Monthly Archives: March 2011

Oil Fields in ArcticOil Fields in Arctic

Rosneft-BP Merger

A couple of months ago, world-renowned BP signed a deal with Russia’s major oil company Rosneft to “swap shares and jointly develop oil fields in the Arctic.” Of course it will be BP reaping most of the benefits (since it will be putting up the majority of the capital) with the Russian Rosneft company taking in 5 percent of BP and BP getting double of that, at nearly 10 percent of Rosneft.

Paying for Technology

The bottom line is, it’s BP that has the technology. So effectively, Rosneft will be paying for it. It lacks both the technological and managerial know-how needed to work “some of the most promising and largely untapped oil fields in the world.” Without this, it will be incapable of maintaining its oil production levels “as output from fields in western Siberia continues to decline.”

BP Benefits?

If that’s the case, then what’s it in it for BP? In a simple word: access. Without the merger with Rosneft, BP is denied access to fields “beyond its political reach.” So Rosneft reaps financial rewards while BP gets otherwise unprecedented access to areas previously denied it due to political reasons.

Russian Energy Issues

This merger is definitely good news for Russians, the country and its economy. But that doesn’t remove its other issues, most notably how to re-educate the people on energy saving activities. Russia is known for its abundant oil and gas reserves so an incredibly lax attitude has been taken amongst the people vis-à-vis energy conservation. But this is essential even in a country with many resources since World Bank figures show that potentially Russia could go much further as with a little bit of work it could cut its energy consumption by a staggering 50 percent. Perhaps if it did this it would be in an even better bargaining position the next time a big name company such as BP approaches it for a deal.

Where Is the IMF Headed?

With the global economy still in somewhat of a crisis and all the events in Japan impacting world finances too, it might be understandable if one were to inquire about the current position of the International Monetary Fund (IMF) today. Of course though, when it comes to such large monetary issues, where there are two people there has to be at least three opinions. A meeting held on how to make reforms to the world’s monetary system was attended by representatives from the top 20 economies.

Pleasant as everyone probably was to each other at the meeting which was held in Nanjing, China, the opinions on exactly how to actuate this change were incredibly different with China asking for a very gradual approach; France pushing for extreme change through the country’s president “ambitious agenda” presentation and America just wondering what all the fuss was about believing that it wouldn’t be too hard to make such a change.

Improving International Currency Order

The other issue on the table was how to “improve the international currency order so that it can provide a more solid foundation for the global economy.” It was proposed that a timetable should be set out for currencies like the Chinese yuan (which are emerging) to move into the IMF’s Special Drawing Right (SDR) “in recognition of their growing role in the world economy.” But America wasn’t so sure. The US executives in attendance didn’t really believe this “international effort” would be needed to fix the issues in the world’s monetary system. It actually seemed instead – according to Timothy Geithner (the country’s Treasury Secretary) that the biggest problem to contend with was the exchange rate policies inconsistencies but that even that issue wasn’t so big and complex and, in his opinion, wouldn’t need a “new treaty or institution,” but rather be solved by “national actions.”

So only time will tell what action – or lack thereof – will be taken vis-à-vis the IMF and the global economy today. Whether it will ultimately decide to act along the lines of Cautious China, Fearless France or the Uncomplicated United States of America remains to be seen.

Stressed-Out Euros and Plummeting Yens

Asia and Europe

Not surprisingly, shares in Japan have dropped amid a backdrop of attempts to recover from the “world’s worst nuclear crisis in decades.” But Japan’s tragedy didn’t impact shares in Europe which steadied following a statement made by the region’s Central Bank chief, Jean-Claude Trichet on its decision to raise interest rates in the near future. This could lead to an increase in “the value of the single currency and returns on euro-denominated investments.”

It’s not even clear exactly what’s going on with Japan financially yet. This is due to the fact that it seems like it’s going to take some time for companies from the country to put in their full-year financial reports as they need time to assess the impact from the country’s damage as well as what kind of effect the power outages across the country that are preventing them from resuming business. As well, this is impacting production in other regions such as Europe and North America as parts manufactured in Japan for them are currently on hold.

Euro: Under Pressure

Due to sovereign debt problems in the region, the euro is undergoing a significant amount of stress. The current instability of Germany’s political system following its ruling party’s loss of a key state election has not exactly helped the situation either. Last trade figures for the euro stood at $1.4075, compared with $1.4078 late in New York on Monday.

Yen Getting it Globally?

The yen is really not doing so badly considering. Of course there was everything that happened in Japan that could have resulted in its total crash. Indeed, once the Fukushima plant encountered a plutonium leak, things really could have gone completely belly-up but actually the yen firmed against the dollar. Even the unrest in Libya and the Middle Eastern “stoked some safe haven demand for the Japanese currency.” The dollar dropped a tad, at around 0.2 percent to 81.68 yen, moving away from its March 18 high after banks around the world stepped in to try and rescue the yen.

