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End of the Asian premium on oil?

Citibank has been saved 3 times in 30 years!

Citibank has been saved 3 times in 30 years!

Resource-scarce economies, such as China, India, Japan and South Korea, have long been heavily dependent on oil from the Middle East, giving producers there the upper hand in pricing. The surcharge, known as the “Asian premium,” has averaged about $1.20 a barrel since 1988.

Now, the tables are turning, handing an advantage to the region’s fast-growing countries in the form of relatively less expensive energy.

In March, Saudi Arabia, the world’s largest oil exporter, sold its Arab Light crude to Asia for $6.37 less per barrel than it charged European buyers … Kuwait and Iraq also followed suit … though official statistics aren’t yet available.

The latest flip in prices has led many analysts to conclude that fundamental changes in the global oil trade will soon eliminate the Asian premium for good, eliminating a drag on the region’s economy. In 2008, for example, Asian customers bought about 14 million barrels of oil a day from the Middle East, according to BP Statistical Review of World Energy. The premium averaged $8.08 a barrel that year, amounting to about $41 billion. (via Economic Clout Earns Asia an Oil Discount – WSJ.com).

Economic miracles

Going down the drain!

Going down the drain!

One by one, each Asian country has been able to pull itself out colonial cess-pit that seemed bottomless at one point of time. Barring a few like Pakistan, Bangladesh, Afghanistan, some Central Asian republics, Asia is truly on its way out of the 20th century misery.

There are two economic miracles. One we have seen.

It is a miracle that Asia has been able to come out of its poverty pit, where it found itself in the 20th century – especially after WW2.

The greater miracle will be when Europe and Middle East find a way to rebuild their economic model – without the Asian premium!

And that is the miracle we may not see!

The road from Copenhagen | Ed Miliband | Comment is free | The Guardian

December 26, 2009 Leave a comment
Stop this scaremongering! We got enough problems of our own to worry about yours!

Stop this scaremongering! We got enough problems of our own to worry about yours!

We did not get an agreement on 50% reductions in global emissions by 2050 or on 80% reductions by developed countries. Both were vetoed by China, despite the support of a coalition of developed and the vast majority of developing countries. Indeed, this is one of the straws in the wind for the future: the old order of developed versus developing has been replaced by more interesting alliances. (via The road from Copenhagen | Ed Miliband | Comment is free | The Guardian).

Old bulldog … old tricks

President Bharrat Jagdeo. *Photo credit: thereddsite.files.wordpress.com

President Bharrat Jagdeo. *Photo credit: thereddsite.files.wordpress.com

Gordon Brown, The British Prime Minister declared, “today, together with Norway and Australia, the UK is taking a further step to a Copenhagen agreement: publishing a framework for the long-term transfer of resources to meet the mitigation and adaptation needs of developing countries.” (Paris Hilton note, who the PM of Britain is!)

More interesting was when Europe went ahead and committed funds and disbursed carbon credits. Small amounts – but nevertheless a significant step! So, what gives! How come Europe was disbursing – not serious money, but more than pocket money, without using IMF, World Bank, et al. No UN! How come?

Anglo-Euro efforts

The joint trojan operation (Norway, Australia and UK + EU) against China (or was it India?) was immaculately pursued. Bernarditas de Castro Muller, former lead coordinator and negotiator for the G77 and China in Copenhagen, writing in the Guardian of UK, reported,

The UK financed workshops in selected vulnerable countries and deployed climate envoys. One of its envoys told intransigent negotiators that the UK would mobilise a group of vulnerable countries to pressure the major developing countries – such as China, Brazil and India – into committing to emissions reductions, contrary to their obligations under the climate treaty.

The EU for example made sustained attempts to influence and pressure developing nations – something that only served to increase their cohesion. They bribed where they could, promising the same recycled financing and maybe more to come if countries bent to their demands. And they bullied when they could not bribe.

India’s neighbours, like Maldives, Bangladesh were co-opted – as were countries, led people of Indian extract like Caribbean island of Guyana, Mauritius. The strategy was to isolate China and pair India with the ‘vulnerble 14’ – like Maldives, Guyana, Bangldesh, etc. For instance, alongwith Mohammed Nasheed, Bharrat Jagdeo in Guyana, was faultlessly pursued. Long ignored and isolated, countries like Guyana suddenly found themselves in the spotlight.

Agreeably surprised, they wondered how Guyana “received a disproportionate amount of coverage and access given its size for its progressive and leading stance on climate change.” Time magazine nominated Guyanese president Bharrat Jagdeo, as one of Heroes of the Environment 2008. This year Time magazine included Mohammed Nasheed in its Heroes of the Environment 2009. It was also announced,

Stabroek News in Guyana has confirmed that President Bharrat Jagdeo has been nominated for the 2010 Nobel Peace Prize for his efforts to combat climate  change. He was nominated by Professor David Dabydeen, Director of the Centre for Caribbean Studies at the University of Warwick.

