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Saturday, April 30, 2016

Is U.S. Productivity Waning?

Why Is Productivity So Weak? Three Theories

More than 151 million Americans count themselves employed, a number that has risen sharply in the last few years. The question is this: What are they doing all day?
Because whatever it is, it barely seems to be registering in economic output. The number of hours Americans worked rose 1.9 percent in the year ended in March. New data released Thursday showed that gross domestic productin the first quarter was up 1.9 percent over the previous year. Despite constant advances in software, equipment and management practices to try to make corporate America more efficient, actual economic output is merely moving in lock step with the number of hours people put in, rather than rising as it has throughout modern history.
We could chalk that up to a statistical blip if it were a single year; productivity data are notoriously volatile. But this has been going on for some time. From 2011 through 2015, the government’s official labor productivity measure shows only 0.4 percent annual growth in output per hour of work. That’s the lowest for a five-year span since the 1977-to-1982 period, and far below the 2.3 percent average since the 1950s.
Productivity is one of the most important yet least understood areas of economics. Over long periods, it is the only pathway toward higher levels of prosperity; the reason an American worker makes much more today than a century ago is that each hour of labor produces much more in goods and services. Put bluntly, if the kind of productivity growth implied by the new data published Thursday were to persist indefinitely, your grandchildren would be no richer than you.
N Y Times 

EYE on the World - 30 April 2016

" Stories Going Beyond the Mainstream "  


 Chasing Functional Extinction - Tigers, Oil Industry, and... 

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Goldman Pegs Oil Between $20-40 in New Industry Order

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After a decade-long “investment phase” that helped unleash the shale revolution, oil is seeking a new equilibrium between supply and demand. Jeff Currie, head of Commodities Research for Global Investment Research at Goldman Sachs, describes how the market has entered an “exploitation phase” that puts downward pressure on prices.  


The Nuclear Taboo - Rethinking Armageddon  

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The world is far different today. On the one hand, both the United States and Russia have far smaller nuclear arsenals than they did at the Cold War’s end. At the same time, new nuclear powers have emerged in pace with advanced conventional precision warfare capabilities. The rise of cyber warfare has also led to concerns over the security and reliability of early warning and command-and-control systems, and weapon systems as well. Advances in the cognitive sciences and research on Cold War crisis decision-making have challenged some of our thinking as to how strategies based on deterrence work, or risk failing. Together, these and other recent developments have combined to form what some are calling a Second Nuclear Age.

Sure Sign Global Economy Heading for Recession

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China Ocean Freight Index Collapses to Record Low  

  1. ....exports are down 9.6% year-over year. Specifically:

  1. To the US -8.8%
  2. To Hong Kong -6.5%
  3. To Japan -5.5%
  4. To South Korea -11.2%
  5. To Taiwan -3.7%
  6. To the countries in the ASEAN -13.7%
  7. To the EU -6.9%
  8. To South Africa -29.6% (!)
  9. To Brazil -47.2% (!!)
  10. To Australia -1.9%
  11. To New Zealand -12.4%.  

GRIM CHARTS: Earnings and S&P Negatively Correlating

Since mid-2015, corporate earnings and the S&P 500 have been moving in the complete opposite direction. Last time they had a complete negative relationship, it was back in 2009—when the stock market crashed.

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Stock Market Crash: These Charts Are a Grim Warning for Investors

  Charts Investors Shouldn’t Overlook

Mainstream stock advisors will never tell you this, but it’s true: the odds of an economic collapse and stock market crash in 2016 are stacking up higher each day.
When I want to know where the stock market is headed, I look at three indicators and they are very powerful predictors over a longer-term period. Those indicators are copper prices, corporate earnings, and how investors treat utilities stocks compared to technology stocks.

More Woes for Schlumberger

Less spending on oil and gas exploration taking its toll on one of the sector's largest companies.

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HOUSTON, April 22 (UPI) -- Schlumberger, the largest oil field services company in the world, said its first quarter revenue experienced one of its sharpest declines since 2014.
The company said revenue through March 31 was $6.5 billion, a 16 percent drop from the previous quarter and 36 percent lower year-on-year.
Chairman and CEO Paal Kibsgaard said in a statement the sequential decrease was one of the largest since crude oil prices started moving sharply lower near the end of 2014.

