Will oil prices become subject to supply and demand? OPEC’s unwillingness to manipulate the price of oil by pumping less gas hints that the future may reside in the market.
Saudi Arabia appears to be displacing Russian crude going into refineries in Poland and Sweden Producers who depend on a higher price per barrel of oil have cut back by $150 billion this year. Eventually diminished investment will diminish output.
Falling oil prices are increasing consumption, which may not be good for carbon levels. In the developing world, however, the amount of oil consumed in relation to economic output is declining. China is becoming less energy-intensive. Rapid depletion in shale oil fields may make investments in shale less attractive, in addition to the environmental objections and the low cost of fuel oil. Who knows? Only the Saudis!
Public servants are the butt of jokes the world over, but they are a real curse in the Middle East, according to a recent Economist report. A routine legal name change in Iraq can tae asmany as 18 court appearances. Starting a business in Egypt requires permits from 78 agencies.
How did this impass come to be? Dictators and one party states have treated the bureaucracy as employment positions for family and friends. Funding these often non-fuctioning employees drains coffers and drives productive workers to the private sector.
Merit testing for jobs and realistic measures of job performances might help get governments functioning again if there is a political will. Tax-authority and unionized workers have protested against change. In Lebanon it was feared that recruiting more competent workers would unbalance a fragile system.
The only answer may be making bureaucrats responsible to citizens at the local level.
X-ray vision, a comic book fantasy for decades, is becoming a reality in a lab at MIT.
A group of researchers led by Massachusetts Institute of Technology professor Dina Katabi has developed software that uses variations in radio signals to recognize human silhouettes through walls and track their movements.
Researchers say the technology will be able to help health care providers and families keep closer tabs on toddlers and the elderly, and it could be a new strategic tool for law enforcement and the military.
“Think of it just like cameras, except that it’s not a camera,” said Fadel Adib, a researcher on the MIT team developing the device.
“It’s a sensor that can monitor people and allow you to control devices just by pointing at them,” he said.
Work began in 2012 to determine how wireless signals could be used to “see” what’s happening in another room, said Katabi, who directs the MIT Wireless Center.
“At first we were just interested . . . can you at all use wireless signals to detect what’s happening in occluded spaces, behind a wall, couch, something like that,” Katabi said.
An RF-Capture device displays the signal on a screen, where the person’s movements can be tracked in real time. It depicts the target as a red dot moving around the room, occupying a chair and speeding up or slowing down.
The wireless signals used to track a person’s motions also can measure the individual’s breathing and heart rate — and potentially identify the person based on the shape of his or her skeleton, said researcher Zach Kabelac.
“The person won’t be wearing anything on them, and the person it’s tracking doesn’t even need to know the device is there,” Kabelac said.
“If something unfortunate happens to them, like a fall, the device will contact the caregiver that they chose to alert” by generating a text message or an email, he added.
That makes health care applications especially interesting.
A company set up to market the technology, now dubbed Emerald, will spin out of the MIT lab next year, with a goal of marketing the device early in 2017, and it’s expected to sell for $250 to $300, Adib said. The team is working to make the device smaller and to develop an interface that will let users configure it through a smartphone app.
The technology raises questions about privacy rights and intrusion, and Adib said the team gave serious thought to those implications..
Brian Dumaine writes: Famed investor Paul Tudor Jones believes that we’re headed for trouble if we don’t shrink the wealth gap. His solution? Pressure companies to be more just.
Jones, 60, who has an estimated net worth of $4.5 billion, was having coffee one day with Deepak Chopra, the holistic medicine advocate and bestselling author, who knows the Wall Street titan through Jones’s wife, Sonia, an Australian by birth who runs a yoga and wellness business. Chopra had grown deeply concerned about income inequality. “I had been going to Occupy Wall Street meetings and saw the rage but didn’t see the solutions,” he says.
During a spirited discussion with Jones about America’s disappearing middle class, Chopra, who teaches a course at Columbia Business School called Just Capital & Cause-Driven Marketing, brought up an idea one of his students had suggested in class: create a stock market index that would drive capital to companies that treated their employees and communities well. The concept of a market-driven approach appealed to Jones, the onetime cotton trader who founded Tudor Investment Corp. in 1980, became famous by predicting the crash of ’87, and today manages $13.8 billion. “I thought, Wouldn’t this be a great thing to do?” says Jones.
Jones did some quick research—and was both surprised and more than a little embarrassed to discover that taking a values-based approach to the stock market was hardly an original thought.
