The Nigerian economy has in recent times been battered on all sides. Its major source of income, crude, has lost almost 100 per cent of its value in a little over a year and is not seen to improve soon. The country’s economy has been downgraded by many rating agencies and some have gone as far as removing it from their watch list entirely.

The naira, the official currency of Nigeria, has not been spared the bashing. It has become one of the worst performing currencies on the African continent while the nation’s external reserves meant to be a buffer in stormy times has neared the red alert stage.

These are some of the major challenges the President Muhammadu Buhari-led government has been confronted with since it took the reins of power on May 29, 2015.

Efforts so far put in place by the government have not proved useful in pulling back the economy from the brinks as well as saving the naira from a free fall.

Although the discussions the IMF boss had with President Buhari, the Senate leadership and other stakeholders during the visit appeared harmless on the surface as reported in the media, there was palpable apprehension among stakeholders, many of which are still trying to unravel the real intent of the visit.  Impact of Lagarde Visit on Nigeria

Weaker-than-expected market conditions may keep the Federal Reserve from raising rates as much as predicted in 2016 as company earnings and the global economy will remain strained.

Tumbling commodity prices and economic sluggishness may continue to limit profit growth.  Flat to modest gains for U.S. equities ahead as slow U.S. expansion won’t be enough to shake the headwinds from global economic turmoil and the fall in energy prices.

Crude oil’s plunge has fueled a flight from risky assets around the world amid mounting concern that China’s policy interventions won’t revitalize growth. At the same time, the Fed is tightening monetary policy. Two weeks into 2016, the Standard & Poor’s 500 Index has dropped 8 percent, falling for a third straight week to the lowest close since August. The index is off to its worst annual start on record.  Will the Fed keep to its suggestion that interest rates will slowly rise?

In December, Fed Chair Janet Yellen and her colleagues on the Federal Open Market Committee elected to raise the benchmark federal funds rate from near zero, where it had been held since December 2008. The median committee member projected the central bank would raise interest rates four times in 2016, according to materials released following the meeting.

Divergence

Jeffrey Gundlach, founder and chief executive officer of DoubleLine Capital, told Barron’s the Fed may be forced to ease again after lifting rates one more time, given the uncertainty in the economy. Investors shouldn’t ignore the divergence between junk bonds and the S&P 500 Index, which is pointing to a bear market, he said.

The U.S. economy will probably grow by 2 percent this year, Gabelli said, powered chiefly by a stronger consumer. Stock and energy prices will look stronger heading into 2017.

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Oil drilling in the US under pressure as the price of oil plummets.  The end of oil is not on us, but the rocky road to alternate forms of energy is well underway.

Paragon Offshore said it has elected to defer an interest payment of $15.4mm that is due today. The payment is due on the company’s $457mm senior unsecured notes due in 2022.

If the company is unable to reach an agreement with its creditors in the next 30 days, repayments on the 2022 notes and revolver could be accelerated causing a default and making Paragon Offshore the second offshore driller to enter bankruptcy this downcycle (following Hercules Offshore). Paragon’s $750mm cash balance is less than the $1.2bn outstanding on its revolver and 2022 loan.

The reason Paragon has such a significant cash balance is that the company drew down substantially all of the available borrowing capacity on their revolver on September 3, 2015 – a step to try to preserve liquidity and give them leverage in discussions with borrowers.

Also today, Seadrill announced an agreement with DSME shipyard to defer the delivery of two ultra-deepwater drillships. The West Aquila and West Libra will be pushed out to 2Q18 and 2Q19, respectively.

Offshore drillers have delayed delivery many times this downturn. But what is new here is the reason. Earlier deferrals often cited the looming oversupply and poor contracting prospects for newbuilds.   A total of $5 billion in U.S. shale writedowns. BHP Billiton said Thursday that it expects an impairment charge of $4.9 billion (post-tax, or ~$7.2 billion pre-tax) against the value of its shale assets in the US, and Tokyo Gas Company said it expects to writedown $90 million on its US shale gas project in the Barnett Shale.

Cass R. Sunstein writes:  In some circles, “redistribution” of wealth has become a dirty word, and recent efforts to make the tax system more progressive have run into serious political resistance, above all from Republicans. But whatever your political party, you are unlikely to approve of the illegal use of tax havens. As it turns out, a lot of wealthy people in the United States, Europe, and elsewhere have been hiding money in foreign countries—above all, Switzerland, Luxembourg, and the Virgin Islands. As a result, they have been able to avoid paying taxes in their home countries. Until recently, however, officials have not known the magnitude of that problem.

But people are paying increasing attention to it. A vivid new documentary, The Price We Pay, connects tax havens, inequality, and insufficient regulation of financial transactions. The film makes a provocative argument that a new economic elite—wealthy managers and holders of capital—is now able to operate on a global scale, outside the constraints of any legal framework. In a particularly chilling moment, it shows one of the beneficiaries of the system cheerfully announcing on camera: “I don’t feel any remorse about not paying taxes. I think it’s a marvelous way in life.”

