Infrastructure and Energy in Russia

Posted on November 8, 2014 by Adela Rogers

Russia possesses 18 percent of the world’s reserves in gas, 13 percent in petrol; 70 percent of its export revenues and 30 percent of its gross domestic product (GDP) are based on hydrocarbons. And 20 percent of its gas is exported to Europe. But with the price of oil now below $90, standing at $80.54 a barrel (West Texas Intermediate) and at $85.68 (Brent Crude), coupled with a drop of 1.3 percent of Russian GDP in 2013 and with zero growth forecasted, it is clear that “the old system no longer functions,” said Tatiana Mitrova.

Russia grew at 6 percent until 2009 and then fell to 0.2 percent this year, per International Monetary Fund (IMF) data. Russia’s gas production stands at 600 billion cubic meters, which is in decline. Novatek’s production is up 1,000 percent and Rosneft is in expansion. But internal Russian market demand is in decline.

In theory Russia could be a gas hub, but its storage facilities are insufficient. Sanctions have cut off investment funds. The Russian people know little about the sanctions. Within the governmnet, however, there is a move to open markets in China.

States like South Africa and Iran grew stronger after sanctions.. Russia is surrounded and its people may be ready to change their priorities. Russian energy businesses may learn to be more attentive to this shift and are prepared to turn inward and also toward China. Infrastrcture and Energy in Russia

Unemployment Rate Dips in US

Posted on November 7, 2014 by Andi Howe

Employers added 214,000 jobs in October, fewer than expected, though the unemployment rate fell to 5.8 percent, the lowest since July 2008.

The report showed 31,000 more jobs in August and September, giving the labor market a nine-month streak of more than 200,000 jobs a month, the Bureau of Labor Statistics said Friday, the longest such streak since 1995.

Voters showed Democrats their frustrations with the economy this week, sending a Republican majority to the Senate and giving Speaker John Boehner (R-Ohio) a boost in his membership in the House.

“Over and over again voters have said jobs and the economy are their top priorities,” Republican National Committee Chairman Reince Priebus said in a statement Friday. “The president said his economic policies were on the ballot, and voters clearly believe we can do better. So now is the time to get to work — so we can get more people back to work.”

Construction jobs were up 12,000 in October while manufacturing rose 15,000, good signs for the growing economy.

W-T-W.org, Women and Finance advocates an infratstructure program in the US to provide jobs for those who don’t qualify for current opportunities and to give pollitiicans time to figure out how to match jobs with qualified candidates.

Water and Abandoned US Mines

Posted on November 7, 2014 by Adela Rogers

Rachel Bales writes: Hundreds of thousands of abandoned mines litter the West: gold, silver, lead, copper. Some are left from the California gold rush; some were abandoned just a few decades ago.

Today, acidic water and heavy metals from mines slowly leach into groundwater, lakes and streams. Corrosive water destroys aquatic ecosystems. Fish – the ones that don’t die – become loaded with arsenic or mercury. People swim in contaminated lakes. They hike over contaminated soil, breathing in dust laced with lead and arsenic. There are about 500,000 abandoned mines in the U.S., contaminating tens of thousands of miles of waterways..

The worst get federal Superfund money for cleanup. The rest are left to the states, private organizations and nonprofit conservation groups to clean up. The waste site sits untouched, and acid continues to drain into nearby water.

The proposals to encourage clean up have failed for various reasons. Mostly, according to Steve Moyer of the water conservation group Trout Unlimited, it’s that no one really cares.But for locals living near abandoned mines, it is a priority. In the Sierra Nevada, which provides 60 percent of California’s water, mercury from the days of the gold rush co flowing into the Sacramento River. ”

In many cases, what happens when a group tries to clean up contaminated water is that it’ll install a sort of treatment system downstream from where contamination flows in. The system filters the toxic water and releases water that’s, say, 90 percent cleaner. But under the Clean Water Act, the cleanup group is considered responsible for the 10 percent of contamination that’s left. That puts the group at legal risk – it could be considered a polluter under the law.