Global Budgetary Issues

Portugal Remains Silent

Things aren’t looking so great for Portugal right now, either politically or economically. The country’s recent crisis has led to an attempt on the part of its government to “rein in the budget deficit.” In turn, this has resulted in markets once again shifting their focus to Europe’s sovereign debt crises. Given all this it is quite interesting that no one has approached the IMF for help, according the organization’s department head of monetary and capital markets. This amidst worries that the country may be asking for an international bailout as was the case with Greece and Ireland just last year. But so far nothing has happened.

Japan: Stronger Than it Looks

Despite the total devastation Japan went through, according to the IMF, it seems that the country is way stronger than it looks. Given its tough economy, it is believed the country will be able to rebuild its damage and that this will only result in a “short-term drop” in its economy. Indeed according to the IMF’s Asia Pacific chief Ken Kang, “despite the extensive damage we are of the view that the economic costs are manageable.” As well, the country had a 3.9 percent growth for 2010 in spite of it contracting by 1.3 percent in the last quarter. Earthquake rebuilding costs are estimated at $309bn according to the Japanese government.

Asia and the Global Economy Today

<h3>Global Financial Crisis on the Mend</h3>

Finally there is some good news vis-à-vis the much talked about – nay, incessantly whined about – global financial crisis.  The peak was around 3 years ago but since then there have been signs of improvement, albeit at a snail’s pace and still necessitating significant assistance according to Sultan bin Nasser Al Suwaidi, a governor from the UAE Central Bank.

<h3>Price of Global Recovery</h3>

But there’s no such thing as a free lunch, right?  Such a recovery attempt is going to come at a price for the local man in the street who will be kicked in the gut by inflation and potential poverty.  There have been such major losses on worldwide stock exchanges (to the price of $30 trillion) that no one is living on Easy Street these days.   Word on the street is that recovery will only come  as a result of “global efforts.”  

<h3>China Doing Well, Relatively Speaking</h3>

On the other hand, China is making quite a mark.  It is expected that the Asian country will be able to “maintain GDP growth of 8 percent over the next 20 years, which will make it the world's biggest economy," according to the bank’s senior VP and Chief Economist, Justin Lin.  Indeed in the next couple of decades it may even become the “world’s biggest economy and “the same size as that of the US at market exchange rates in terms of nominal GDP.”

So while the world economy gradually tries to pull its feet up off the ground and remain there for a while, at a high cost to its citizens, China is growing in leaps and bounds.  Who knows what will be with Japan, following the recent disaster?  But at least one country in Asia today has what looks like a bright future ahead.  Since no one can see into the future however, only God and time will tell if this prediction will actually be realized.

Global Food Imports Impacted by Japan


<h3>Japan’s Potential Radiation Leaves Food Shortage</h3>
The consequences of Japan’s recent disasters are starting to have an impact on global food imports.  Along with America, Australia and Singapore have now been restricting food and milk imports from there, with Canada set to also pull the reins on its screening.  Those living in Tokyo have even been told not to give their young children tap water due to contamination which stands at twice the safety level; that’s 13 million people who need to worry about the safety of their drinking water.

Anywhere close to Fukushima is a worry vis-à-vis milk and vegetables that look to have major radiation above safety levels.  According to Singapore’s Agri-Food and Veterinary Authority, there have  not been any food imports from Japan’s affected regions following the Fukushima plant disaster.  There have of course been major attempts at stabilizing this plant but it’s taking time.  
<h3>Radioactivity Issues to Impact Food Imports</h3>
There are substantial attempts now to screen Japan’s food imports for radioactive presence, especially vis-à-vis fish and shellfish.  Indeed, the Food Standards Agency (FSA) is now working to do just this, with the assistant of port health authorities and other governmental departments.


If Japan is prevented from importing foods, this will have a further negative impact on the country’s economy.  And right now, even though the United Kingdom only receives 0.1 percent from Japan, if any of that is found to have illegal radiation levels, it will not be able to enter the country.  So now food authorities in Japan are discussing the matter with the FSA to find a solution.  
Japan clearly has a long way to go in its recovery. The worst of course is the daily increase of fatalities.  But from another perspective, what must be remembered is that it has a long road back to becoming the world economic superpower it once was.

Japan Tries To Recover Its Gems

 

<h3>Diamonds Are a Girl’s Best Friends</h3>

If anyone knows that fact it’s Tiffany…as in Diamond-buff Tiffany.  The company just publicized their staggeringly juicy figures for fourth quarter earnings of $181.2 million ($1.41 per share) which is quite a step-up from the same quarter of last year which was $140.4 million ($1.10 per share).

Despite these great figures it seems like this trend is not worldwide, especially Japan.    But that’s not all that surprising; diamonds are no doubt the last thing on the Japanese’s mind.  Tiffany expected sales to drop in the country by 15 percent this quarter which will lead to a depletion of the company’s earnings forecast for the first quarter to $0.57 per share.

<h3>Disaster Hits; Diamonds Drop</h3>

News from other diamond companies was that Gem Diamonds may possibly merge with Lucara Diamond Corp. And despite what is going on, investment from Japanese companies in Thailand doesn’t look like it will decrease and may even increase in the near future as companies in Japan increase foreign investments following their earthquake and tsunami.  Indeed, it has been confirmed that there will not be a depletion of investments in Thailand by the Japanese as the country is set to plough ahead on its long road to recovery, according to chairman and CEO of Japan External Trade Organisation (Jetro), Yasua Hayashi.