Gabriel Zucman, who teaches at the University of California at Berkeley, has two goals in his new book, The Hidden Wealth of Nations: to specify the costs of tax havens, and to figure out how to reduce those costs. While much of his analysis is technical, he writes with moral passion, even outrage; he sees tax havens as a “scourge.” His figures are arresting. About 8 percent of the world’s wealth, or $7.6 trillion, is held in tax havens. In 2015, Switzerland alone held $2.3 trillion in foreign wealth. As a result of fraud from unreported foreign accounts, governments around the world lose about $200 billion in tax revenue each year. Most of this amount comes from the evasion of taxes on investment income, but a significant chunk comes from fraud on inheritances. In the United States, the annual tax loss is $35 billion; in Europe, it is $78 billion. In African nations, it is $14 billion.  Parking Money

by Rachel Gold

Federico Fubini wries:   RePEc (Research Papers in Economics) arguably provides the closest thing to a credible hierarchy of economists, not unlike the ATP’s rankings of professional tennis players. The site, entirely open and free maintains a decentralized online database of around two million items of economic research, including working papers, journal articles, books, and software. Its index of influence assesses the number of citations for each author, weighted by impact and discounted by citation age (otherwise, Adam Smith and Karl Marx would likely still top the list).

Because the ranking is updated every month, RePEc enables one to track which economists are viewed by their peers as the most influential over time. So I compared the rankings from December 2006 and September 2015 to see whether the RePEc index had evolved along with economic reality.

It had not. Despite the profound – and largely unpredicted – financial and economic turmoil of the intervening decade, the intellectual influence of those whose theories suffered the most evidently remains undented.

After a succession of bursting multi-trillion-dollar credit bubbles, you might wonder what to make of Robert Lucas’s view that rational expectations enable perfectly calculating “agents” to maximize economic utility. You might also want to rethink Eugene Fama’s efficient markets hypothesis, according to which prices of financial assets always reflect all available information about economic fundamentals.

You must not be an economist. In fact, Lucas and Fama both moved up in the RePEc rankings during the period I examined, from 30 to nine and from 23 to 17, respectively. And the persistence at the top is striking across the board. Among the top ten economists in September 2015, six were already there in December 2006, and another two were ranked 11 and 13.

What is remarkable about this is the difference between the pace of change in the ranking of economists and in the economy itself. Entry barriers among the world’s ten richest people and ten most valuable companies seem to be far lower than among the top ten economists. According to Forbes, only two of the ten wealthiest individuals in 2015 (Bill Gates and Warren Buffett) were in the top ten in 2006. And just three companies – ExxonMobil, General Electric, and Microsoft – made the top ten in terms of market capitalization in both 2006 and 2015.

In the rankings of economists, by contrast, criteria such as gender or geographic origin confirm the overall inertia. Only four women made the RePEc top 200 in September 2015, compared to three in December 2006, and two were included on both lists.

The rest of the RePEC top 200 tend to be Caucasian men in their 60s and older – roughly three decades past the age when an economic or scientific author is generally most innovative, according to research by the economist Benjamin Jones. No black person, American or otherwise, is in the top 200.

How surprised should we be that, even after the Great Recession cast grave doubt on the rational-market theories so dominant a decade ago, the top tier of academic economics remains largely unchanged?

Might the world’s leading economists be so keen to protect their own ideas that they ignore (or, worse, stifle) innovation from unexpected quarters?

For a group of people so committed to free markets and so enamored of “creative destruction,” that is a question that urgently needs to be addressed. The answer may hold enormous implications not only for intellectual growth, but also for human welfare.

Christine Lagarde writes:  November’s terrorist attack in Paris and the influx of refugees into Europe are but the latest symptom of sharp political and economic tensions in North Africa and the Middle East. And these events are by no means isolated. Conflicts are raging elsewhere, too, and there are close to 60 million displaced people worldwide.

Moreover, 2015 was expected to be one of the hottest years on record, with an extremely strong El Niño that has spawned weather-related calamities across the Pacific. And the arrival of interest-rate normalization in the United States, together with China’s slowdown, is contributing to uncertainty and higher economic volatility worldwide. Indeed, there has been a sharp deceleration in the growth of global trade, with the drop in commodity prices posing problems for resource-based economies.

One reason that the global economy is so sluggish is that, seven years after the collapse of Lehman Brothers, financial stability is not yet assured. Financial-sector weaknesses linger in many countries – and financial risks are growing in emerging markets.

Putting all of this together, global growth in 2016 will be disappointing and uneven. The global economy’s medium-term growth prospects have weakened as well, because potential growth is being held back by low productivity, aging populations, and the legacies of the global financial crisis. High debt, low investment, and weak banks continue to burden some advanced economies, especially in Europe; and many emerging economies continue to face adjustments after their post-crisis credit and investment boom.

This outlook is heavily affected by some major economic transitions that are creating global spillovers and spillbacks, particularly China’s transition to a new growth model and the normalization of US monetary policy. Both shifts are necessary and healthy. They are good for China, good for the US, and good for the world. The challenge is to manage them as efficiently and as smoothly as possible.  Lagarde Assesses the State of the World

Yanis Yaroufakis wriets: Imagine a depositor in the US state of Arizona being permitted to withdraw only small amounts of cash weekly and facing restrictions on how much money he or she could wire to a bank account in California. Such capital controls, if they ever came about, would spell the end of the dollar as a single currency, because such constraints are utterly incompatible with a monetary union.

The reality of Greece’s two currencies is the most vivid demonstration yet of the fragmentation of Europe’s monetary “union.” In comparison, Arizona has never looked so good. Bifurcating Currencies