In 2012, the Environmental Protection Agency issued a clarification of protections for cleanup groups. But Leon Szeptycki, a lawyer at Stanford University specializing in water quality and restoration, said the EPA guidance doesn’t include enough detail.

One of the biggest concerns is how long a group would be on the hook after installing a treatment system, he said. Many good Samaritans are local groups with limited funding. They may have the money to install a treatment system, but not necessarily to maintain it for decades to come. At what point can the group walk away? Is it liable for poor-quality water if the system breaks down in 10 years?

This uncertainty in the memo leaves organizations hesitant to test the policies. So nothing gets done.

Irish Water: Public or Private?

Posted on November 5, 2014 by Adela Rogers

Irish Minister for the Environment Alan Keely might hold a referendum to make sure that Irish water stays in public ownership. The Irish government is mired in conroversy over the furute ownership of Irish water.

Water is plentiful in Ireland, but the Irish use about as much water as Americans do. A lot. 102 gallons per person each year. Pipes have to be repaired. Someone has to pay. The people are baulking. In difficult economic times in the country, free water has become a campaign cry. The International Monetary Fund is insisting that the problem be taken care of iif Ireland is to receive funds.

Primary responsibility for that transformation falls to Irish Water, a new enterprise that consolidates the water services provided by 34 local authorities. Headquartered in Dublin, but with eight regional offices, Irish Water will work to fill a backlog of investment needs – including leak repair – that has resulted from more than a century of underinvestment in water services.

The House voted to accept a Fianna Fáil motion which stated: “That Seanad Éireann requests the Government to initiate legislation to provide for a constitutional referendum to enshrine the ownership of Irish Water to the Irish people in perpetuity.” The Seanad was ladjourned for 15 minutes after Opposition Senators protested that they did not have enough time to debate water charges.

When Cathaoirleach Paddy Burke called on Mr Kelly to respond to the debate, Independent Senator Fidelma Healy-Eames complained that she did not get an opportunity to speak. Fianna Fáil Seantor Brian Ó Domhnaill said the Government did not want to hear what the people were saying.

Meanwhile in the Dáil Mr Kenny said he agreed with Tánaiste Joan Burton that water charges should be affordable and fair.

Security Issue with Erection of Cell Towers?

Posted on November 1, 2014 by Adela Rogers

Mysterious interceptor phone towers are being erected in the US. The towers do not appear to belong to the National Security Agency.

In the US today, selling information is big business. How can Twitter, Skype, Google and Facebook offer their services free to customers? Just try opting out of information sharing. It’s almost impossible.

These towers tell your phone that none of your usual conections are available and trick you into using theirs.

NSA does’t need a fake tower to tap your phone. They just go to your supplier. The FCC announced that it was investigated the use of towers by criminals and foreign intelligence.

China: Bust or Boom

Posted on October 28, 2014 by Susan_Hall

William Pesek writes: Is China headed for a boom or bust? Depending on whom you read, the world’s most populous nation is on the cusp of either a debt meltdown, or a middle-class expans

I’ve written before about the possibility of China suffering its own Minksky moment– the point when a debt-driven speculative bubble comes to a sudden and nasty end. Yet there’s also evidence the country may be approaching something of a Henry Ford moment, when a manufacturing-based economy matures to point where workers can afford to buy the products they’re making. The reality, as unsatisfying as it may be to those looking for a dramatic headline, is probably somewhere in between.

Authors David Hoffman and Andrew Polk predict Chinese gross domestic product growth will drop below 4 percent in the next decade. At the same time, more optimistic takes from the Asia Society Policy Institute and the Rhium Group argue that financial upgrades are underway in China that could produce a more sustainable growth path. Those who fear a slowing economy might spark riots and instability also have to be heartened by new data that suggest incomes across China — which is what matters most to ordinary Chinese — are rising more than is commonly acknowledged.