Just Awful: "Beautiful Cambodian Tigers Functionally Extinct"

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Tigers Are Now Extinct In A Country Where They Used To Thrive 

Six years after 13 countries pledged to double the number of tigers in the wild by 2020, the World Wildlife Fund (WWF) declared tigers “functionally extinct” in Cambodia on Wednesday.
According to WWF, the last wild tiger in the country was observed in 2007 thanks to a hidden camera in the Mondulkiri Protected Forest. Cambodia, one of the 13 countries in the world where tigers live, has approved a plan to reintroduce tigers into the Mondulkiri protected forest in eastern Cambodia, the Guardian reports. “We want two male tigers and five to six females tigers for the start,” said Keo Omaliss, director of the department of wildlife and biodiversity at the Forestry Administration, according to the Guardian. “This is a huge task.”

Friday, April 29, 2016

Financial Structure Overhaul Possible?



By Charles Hugh-Smith of OfTwoMinds blog,

Why Real Reform Is Now Impossible 

The endless bleating of well-paid pundits in the corporate media about "reform" is just more circus.

It's difficult for well-meaning pundits to abandon the fantasy that meaningful reform is possible. Indeed, a critical function of the punditry and corporate media is to foster the fantasy that the status quo could be reformed if only we all got together and blah blah blah.
As I explain in my new book Why Our Status Quo Failed and Is Beyond Reformreal structural reform would trigger the collapse of the status quo. (As a reminder, the status quo benefits the few at the expense of the many.)
But there's another dynamic that makes reform impossible. I've prepared a chart to explain this dynamic:

Thursday, April 28, 2016

Goldman Pegs Oil Between $20 -40 in New Industry Order

Goldman Sachs Pegs $20-40 as New Oil Order Range

After a decade-long “investment phase” that helped unleash the shale revolution, oil is seeking a new equilibrium between supply and demand. Jeff Currie, head of Commodities Research for Global Investment Research at Goldman Sachs, describes how the market has entered an “exploitation phase” that puts downward pressure on prices.  