US actor Harrison Ford and Guyana's President Bharrat Jagdeo at a news conference about forest protection on September 21, 2009 in New York. Photograph: Don Emmert/AFP/Getty Images

US actor Harrison Ford and Guyana's President Bharrat Jagdeo at a news conference about forest protection on September 21, 2009 in New York. Photograph: Don Emmert/AFP/Getty Images

The Commonhealth Heads meeting a few weeks before Copenhagen was supposed to seal this ‘alliance.’ Intriguingly, the French President Sarkozy joined the Commonwealth Summit, with Danish Prime Minister Lars Loekke Rasmussen and UN Secretary General, Ban Ki Moon – and proposed a US$10 billion fund for climate change. Just imagine the French joining in a Commonwealth meet (a first, I would think).

Possibly it was the US efforts which made China and India stand together at Copenhagen.

Why the US did not ratify the Kyoto Protocol?

The political undertones of climate control talks are unravelling. The first major smoke signal was when the USA refused to ratify the Kyoto Protocol – while talking about global warming and climate change at the same time. Sometimes puzzling and wholly beyond understanding! The lip service paid by the US to climate change can be best summarized by a Hindi idom हाथी के दांत, खाने के एक, दिखाने के एक. Meaning, elephants have two sets of teeth – one for actual use and another for show.

Cynical subversion of media, honours and public opinion

Cynical subversion of media, honours and public opinion

The third element in the multilateral equations set was the efforts made by Bush /Obama to get India and China to ‘get on the climate change band wagon’ with the US. The Chinese ‘unilateral’ announcement of ‘voluntary’ carbon intensity cut after Obama’s trip to China a few days before Copenhagen was a signpost of this unusual ‘alliance’. India followed soon thereafter with its own ‘voluntary’ carbon intensity cuts. One of the justifications of Bush’s nuclear deal with India was climate change.

This US master-stroke of Obama+BASIC meeting, ensured that the “only breakthrough was the political coup for China and India in concluding the anodyne communiqué with the United States behind closed doors, with Brazil and South Africa allowed in the room and Europe left to languish in the cold outside.”

In hindsight, US covert resistance to climate change was actually resistance to the monopolisation by the EU on the climate change agenda and campaign. Under the garb of climate change, EU was trying to do what US did to the world, under the garb of poverty elimination, population control, Bretton Woods in the aftermath of WW2.

What were the BASIC countries resisting

Writing from a Western standpoint, John Lee, in the Guardian, of the UK, faults China for not allowing,

“Teams of international economists, scientists, inspectors and statisticians roaming China to gather information on carbon emissions and reduction initiatives … reporting to political masters in America and Europe … (on) the further problem of cheating in current and future carbon reduction schemes.” (ellipsis and linking text in brackets mine).

The Climate Change Agreement would have delivered us - hog tied and helpless!

The Climate Change Agreement would have delivered us - hog tied and helpless!

Ed Milliband, Britain’s Energy Minister, younger brother of British foreign secretary, David Miliband, writing for the Guardian,

“We cannot again allow negotiations … to be hijacked in this way. We will need to have major reform of the UN body overseeing the negotiations and of the way the negotiations are conducted (for this) global campaign, co-ordinated by green NGOs, backed by business … we must keep this campaign going and build on it. It needs to be more of a genuinely global mobilisation, taking in all countries …this year has proved what can be done, as well as the scale of the challenge we face. (ellipsis and emphasis mine).

Indeed much has been done.

Face behind the mask

Faceless NGOs, without accountability to anyone, were able to bring global political leadership, to the very brink of an agreement. Like Milliband’s boss, Gordon Brown remarked, “the political will to secure the ambitious agreement … comprehensive and global agreement that is then converted to an internationally legally binding treaty in no more than six months.was very much there. The same 25,000 people (25 countries x 1000 powerful people) who rule over the G8-/OECD wanted the poor to invite these 25,000 to have undue and illegitimate oversight over our ‘poor’ lives – in the name of climate change.

The message I got ... loud and clear

The message I got ... loud and clear

To deliver more than 600 crore (6 billion) of humanity to an agreement that would have allowed the likes of the Milliband Brothers (and their NGO ‘partners-in-crime’) to pry into our lives, our affairs and dictate our very existence – with our own consent. Without recourse, with no checks and balances. With large amounts of unaccounted money at their disposal. To decide how we live our lives. Under a system, that would have re-invented colonialism, in a way wholly unknown to us earlier.

Any deal was a bad deal

Last time around, India was called the deal breaker at Doha. This time around, it is China. Who gets called, what by whom, may seems unimportant! But as my grandfather reminded me many times, बद हो जाओ, लेकिन बदनाम नहीं (Beware of getting a bad reputation).

The Guardian, goes onto say, “Only China is mentioned specifically in Miliband’s article but aides tonight made it clear that he included Sudan, Venezuela, Bolivia, Nicaragua and Cuba, which also tried to resist a deal being signed.” Sadly India is not included in this list of ‘deniers’ who are, as Gordon Brown puts it, “anti-science and anti-change environmental Luddites who seek to stand in the way of progress.”

