  • Boeing, too, is facing lukewarm demand for its latest jumbo jet upgrade, known as the 747-8. The company has received just 51 orders for this big plane, which can seat about 460 passengers and lists at $357 million. By contrast, it has sold more than 1,200 twin-engine 777s, which sell for as much as $320 million.
  • Richard H. Anderson, Delta’s chief executive, has said the A380 is “by definition an uneconomic airplane unless you’re a state-owned enterprise with subsidies.”
  • Bruno Delile, Air France’s senior vice president for fleet management, says that there are a limited number of routes in its network with enough daily traffic to justify the expense of such a big plane. “The forecasts about traffic growth and market saturation haven’t exactly panned out,” he says.
  • Not only do airlines take a big risk on the size and cost of the A380, but they also have to gain the cooperation of airports to modify gates and widen taxiways to make room for the plane.
  • With versions that seat 210 to 330 passengers, and with a range of about 9,000 miles, the 787 allows airlines to fly pretty much anywhere in the world and connect smaller airports without going through a hub.
  • And passengers are willing to pay more to avoid a connection
  • f most airlines appear skeptical of the A380, Emirates is a true believer. It stunned the industry in December when it ordered 50 more of the planes, beyond the 90 it already had on order, throwing Airbus a much needed lifeline
  • The airport handled 66 million passengers last year, rivaling Heathrow as the busiest international hub.
  • for Emirates, the biggest selling point of the A380 is its ability to pack in more business-class seats and create an environment that appeals to big-spending passengers.
Gene Ellis

Taiwan's information-technology industry: After the personal computer | The Economist - 0 views

www.economist.com/...-world-after-personal-computer

shared by Gene Ellis on 15 Feb 15 - No Cached
  • Information and communications technology now makes up one-third of GDP.
  • its companies make 89% of the world’s notebooks, as well as 46% of desktop PCs. These days they make them mainly with Chinese labour: 94% of their hardware, by value, is produced on the mainland.
  • It is moving into retailing and wants to develop its own technology, for which it intends to hire another 5,000-10,000 engineers in Taiwan.
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  • The leading ODMs have realised that they cannot rely on the PC for ever. One option is to go where the growth is: mobile devices.
  • Wistron spread into cloud computing, after-sales service (of which it already did plenty), medical equipment and recycling—which Patrick Lin now runs.
  • Taiwanese companies can adapt in a very short time,” says Chris Hung, an analyst at MIC. They have done so before, such as when they moved production to China to take advantage of its big, cheap labour force. Up against Chinese capital as well as labour, not to mention the South Koreans, they must do so again.
Gene Ellis

Russia Presses Ahead With Plan for Gas Pipeline to Turkey - NYTimes.com - 0 views

www.nytimes.com/...or-gas-pipeline-to-turkey.html

shared by Gene Ellis on 18 Feb 15 - No Cached
  • Russia Presses Ahead With Plan for Gas Pipeline to Turkey
  • But in recent weeks, the Russian state-owned company Gazprom has shown signs that it is serious about proceeding with what it calls Turkish Stream.
  • Gazprom’s chief executive recently made it clear that Turkey is its new focus — and that if Europe wants more Russian gas then it will need to find its own way to tap into it.
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  • Another potential sticking point is Turkey itself. For one thing, the country obtains about 60 percent of its gas from Russia, a dependence the government is not necessarily eager to increase.
  • Industry analysts estimate that the cost of Turkish Stream would be about $10 billion for Gazprom, which so far has spent an estimated $4.7 billion on the Black Sea project.
  • Mr. Putin already publicly offered a 6 percent reduction to Turkey. But Ankara, which pays substantially more for Russian gas than Germany does, is pressing for a better deal.
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