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Wednesday, April 27, 2016

Leading Insights, Ideas, Facts, Opinions, Politics & More

  Global  Overview 

Bu Tom Wipple

Limits to Growth: A report published by the UK government’s new All-Party Parliamentary Group (AAPG) on Limits to Growth reviews the scientific merits of a controversial 1972 model by a team of MIT scientists, which forecasted a possible collapse of civilization due to resource depletion. The recent report found that world fossil fuel production is likely to peak in around 2025… largely as a result of Chinese coal production peaking. An important and often misunderstood issue clarified by the report is that the risk of collapse is not because resources are running out, but because the quality of the available resources is declining while the cost of extracting this lower-quality resource is increasing. According to the report’s authors, growth could well be coming to an end, permanently. (4/22)
The world’s biggest oil companies, set to report their worst quarterly earnings in more than a decade, are finding their cost-cutting efforts haven’t matched the decline in crude prices over the past two years. While producers have been deferring projects, eliminating jobs and freezing salaries, the process will take three years to complete. In the meantime, profits are being hammered. (4/23)
Oil tankers carrying around 200 million barrels of crude are waiting to leave or dock at ports around the world, creating “the world’s biggest traffic jam,” according to a Reuters story. Middle East ports are choking on the oil waiting to be loaded onto tankers and shipped to Asia, and Asian ports are forcing tankers to wait for weeks before unloading because their infrastructure can’t cope with these amounts of oil. (4/18)
Diesel glut: Europe has become a dumping ground for diesel. The continent may run out of onshore capacity and European-bound ships may become offshore storage tankers. (4/20)
In the UK, the so-called Gatwick Gusher shale basin could add as much as $74 billion to the nation’s economy, according to a study by Ernst & Young and commissioned by U.K. Oil & Gas Investments. (4/19)
Russia beat Saudi Arabia as China’s top crude oil supplier in March, a follow-on to taking the No.1 spot in four months of 2015. Shipments from Russia rose 58 percent last month from a year ago to 1.09 million b/d. This compared with February volumes from Russia at 1.03 million b/d and an all-time high at 1.13 million b/d in December. (4/21)
Head-fake “freeze meeting #2”? Major OPEC and other crude producers will meet in Russia, possibly next month, in a new push to agree on an output freeze to shore up oil prices, Iraq’s DeputyOil Minister Fayyad Al-Nima said. There is still no agreement on an oil meeting in May, Russian Energy Minister Alexander Novak said after Al-Nima’s comment. (4/21)
Leviathan a headache: Though a game-changing gas discovery for Israel and for the discoverer, Texas-based Noble Energy, the giant Leviathan offshore gas field in the Eastern Mediterranean has been one bureaucratic headache after another. Now reports are surfacing that the company is seeking to reduce exposure by selling 15 percent of its 40 percent interest in the project. Noble Energy discovered the Leviathan deposit back in 2010. (4/21)
India’s crude oil imports resumed climbing in the year ended March, after stagnating in the previous period, as a new refinery on the country’s east coast started up. The nation’s crude imports rose 6.7 percent to 202.15 million metric tons (about 4.05 million b/d) last financial year. (4/21)
Egypt offers a bright spot for natural gas development, a lone bright spot in an energy world undergoing harsh austerity. Egypt has suffered blackouts due to shortages in natural gas and has been scrambling to make up for the shortfall. But a more enduring solution could soon arrive as Italian oilgiant Eni develops the gigantic Zohr natural gas discovery in the Mediterranean Sea. The field could hold 30 trillion cubic feet of natural gas, enough to make it the largest gas discovery ever recorded in the Mediterranean. (4/22)
East Africa decision: The oil pipeline route puzzle has been solved, with Uganda choosing to export her crude oil to the East African coast through Tanzania and not Kenya.  A report states that the Kabaale-Tanga route through Tanzania is the only option to secure first oil exports by mid-2020. (4/21)
Nigeria deployed police and soldiers to gasoline stations to maintain order as fuel shortages grip Africa’s biggest oil producer. The most severe fuel scarcity in a year in Africa’s most populous nation has left motorists paying more than double the government’s official price for gasoline and put increasing pressure on a stagnating economy that’s been hit by tumbling oil prices. (4/22)
The Brazilian pre-salt bonanza has now officially begun, with Norway’s Statoil and partners announcing production of the first oil and gas from the offshore Gavea field in Brazil—part of the largest-ever oil and gas discovery in the Campos Basin’s pre-salt layer. Pre-salt oil and gas deposits are attractive because wells in this layer tend to yield more crude oil than other offshore wells. However, they are also much deeper than other wells, so pre-salt projects tend to be cost-intensive and challenging—particularly in a depressedoil price environment. (4/22)
Offshore Brazil, energy company Statoil and partners Repsol Sinopec Brasil and Petrobras have struck oil in the deepwater Campos Basin. The appraisal well produced around 16 million standard cubic feet of gas and 4,000 barrels per day of oil. (4/19)
Mexican officials are setting out to assure investors of government support for state oil company Pemex after the firm received a $4.2 billion financial lifeline to help it through a cash-flow squeeze brought on by falling oil prices. (4/19)
The total US rig count declined by eight last week to 433, according to Baker Hughes. The number of gas rigs fell by one to 88 while the oil rig count declined by seven to 344.
Total US energy production increased for the sixth consecutive year. According to EIA data, energy production reached a record 89 quadrillion British thermal units, equivalent to 91 percent of total U.S. energy consumption. Liquid fuels production drove the increase, with an 8 percent increase for crudeoiland a 9 percent increase for natural gas plant liquids. Natural gas production also increased 5 percent. These gains more than offset a 10 percent decline in coal production.
Increased US oil production from the Gulf of Mexico is not enough to offset on-shore declines of 1.65 million b/d by 2017.  Total U.S. crude oil production is projected to fall 15 percent from 9.43 million b/d in 2015 to 8.04 million b/d in 2017. (4/21)
LNG exports: A tanker from Louisiana loaded with US liquefied natural gas is en route to Portugal, the first shipment in a trade relationship that could shake up the European market. The 970-foot long Creole Spirit is expected to arrive by the end of April. In Europe, American gas will add to a swell in supply in a crowded market long dominated by Russia. Analysts predict that the arrival of U.S. gas could trigger a price war, leading to lower prices for consumers that could act as a shot in the arm for the struggling European economy. (4/22)
Alaska has long been a bastion of US oil production, even giving dividend checks to residents from oil revenues. But oil price woes are having a major effect on a state that has no state income tax or state sales tax, and crude production on Alaska’s North Slope in 2015 fell to its lowest point in decades. (4/18)
The global oil-market rout is weighing on General Electric, which posted a quarterly decline in operating income and orders for its core industrial businesses. GE reported a 6.1 percent gain in revenue for the first three months of 2016, but profit declines in units making locomotives, power turbines and oil-industry equipment hurt its bottom line. (4/23)
Oil companies seeking cash have found a well that keeps producing: the stock market. Callon Petroleum Co., a small oil producer, has sold new shares three times in the past six months to raise cash, most recently in a successful sale Tuesday night. Though stock prices often decline on such deals due to the addition of new shares, Callon’s shares ended Wednesday up 12 percent, at $10, as the price of oil reached near a five-month high and US energy shares broadly rallied on better-than-expected crude-supply data. (4/21)
Rig company Transocean said it was delaying the delivery of two ultra-deepwater drill ships to 2020 in an agreement with a shipyard company in Singapore. (4/21)
Oil-to-solar jobs: A few years ago, Sean and Stormy Fravel were riding the oiland gas boom like so many others in West Texas. But when their jobs disappeared along with $100-a-barrel oil prices, they turned to a new type of energy occupation: solar power. Instead of driving an 18-wheeler to haul drilling equipment in and out of the oil patch, the Fravels now install solar panel racking systems and perform quality checks on a solar farm under construction in McCamey, about 300 miles northwest of San Antonio. (4/22)
State-level taxes and fees on gasoline in the United States averaged 26.5 cents per gallon (¢/gal) as of January 1, 2016. These taxes and fees ranged from a low of 8.95¢/gal in Alaska to a high of 51.4¢/gal in Pennsylvania, in addition to the federal tax of 18.4¢/gal. (4/20)
US energy bill: As recently as a week ago, the energy bill that Congress was considering was stalled and faced an uphill battle. But the Senate has sprung into action, and voted in favor it by 85-12. The energy package is the first major piece of energy legislation passed in almost a decade. At the same time, it is a rather modest piece of action. (4/21)
Developing “clean coal” technology would help the coal sector in both the US and China and prevent further job losses, the US energy secretary has said.  Crashing prices for coal amid China’s economic slowdown and US investors’ preference for newer, less polluting energy technology has hit the industry hard in both countries. (4/19)
Climate: Representatives from more than 150 countries gathered at the UN last Friday to sign a global accord aimed at slashing greenhouse gas emissions and slowing climate change. But in the four months, since that historic pact was negotiated in Paris, a drumbeat of grim scientific findings has underscored that staving off the worst consequences of global warming may take far more aggressive actions. The first three months of 2016 were the warmest on record in 136 years — by large margins. (4/21)
Sea levels could rise by much more than originally anticipated, and much faster, according to new data being collected by scientists studying the melting West Antarctic ice sheet – a massive sheet the size of Mexico. That revelation was made by an official with the National Oceanic and Atmospheric Administration on Tuesday at the annual RIMS conference for risk management and insurance professionals in San Diego, CA. (4/22)  

