Here's my summary of the key news overnight in 90 seconds at 9 am, including news that the Fonterra dairy auction this morning has seen the index hit 1,108.5, its highest level since December 2011.
It has risen in 10 of the last twelve auctions, and was up another 1.1% since the last one on the back of a 2.8% rise in whole milk powders.
However, this globaldairytrade data is all in US dollars - recalculating the results in NZ dollars does not give the same up trend. In fact, todays result is 1.2% lower than the previous auction in a NZ dollar basis. In US dollars, this index is level pegging with a year ago; in NZ dollars its down 5%.
In the US, two big banks, JPMorganChase and Goldman Sachs, have reported bumper results, beating analysts estimates. But given the reputation damage at JPMorgan, the CEO for that bank has seen his compensation cut sharply. Pay and bonuses at Goldman Sachs fell too.
Fundamental economic data in the US out overnight was very positive. Nationwide factory output was up 0.8% in December, inflation was flat, and inflation adjusted weekly earnings were up 0.6%. The factory output data was encouraging because we had had a few key regional surveys showing very mixed results. And this overall trend of good US data comes after recent positive news from retail sales and real estate activity.
It is unemployment that is still yet to start improving. It is steady at 7.8% according to the latest OECD data we received in an email statement. That same data shows euro-zone unemployment at 11.8%, a record high and growing.
And finally today, the issue of 'currency wars' is back as a talking point. The world is on the brink of a fresh currency war outbreak Russia has warned, and European policy makers joined Japan in bemoaning the economic cost of rising exchange rates.
The NZ$ starts today slightly higher at 84.0 USc, 79.6 AUc and the TWI is at 75.4.
No chart with that title exists.
38 Comments
Im sorry but we dont do trends. Just like the BDI we note with relish a wee blip upwards....from 700 to say 705....that it is down from 11000 and has dropped for 2 years who cares....not important....
Great chart btw.
http://www.bloomberg.com/quote/BDIY:IND/chart (click on 5Y)
The world is doing fine....we all are doing fine.
IMF team warns of global economy entering uncharted territory with US$ 180 a barrel in 2021.
http://crudeoilpeak.info/imf-team-warns-of-global-economy-entering-unch…
With new mortgages now starting to be 95% and 30 year as the new normal? with oil and hence petrol at a price level beyond $147USD in 2008...8 years from now....but Olly says price will double its a sure bet....
Of course the kicker is $180 doesnt account for the geological problem, so it isnt science based, its a bit la la and yet $180! ouch.
"“While our model is not as pessimistic as the pure geological view, which typically holds that binding resource constraints will lead world oil production onto an inexorable downward trend in the very near future, our prediction of small further increases in world oil production comes at the expense of a near doubling, permanently, of real oil prices over the coming decade. This is uncharted territory for the world economy, which has never experienced such prices for more than a few months. "
So the geologists say it will peak, and decline, some economists say we will just pay double what we are paying now, or $4 a litre.
How does Hugh P's outer suburbs survive on $4+ a litre? doesnt does it...just like the US.
Interesting times....doing fine?
regards
$180? How does that work, money is debt, Debt requires growth, growth increases GDP, GDP is proportional to Energy use, Energy is mainly oil & assco fossil fuels. Hence $/per barrel is a unitless ratio which is ERORI. Its grossly unstable and will not be 'solved' by rhetoric
The first ball-drop of the year.
Oram and Fallow on Nat Radio - just gone @9.45.
Nice fellows both. Quite intelligent both (met 'em both, that's a pers.com). Neither could be accused of being lobby/touts.
But how off the pace? Fallow talking of using our logs for fuel - yes, it'd be carbon-neutral, and that would be no bad thing. But-------- the EROEI would be so awful, you'd never get withing a bulls' roar of BAU. You'd be triaging left, right and child-poverty-green.
Then they launch into growth projections - quite sincerely - as if there is no connection with the energy supply.
This is prima facie cognitive dissonance. Both should have seen the comments hereabouts, both should have done their homework. In my book, there's no excuse for this. Fallow at least said 'if' a couple of times...... Oram seems incapable of equating resource (linchpin energy) supply with 'growth'.
I challenge one or the other to reply here, stating that exponential economic growth can be had concurrently - and/or for how long? - with the dwindling quality of all resource-supplies (due to cherry-picking first), with the dwindling resource-per-head radio, and with increasingly compromised energy-supplies.
An economist with no clue on engineering and backed up with his un-shakable political view of the world. So he cant or is incapable of seeing such an issue because the second he does his entire "un-shakable view" is utterly destroyed.
I do like his posts but he builds on quicksand.
regards
That's where an economist misses the boat.
Yes, PV is down to grid-comparitive in $ terms.
What he doesn't address is the need for copper (or other conductor), plastic (or other insulator), batteries (or other storage mechanism, ie dams) and most important, tha bang-for-volume/weight carried.