Then Jones had a different idea: Why not rank America’s top 1,000 companies based not on what Wall Street values—profits—but rather on what Main Street wants? If the list caught on, he reasoned, companies might someday vie to be ranked higher than their rivals. And to do so they would have to pay workers more fairly, make products more sustainably, and give more back to the community.
To put his plan into action, Jones earlier this year created a nonprofit called Just Capital. The mission is to research what makes people like or dislike corporations and then to create an annual list—which will debut in the fall of 2016—tentatively called the Just 1000. “We want to give the American public a voice where it’s never had a voice,” says Jones. “It’s going to be crystal clear and unbiased and without prejudice. And it’s going to drive corporate behavior.”
Skeptics might wonder what kind of difference a simple list can make. But Jones believes that harnessing public opinion can prove powerful—and that changing the behavior of big companies could have a cascading effect.
The use of biometrics to confirm identity is on the rise.
The Atlanta Fed reports: The use of physical characteristics to identify people – biometrics – is older than flying machines. Seeking a way to identify repeat criminal offenders so as to mete out harsher punishments, a police inspector in England in the 1880s devised a system of measuring criminals’ arms, heads, and other features. Then crime fighters began fingerprinting suspects a couple of decades later.
Today, a smart phone can have a fingerprint reader to prove you’re you when you make a payment over the phone. Consumers can now choose from more than a dozen “mobile wallets,” essentially payment mechanisms built into mobile phones. Numerous big technology and financial firms have rolled out payment apps that use biometrics. And many information security experts contend,that it is time to retire passwords as an authentication tool.
A boom in mobile payments and biometrics, long promised by industry boosters, could be dawning. That was among the themes that emerged from the Risk Forum’s November forum, “Banking on Biometrics: Bye-Bye Passwords?” The one-day forum explored the present and potential of biometrics as a verification tool for payments and banking.
Verifying a person’s identity generally encompasses some combination of three elements:
Something you have (a payment card, for example)
Something you know (a PIN or password)
And something you are (your fingerprint, iris, and so on)
So far the first two have served the U.S. payments system reasonably well, Lott pointed out. Some of the technological advances are fascinating. Many sensors now include “liveness” detection. For instance, many facial recognition sensors require that you blink to be sure your face picture is real and not a three-dimensional mask, and advanced fingerprint readers detect blood flow.
Meanwhile, consumers have become more receptive to biometrics, Jain said. That growing level of acceptance seems to be evident in the marketplace. USAA, the first financial services firm to offer fingerprint, voice, and facial recognition for mobile banking apps, has garnered more than a million users for its biometric system.
And smart phone payment systems appear to be catching on. Jain said Apple Pay is supported by more than 300 banks, while Android Pay is accepted at more than a million stores.
“Biometrics are changing the way we conduct everyday transactions,” Jain said, “and now the focus is on payments.”
Nothing, including biometrics, promises 100 percent security. One of the keys to solid authentication, several conference speakers noted, is to figure ways to block imposters even if they have compromised biometrics, which sometimes can be done with photos or even 3-D masks on less-sophisticated systems.
The real key to biometrics becoming ubiquitous is straightforward: they must offer real security and be easy to use.
Russian oil keeps pumping in Siberia, despite crash in oil prices.
Stephen Bierman writes: In the fight for market share among the world’s oil producers this year, Russia wasn’t supposed to be a contender.
But the world’s No. 3 producer has been pumping at the fastest pace since the collapse of the Soviet Union, adding to the flood on an already-swamped market and helping push prices to the lowest levels since 2009.
Russia’s unexpected oil bounty this year is the result not of a new Kremlin campaign but of dozens of modest productivity improvements across the sprawling sector. Even pressured by plunging prices, as well as U.S. and European Union sanctions that cut access to much foreign financing and technology, Russian companies have managed to squeeze more crude out of some of the country’s oldest fields. They have also brought new projects on line, offsetting steady declines in its core producing region of West Siberia.
With a rise of 0.5 percent in the first nine months of 2015, Russia hasn’t boosted production as much as its larger rivals, the U.S. (up 1.3 percent) and Saudi Arabia (up 5.8 percent), according to Citigroup Inc. But having ignored OPEC’s calls earlier this year to join efforts to support prices by pumping less, Russia is keeping up with the cartel.
Bashneft, with some of the oldest reserves in Russia, has been the biggest single contributor to increased crude output this year, thanks largely to low-cost efforts to squeeze more oil out of regions that have been in production for decades. The results have helped make Bashneft’s shares among the best performers on Russia’s stock market in the last 12 months.