<h3>When Spending Pays</h3>

At the end of the day while it’s tempting to save monies following a disaster, the only real way to rebuild an economy is by spending.  This, the Japanese government recognizes.  It is set to actually “increase its budget spending” in an attempt to “kickstart [the] economic recovery.”

Perhaps sooner than they know it the Japanese will be out buying their favorite gems once more.  The economy has to recover and once it does, diamonds could become the Japanese girl’s best friend again.

 

Optimism at the 3rd Annual Agribusiness in Ukraine Conference

Agribusiness in Ukraine is a key, rapidly growing industry. Each year, hundreds of leading global industry participants gather at the Intercontinental Hotel in Kyiv for a conference, “Agribusiness in Ukraine” to discuss relevant strategic issues facing the ongoing development this dynamic economic sector in Ukraine, which is extensively blessed with some of the most fertile farmland in the world. It is expected that in the next few years, agribusiness will comprise up to 30% of Ukraine’s GDP.

Leading investors in the sector such as NCH Capital, co-founded by George Rohr and Moris Tabacinic; Horizon Capital’s Irina Starodubova; and AgroGeneration’s Charles Vilgrain are monitoring evolving government policies and regulations that will ultimately attract significant new Western capital to the sector. Other topics on the conference agenda included challenges related to food safety and the urgent need for expansion of the country’s infrastructure and agribusiness logistics capacity. During the March, 2011 conference, an array of major industry players explained their views on strategic development of agrarian companies. Those who presented included: Leonid Kozachenko, the President of the Ukrainian Agrarian Confederation; Victor Ivanchyk, the CEO and Founder of Astarta Holding; and Peter Thomson, Deputy CEO of Ukrainian Agrarian Investment.

Britain’s Employment Figures Vis-à-vis Japan’s Tsunami

Brits Not Getting British Jobs?

According to official figures, a staggering 80 percent plus of jobs were given to individuals not born in Britain.  Last year, figures were 173,000 for those getting jobs not born and bred in the country with only 39,000 (less than one in five) being given to the Brits.

Foreign Immigration Issues

This leads to the question about how much foreign immigration should be allowed to come into Britain.  According to Sir Andrew Green (from the think-tank MigrationWatch), “these numbers point out the importance of controlling foreign immigration and of driving up the skills of British workers and the incentives for them to take the jobs.”

Britain’s Road To Recovery?

But ultimately what does this all mean for Britain trying to get out of its economic slump, along with the rest of the world?  Apparently not great.  Such figures are painting quite a “bleak picture of a jobs market struggling to recover from a deep recession and facing a faltering recovery.”  Indeed, it has been the “jobless and joyless recovery,” according to chief economist at the Institute of Directors, Graeme Leach.  Unemployment in Great Britain has not reached this high in 17 years, standing at 2.53 million.

Japan’s Tsunami Impacting Britain’s Economy

The timely question being asked now by Brits, is how is Japan’s recent tsunami crisis going to further impact the money in their pockets?  According to managing director at Chelsea Financial Services Darius McDermott, “Japan has always been a cheap market and the tragic events of the last few days have reduced prices further.”  He thus advises “putting money into [the country’s] companies actually helps support its economy,” thus urging Brits not to shy away from doing just that in the face of Japan’s tragedies.  
In conclusion, Britain can clearly be accused of creating some of its own economic problems.  Being paranoid about how it will be impacted by economic issues throughout Asia is not productive or constructive.  It is time to band together to help the entire world move through the global economic crisis successfully as ultimately this is the way all countries will reap the most benefits.

Apple Struggles to Please the World

Could it really be true?  Is it possible that popular computer-giant company Apple is actually experiencing dissatisfied customers?  Well, yes.  And no.  Yes and no to be exact.  The only reason Apple and dissatisfied customers may be used in the same sentence is because their latest product – the iPad 2 – isn’t being produced fast enough for the company’s salivating customers.  
<h3>Samsung to Blame for Apple’s Issues?</h3>
Currently waiting time statistics for the new tablet stands at five weeks online at www.apple.com.   The question being asked, is, who is to blame?  Is it solely Apple, or is there something else involved?  Apparently so.  Since Apple and Samsung diluted their relationship things have gone a bit sour.  This was probably caused by the difficulties Samsung was encountering while trying to get the new A5 processor to meet Apple’s demands.
<h3>Tsunami Not Impacting iPads 2?</h3>
No matter what is going on in the world – earthquakes, tsunamis and the letdown of the global economy – it seems people still want the latest and best in technology.  Apparently Motorola is set to send some XOOM units to Europe and Asia in the next few weeks.  Indeed the company is set to sell around 500,000 units of the Atrix during the first quarter of this year which for sure is more than original expectations.
Apple’s inventions are close to genius and are marketed incredibly well.  Whatever is going on in the world, and in one’s personal life, it is thus clear that a good product such as the iPad 2, will always sell and customers will only be dissatisfied if they have to wait for any stretch of time to be the owner of this cool new tablet, whether they are living comfortably in Europe, or in tsunami-torn Asia.