EV's have to carry so much battery weight/space, that they'll never compete with a tank of fuel. They will have a place, short-haul/urban most likely. You don't do growth on that though, the EROEI of the whole process is nowhere near that of a tank of fuel.
I think these folk make the mistake of assuming middle-class BAU as a starting-point 'given', then somehow produce rabbits out of hats to plug the gaps. Until we actually address population and consumption per-head, that mind-set is doomed.
And his 'you can have economic growth and environmental improvement (or even status quo) is the oxymoron of all time. Same one at the DOC one "conservation through prosperity'.
It's the media should be exposing the DOC nonsense for what it is - not riding shotgun to the oxymoron.
Consider that the energy content of 1 gallon of petrol is the equivalent to 1000 fully charged lead-acid car batteries! You can how see just how lucky we are to have access to such energy density and how hard (i.e. impossible) it will be to maintain BAU on EV alone.
So many wrongs / misbeliefs in what you say. I have pointed out such wrongs from other posters time and time again.
a) demand for fossil fuels has outstripped supply since 2005, hence oil's price, its impact and the resulting state of our global economy.
b) EVs are going no where, the cost to produce simply exceeds most ppls ability to buy.
Oil price well sit back and watch, every time we come out of a recession the demand will send the price up steeply causing a severe recession....that drops demand and the price collapses....saw tooth effect for the next 20 years with a downward trend on production and GDP.
<updated>
NB my hobbyhorse is the impact of energy cost and availability on economics....which means impact on business.
I use 1 tank of fuel a month, that is $85, if petrol goes to $4 a litre I can still afford to drive as "normal". I know ppl on similar salary who use 1 to 1-1/2 tanks per week. My fuel bill goes to $170, thier bill goes from $510 a month (and that is hurting them now) to $1000....just how do they manage with that?
Hugh P seems to think that the outer suburbs can just expand and all will be well even at that price....crazy.
A MiEV is $65k v 22k for its petrol equiv that lasts twice as long. I dont know about you but I cant afford/justify a $22k new car let alone a $65k one that lasts 1/2 as long.
regards
Ivan - better to keep your mouth shut and be thought a fool :)
That subject - jointly and severally - has been well-canvassed hereabouts.
http://en.wikipedia.org/wiki/Energy_returned_on_energy_invested
Bur EROEI is just part of the picture - tar-sand-based oil production cannot make up for major-source depletion, neither in rate nor in calorific profit.
And we've long pointed out the stupidity of "200 years" type comments. They are linear, fail to allow for peaking, cherry-picking, and attempted growth.
Do some homework please - the time for such comments has well passed.
Here's an interesting wee graph, Steven. Ivan should have had a look perhaps....
http://earlywarn.blogspot.co.nz/2013/01/us-oil-rig-count-declining.html#more
EROEI, no more, no less. Wonder if that was 'peak effort'? Seems like we are yet to experience 'peak hype'.
:)
I cant wait for you to provide the support for you assertions, I dont recall you ever doing so.. Please provide evidence of your claims, ie post URLs.
for instance this is November 2012
http://online.wsj.com/article/SB100014240529702040050045780807336694527…
Which actually says a slow down, it maybe superceeded so sure point it out.
nothing here...
lets see it please because right now you are un-justified.
1) The biggest for tar sands is EROEI, canadian sands has a EROEI of about 5 to 1 (maybe), the minimum for our economy is about 8 to 1. So this means we have to rob considerable energy off some other sector or process. The only two viable processes are we use copious natural gas or nuclear derived steam to seperate out the "oil" The latter isnt practical.
2) Its unlikely it can double in a few months without the water to do so.
3) Its leaving huge tracts of waste land from the tailings, ie even if you ignore AGW impacts
http://www.reuters.com/article/2012/11/14/oilsands-emissions-idUSL1E8ME…
its non-CO2 environmental impact is huge.
Present oil output is roughly, 1.2 growing to 3.3 in 2020. So I ask again where is this doubling?
http://en.wikipedia.org/wiki/Athabasca_oil_sands
Each year alone we need 4 to 7mbpd extra, oil sands will see 2mbpd more by 2020 or about 100,000 extra per year....its nothing, nada, zilch in the scheme of things.
200 years, moot with AGW in 100 years we wont be around at least as a society that has the capability to extract any significant mineral left.
regards
A psychologist friend of mine, opines that much of your kind of comment is fear-based.
Kind of 'if I ridicule it, I'll be above it, therefore it won't affect me'.
Good luck with that - I move in circles where the need for sustainability/resilience is well understood and the probable consequences of our present trajectory are feared, but we still laugh, and have fun.
We don't make the cognitive mistake of thinking that our happiness will alter reality, though.
Your psychologist friend couldnt be further from the mark. Its called having sport.....nothing whatsoever to do with fear.
I tend to be of the view that psychologists are about as much use as an ashtray on a motorbike.
And you can rest assured Im rather happy i dont move in your circles.......