For now, the best strategy for outsiders may be to look the other way, as best they can. Instead of obsessing over every tick up or down in China’s GDP growth rate, the investment world needs to give Chinese leaders time and space to implement the reforms they’ve pledged thus far.

There are many ways to take China’s pulse. Economists’ favorite reality-check indicators include HSBC’s purchasing manager’s index, rail-freight traffic, export and import data (which can be confirmed by cross-checking the numbers with trading partners), electricity-use trends and the trajectory of prices of commodities China dominates like iron ore and coal. Even if this is a non-starter, let’s at least encourage Beijing to forgo a growth target next year.

Xi’s challenge was clear last week when the global media convulsed over news China had grown the slowest in five years in the third quarter. Editors and bankers tripped over themselves to urge Beijing to do more to spur growth. This is what’s truly hypocritical: Even though everyone acknowledges that China must stop artificially pumping up its economy, markets panic at the slightest hint GDP is losing altitude — as if China were some giant company that must constantly impress us.

The last thing China should do is embark on a fresh stimulus kick to placate the nail biters: That would result merely in more debt and unproductive investment and even bigger asset bubbles. The world needs a stable China more than it needs a fast-growing one. And on that front, the economy is doing surprisingly well.

Solar Power Worldwide

Posted on October 26, 2014 by Adela Rogers

The sun could be the world’s largest source of electricity by 2050, ahead of fossil fuels, wind, hydropower, and nuclear according to reports issued by the International Energy Agency. Achieving this goal will require policy commitments by China, the United States and other nations where solar installations are cost effective.

In Munich Germany, a city of 1.4 million, intends to have 100 percent clean energy supply by 2025. The city-owned utility company is investing not only on in local-green production, but also in projects such as a solar plant in Spain and a wind farm in the North Sea. Electricity from those sources would be fed into the Europe-wide power grid.

Yellen Addresses Inequality in the US

Posted on October 22, 2014 by Adela Rogers

Janet Yellen, head of the Fed, spoke in Boston about income inequality as a major problem in the US. Ruminating on the ever-widening gap between America’s rich and poor, Federal Reserve Board Chairwoman Janet Yellen, in a widely reported speech on Friday, said: “I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”

Could have been said about the Gilded Age and the 1920s, when similar questions were raised and, incidentally, gave rise to a formulation called the “Great Gatsby curve,” the relationship between income inequality and low social mobility that recent economists came up with.

Only this time, it’s more so. “The past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the Great Depression,” Yellen said, citing the Federal Reserve’s triennial Survey of Consumer Finances, published last month, and other data.

“By some estimates, income and wealth inequality are near their highest levels in the past hundred years, much higher than the average during that time span and probably higher than for much of American history before then.”

Yellen is not the first to point this out, but the fact that it’s being made by the world’s most powerful central banker, and in such stark language, may hopefully give it some added purchase. “Stagnant or falling living standards for many families” went side-by-side with the wealthiest 5 percent’s share of total wealth reaching 63 percent in 2013, up from 54 percent in 1989.

“To put that in perspective, the average net worth of the lower half of the distribution, representing 62 million households, was $11,000 in 2013. About one-fourth of these families reported zero wealth or negative net worth, This $11,000 average is 50 percent lower than the average wealth of the lower half of families in 1989, adjusted for inflation.”

“Meanwhile, the average real wealth of families in the top 5 percent has nearly doubled, on net — from $3.6 million in 1989 to $6.8 million in 2013.”

And, a brief example of the Great Gatsby curve: “Other research tells us that inequality tends to persist from one generation to the next. … Research also indicates that economic mobility in the United States has not changed much in the last several decades; that mobility is lower in the United States than in most other advanced countries.”