The other big boosts to Russian production this year have come from a few mid-sized new fields like those of Severenergia in the Arctic Yamal region. Co-owners Novatek OJSC and Gazpromneft PJSC invested in the $9.2 billion project back when oil prices were high. With most of the capital already committed, operating costs now are relatively low and output of gas condensate, a light and especially valuable form of crude, is up five-fold this year.
One side effect of falling oil prices — the 52 percent plunge in the ruble over the last two years — has helped Russian oil producers, chopping their costs in dollar terms since between 80 and 90 percent of their spending comes in rubles.
Relatively high taxes on oil have actually sheltered the industry from much of the impact of the drop in prices. Bashneft and other Russian companies working fields in the Volga River basin — some of the first to be discovered in Russia early in the last century — are benefiting from Soviet inefficiency.
Custom-designed pumps — made locally and thus not affected by sanctions — help draw oil out of narrow holes, he added. Every month, the company ranks potential drilling and other projects by the minimum oil price needed to make them profitable. Only the above-water ones make the grade, a kind of flexibility and discipline typically associated with western companies.
Across the industry, companies have boosted production drilling to increase output. While the country’s biggest west Siberian fields are showing declines, smaller new projects have more than offset them this year.
Gainers include Irkutsk Oil Co. in Siberia and Exxon Mobil Corp.-led Sakhalin-1 in the Sea of Okhotsk.
In the Arctic, Novatek started production at the Yarudeyskoye oil field this month. The field will “rapidly reach” planned output of about 70,000 barrels a day, the company said early this month.
Though only about 0.7 percent of total Russian oil output, that gain is likely to be enough to keep the record pace going, said Alexander Nazarov, an oil and gas analyst at Gazprombank.
Raymond Colitt and Anne Edgerton write: Nelson Barbosa could, of course, turn out to be the man who fixes Brazil’s finances, tames soaring inflation and revives the sinking economy, but investors sure aren’t betting on it.
He replaces Levy, the market’s golden boy, with his University of Chicago-training, asset-manager experience and reputation as a fierce budget cutter. Barbosa, while generally respected by analysts for his technocratic skills, isn’t seen as being quite as tight-fisted on spending, a perception he only reinforced when suggesting that he was amenable to granting subsidies to some industries.
What’s more, the crisis that Barbosa will step into when he’s officially sworn in is markedly more severe than it was a year ago. The economy is now shrinking at a 7 percent annual pace; the budget deficit has swelled to the widest in at least two decades; the country’s investment-grade rating is gone; Congress is bogged down in impeachment proceedings against President Dilma Rousseff; and the greatest corruption scandal the country has ever known is showing little sign of abating. If Levy couldn’t stem the crisis when it was more manageable before, what reason is there to believe Barbosa will now?
Levy struggled almost from the outset, though, to reverse the widening budget gap. With legislators focused on the corruption scandal — which began at state-run oil giant Petrobras and has landed many executives and politicians in jail — little attention was paid to his pleas to cut spending. His relentless push in Congress to curtail labor and pension benefits earned him scorn from many members of the ruling Workers’ Party, which traditionally championed a robust social safety net.
Even some business leaders started to express concern that Levy’s struggles to shore up fiscal accounts were blinding him to the need to stimulate growth. As the country’s finances worsened and the economy slipped deeper into recession, markets sank month after month. The currency is down 33 percent against the dollar this year. Prices on the government’s 10-year bonds have dropped to 82 cents on the dollar from 99 cents when Levy took office back in January. The yield has climbed to almost 7 percent.
Brazil hasn’t posted a primary budget surplus since April
The task of negotiating with Congress now falls to Barbosa, a 46-year-old economist who studied at the New School for Social Research in New York and started his career as a civil servant at the central bank in the mid-1990s.
The strength of the minister’s ties may get tested quickly. Barbosa has said he’d try to push through plans to simplify taxes and cap pension spending. He said in an interview with Estadao newspaper over the weekend he would win approval by May of a tax on banking transactions. Those are proposals that Levy never managed to get Congress to back.
Andrew Sheng and Xiao Geng write: Nobel laureate economist Douglass North applied economic theory to history to gain insight into institutional and social change. His theoretical framework could prove invaluable to China’s leaders as they navigate the next phase of institutional change.
North identified three lessons that policymakers should draw from his research.
First, what determines economic performance is the mix of “formal rules, informal norms, and enforcement characteristics.” Second, polities have a major impact on economic performance, because they “define and enforce the economic rules.” And, finally, adaptive efficiency (how the rules are changed), not allocative efficiency (the most effective rules right now), is the key to long-term growth. China’s Institutional Change