Sure Sign Global Economy Heading for Recession


Relentless deterioration meets stunning overcapacity.

..exports are down 9.6% year-over year. Specifically:

  • To the US -8.8%
  • To Hong Kong -6.5%
  • To Japan -5.5%
  • To South Korea -11.2%
  • To Taiwan -3.7%
  • To the countries in the ASEAN -13.7%
  • To the EU -6.9%
  • To South Africa -29.6% (!)
  • To Brazil -47.2% (!!)
  • To Australia -1.9%
  • To New Zealand -12.4%.  

China Ocean Freight Index Collapses to Record Low

The amount it costs to ship containers from China to ports around the world, a function of the quantity of goods to be shipped and the supply of vessels to ship them, just dropped to a new historic low.

The China Containerized Freight Index (CCFI) tracks contractual and spot-market rates for shipping containers from major ports in China to 14 regions around the world. It reflects the unpolished and ugly reality of the shipping industry in an environment of deteriorating global trade.


For the latest reporting week, the index dropped 0.6% to 636.14, its lowest level ever. It has plunged 41% from the already low levels in February last year, and 36% since its inception in 1998 when it was set at 1,000. This chart shows the continuing collapse of containerized freight rates from China to the rest of the world:

Monday, April 25, 2016

Overpopulation a Ticking Economic Time Bomb

Return of the population timebomb

May 2008

Where do the children play?

Only since 1800, in the last 0.1% of the history of Homo sapiens, has the human population shot into the billions. Now at nearly 6.7 billion, with 9 billion looming 40 years away, few environmentalists seem to care.
Yet the population-environment link is clear. Our environmental impact, as gauged by total resource consumption for a country or the world, is the product of population size and the average person’s consumption.
Today’s crumbling environment, racked by climate change, mass extinction, deforestation, collapsing fisheries and more is evidence our total consumption has gone too far. We are destroying our life-support system. In ecological terms we are in “overshoot” of Earth’s “carrying capacity” for humans, our demand exceeding the planet’s absorptive and regenerative capacities.
To avert catastrophe, we need to reduce both factors in the equation: our numbers and per person consumption.
Or so it would seem. Ignoring that logic, most environmentalists today avoid half the equation. An emailer’s assertion was typical: “John, if everyone on Earth just consumed less, as they do in Mexico, say, we wouldn’t have exceeded carrying capacity.”