IMF Executive Board Completes First and Second Reviews Under Extended Fund Facility Arrangement for Greece and Approves €3.24 Billion Disbursement
Press Release No.13/13
January 16, 2013
The Executive Board of the International Monetary Fund (IMF) today completed the first and second reviews of Greece’s economic performance under a program supported by a four-year Extended Fund Facility (EFF) arrangement for Greece. The completion of the review enables the disbursement of an amount equivalent to SDR 2.798 billion (about €3.24 billion or US$4.3 billion), bringing total Fund disbursements under the EFF arrangement to an amount equivalent to SDR 4.197 billion (about €4.86 billion or US$6.46 billion).
In completing the review, the Executive Board also approved waivers of applicability of end-December 2012 performance criteria, modified performance criteria, and rephased disbursements under the arrangement.
Following a political crisis that delayed implementation of the economic program, understandings were reached with the government on a fully recalibrated economic program to be supported under the EFF arrangement. Policies were modified to deal with stronger macroeconomic headwinds and to better reflect observed implementation capacity.
The fiscal adjustment path was lengthened by two years to 2016 to give Greece more time to reach the primary balance target, privatization targets were adjusted downwards to reflect weak market conditions, and the authorities specified the adjustment measures necessary to close the fiscal gap through 2014. In addition, authorities took measures to liberalize product markets and advance bank recapitalization.
The Greek government also reached understandings with its European partners on a revised financing framework, including steps to ease its debt burden.
The EFF arrangement, which was approved on March 15, 2012 (see Press Release No. 12/85), is part of a joint package of financing with euro area member states amounting to €172 billion over four years. It entails exceptional access to IMF resources, amounting to about 2,159 percent of Greece’s quota.
Following the Executive Board’s discussion, Ms. Christine Lagarde, IMF Managing Director and Executive Board Chair, said:
“The program is moving in the right direction, with strong fiscal adjustment and notable labor-cost competitiveness gains. While the program has been adjusted to take account of the deeper recession and implementation capacity, the strategy remains focused on restoring growth, competitiveness, and debt sustainability.
Forceful structural reforms and broad-based domestic support will be needed to meet challenges, alongside long-term support from Greece’s European partners.
“Greece has made progress with structural reforms, reflected in recent actions to reduce non-wage labor costs and reform the product market. However, much more remains to be done to achieve the critical mass of reforms needed to boost productivity and lower prices.
Ambitious reductions in barriers to competition are crucial. It will also be important for the government to deliver its privatization plans and to take appropriate steps to strengthen the governance of the process, if necessary.
“Efforts must continue to restructure and strengthen the banking system. With the finalization of the bank recapitalization framework, it is vital that the new monitoring and supervisory framework be made effective to protect the public interest and prevent state interference in management. Additional financing from euro area member states to allow Greece to redeem treasury bills from banks could support liquidity and credit creation.
“Greece’s fiscal effort has been impressive by any measure. The frontloaded adjustment will help bring spending back towards pre-euro levels, and has been designed to protect the most vulnerable. Looking ahead, Greece needs to radically overhaul its tax administration to bolster tax collections, fight tax evasion, and shrink the public sector, in particular through targeted redundancies.
“Steps are being taken to put Greece’s debt on a more sustainable path. Greece’s European partners have extended repayment periods on their loans and provided assurances that they will consider additional conditional measures and assistance to reduce debt to substantially below 110 percent of GDP by 2022.
“Euro area member states have committed to work together with the Greek authorities and the IMF to ensure the success of the program, reaffirmed the IMF’s preferred creditor status, and committed to providing adequate support to Greece during the program and beyond, provided that Greece continues to cooperate closely with the IMF in the implementation of appropriate adjustment policies. This would facilitate a return to debt sustainability and timely repayments to the Fund.”
Thanks Gareth. Where's Monty Python? If I was a Greek - particularly a working Greek - citizen, I'd be very afraid.
The good part is that we are about to witness what will happen here. The interesting question is whether we'll be smart enough to avoid, or whether we wake up peasants owned by a small overseas clique, using local puppets to maintain the repression.
Sorry, the law and order. Silly me.
Seems a lot of words to say,
1) yet more debt wont be repaid, or repaid later, so a bigger partial default.
2) Greeks already suffering hardship will face even more and prolonged hardship.
One has to wonder just how long this eye of the storm will last.
ie consider the delusion that one day there will be light of the end of the tunnel and even and exit from the tunnel....oh look we can see it.
Actually bad news its the headlights on the on coming peak oil train, ensuring no exit, ever just a nasty grind....
4+ years in....looks really great so far, honest it does.
regards
70 seconds at 7am...!
"A partial Gold Standard – created by the global market, and beholden to nobody – is the best of all worlds. It offers a store of value (though no yield). It acts a balancing force. It is not dominant enough to smother the system"
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100022332/a-new-gold-standard-is-being-born/
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