Climate control noise is just drowning out all debate

Climate control noise is just drowning out all debate

How I wish India was blamed for the failure of Copenhagen!

De-construction of climate change by 2ndlook

Two Books on the Monetary Horror Story That Looks Like Today’s – NYTimes.com

January 20, 2009 Leave a comment

Hjalmar Schacht (above left) and Sir Montagu Norman (right)

In the 1920s the press had been infatuated with an international foursome of elite bankers who took on the challenge of restoring global economic balance after the wreckage created by World War I. They had been called the “Most Exclusive Club in the World.”

With the angrily Prussian-mannered Hjalmar Schacht of the Reichsbank, the conniving Émile Moreau of the Banque de France and Benjamin Strong of the Federal Reserve Bank of New York as its other principals, and with Winston Churchill, John Maynard Keynes and Franklin D. Roosevelt among its secondary players, “Lords of Finance” tracks the shifting balance of economic power that reflected each country’s self-interested agenda. But one of the book’s most important points is that self-interest, in the world of global economic fluctuations, can be self-defeating. (via Books of The Times – Liaquat Ahamed’s ‘Lords of Finance’ – Monetary Horror Story That Looks Like Today’s – Review – NYTimes.com).

Elephants in the room

Another interesting book which covers a wide area – between the wars. The Western pre-occupation with itself, its total self absorption, at a cost to the rest of the world shows up in this book.

As is usual, it ignores other crucial elements and factors. For instance, how the Indian economy was used to meet Britain’s Post WW1 liabilities. To ‘dampen’ India’ gold demand, the Indian rupee was put on fixed, overvalued rate vis-a-vis the sterling.

Indian exports crashed, imports ballooned. Indian accounts would be settled at ‘official’ silver prices, with inflated silver released by the US under the Pittman Act. Gold prices were deflated – and Indians would therefore receive less for their gold. Thus with with a combination of inflated silver price, deflated gold price, high interest rates and an overvalued Indian rupee, the Indian economy was strangled. None of the book reviews or interview however identify this – unwittingly, or deliberately.

India funded the post WW1 recovery

The mechanics and the development is laid out in a better book, John Bullion’s Empire by By G. Balachandran. This book traces how much of India’s poverty was a result of economic policies between the two World Wars co-ordinated by these four central bankers.

On October 27th, 1931, the Ramsey Macdonald led “National” Government (Conservatives and Liberals coalition, fearful of the rising Labour Party) in Britain won a huge majority of 554 MPs of 615. The economic crisis of September 1931 (misnamed as the Indian Currency Crisis) was a result of this economic policy which reduced Indian economic activity – resulting in bankruptcy of the Colonial India Government.

Parallel Great Depression era problems in the US, the Weimar Republic problems – and other issues pushed this ‘National’ government to ram through a series of measures (page 130-131) that inflated silver prices, depressed gold prices and raised interest rates in India. The Indian rupee was pegged at a high exchange rate vis-a-vis the sterling. Indian exports crashed. To ensure that Indian farmers had no options, Indian money lenders were regulated and licensed into paralysis.

Indians were paid, with inflated and abundant silver stock, instead of gold. This silver was the same silver released by the Pittman Act. The silver buffer solution to the gold drain to India was seen as the “only buffer to protect Western gold reserves against the Indian drain (was) a silver buffer.” Of course, later the British Raj decided to settle Indian debts with promissory notes – and not even silver. It was this Indian ‘sacrifice’ which enabled the recovery of the West.

Done over the protests by Gandhiji, trade bodies and merchants and threats of resignation by the Viceroy and his Executive Council, the resulting ‘money famine’ (page 155) had the Lord Willingdon ecstatically say ‘Indians are disgorging gold‘ (page 156). Neville Chamberlain pitched in with his classic statement “The astonishing gold mine that we have discovered in India’s hordes has put us in clover.”

Crash in silver prices

New mines and increased silver production saw a crash in silver prices. US silver coinage was being depreciated due to increasing supplies of silver. On the other side, Britain had a large debt due to WW1. Britain and America stuck a deal at the cost of the Indian subjects of the British Raj. The US passed the Pittman Act which mandated silver sales at more than a dollar per ounce – double the 50c per ounce prevailing price of silver. Britain agreed to settle all Indian debts with silver. Gold prices were deflated. Interest rates in India were increased. Restrictions on gold imports on were placed and gold demand in India was ‘normalized.’

Impoverishment of India

With crashing exports and increased imports, the Indian citizenry had no option but to pay for all essentials and taxes with gold. As a quid pro quo, for this silver for gold scam, the US lent gold to Britain in 1926, which allowed Britain to revert back to the pre-War old standard.

Looking back, it was clear that this achieved nothing but the impoverishment of India. In 1948, Montagu Norman had to admit that with these maneuvers “We achieved absolutely nothing, except that we collected a lot of money from a lot of poor devils and gave it to the four winds.”

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