So much for rags-to-riches. What can be done? While some inequality will always be with us, says Yellen, she offers offers “four building blocks of opportunity” to help level the playing field

The first two “cornerstones” focus on improving education and other resources for “children in their most formative years,” and easing the unequal debt burden a college education imposes on the less well-off. Generally speaking this will require more government spending, a stronger social safety net, and reforming how public education is paid for. Hint: Maybe it’s not through property taxes.

Building block No. 3: Start a business. “A significant source of wealth,” notes Yellen, but much harder to get, especially for those in the lower income categories, where business ownership “has fallen to a 25-year low, and equity in those businesses, adjusted for inflation, is at its lowest point since the mid-1990s.”

The editors of W-T-W.org Women and Finance are recommending a 20 year infrastructure repair and building program in the US which would take care of badly needed improvements and also employ people while we figure out how to match job readiness with available jobs.

What Does China’s Growth Cycle Really Mean?

Posted on October 19, 2014 by Adela Rogers

Keyu Jin writes: Most economists have a reason to be worried about China’s economy – whether it be low consumption and large external surpluses, industrial overcapacity, environmental degradation, or government interventions like capital controls or financial repression. What many fail to recognize is that these are merely the symptoms of a single underlying problem: China’s skewed growth model.

That model is, to some extent, a policy-induced construct, the result of a deep-rooted bias toward construction and manufacturing as the leading drivers of economic development. Today, China’s proclivity for industrial production is manifested in large-scale manufacturing and infrastructure projects, encouraged by direct and indirect government subsidies. By boosting investment and generating tax revenue for local governments, this approach has a more immediate positive impact on GDP than efforts to develop the service sector.

The disparity between China’s GDP growth which has averaged nearly 10% annually over the last few decades, and its employment growth, which has amounted to just 1-2% annually. Clearly, industrialization and export expansion alone cannot absorb China’s massive labor force.

The problem is that rapid labor-productivity growth in the industrial sector – more than 10% per year over the last two decades – is reducing the need to hire more workers. The service sector, by contrast, experienced much slower labor-productivity growth (about 5% annually over the same period), meaning that it could be far more effective in generating employment growth. In the United States, about 80% of the total labor force was in the serevice sector in 2012.

Chinese households are missing out on the benefits of economic growth. In order to cap the rise in labor costs, wages were suppressed, growing by only 5% annually over the last 20 years, even as productivity grew at an annual rate of 8.5%. Meanwhile, financial repression lowered the cost of capital. In the last decade, the average real (inflation-adjusted) return on deposits has been near zero. With about 80% of Chinese household savings deposited in banks, this implicit tax on savings has had a major economic impact, reinforcing Chinese households’ tendency to save and thus undermining consumption growth and exacerbating global imbalances.

In this way, China’s distortionary policies have helped to perpetuate a dysfunctional growth model. Wage suppression, financial repression, and an undervalued exchange rate subsidize exports and production, at the expense of households, which are thus compelled to save, weakening domestic demand.

Breaking the cycle will not be easy, but there is no other way to address many of the most pressing problems confronting China’s economy. Indeed, the current growth model is also taking a heavy toll on the environment, with pollution threatening the population’s health, especially in urban areas.

Restructuring the economy is perhaps the most urgent – and most difficult – challenge facing China’s leaders today. Given that the current distortions are interlinked, they may need to be addressed simultaneously. China’s gradualist approach may no longer work.

Gas Tax for Infrastructure Repair in the US?

Posted on October 17, 2014 by Adela Rogers

The Bloomberg editors are recommending an increase in the gas tax to fund infrastructure repairs. Concern about infrastrucutre repair in the US is commendable, but we must begin to tackle the issue in a broader context.

W-T-W>org Women and FInance is recommending a twenty-year program funded by the federal government and administered by states in which tolls would pay for the repairs and money to be saved by new job creation would be factored into the costs and savings of the project.

The problem with gas taxes, which might be lievied as the cost of gas goes down, is that people who gas up to go to their jobs or trasnport goods may be disproportionately taxed. The gas tax should also be legally pegged to infrastructure repair.