Friday, January 22, 2016

Short Course in Overproduction, 5

From the Financial Times, Tuesday 19 January:
Iran sanctions lifted, 500,000 barrel/day increase in production planned.  Pre-sanctions production 2011 at 2.5 million barrels/day; 2015 at 1.1 million barrels/day.
"If Iran does not increase its oil production, neighbouring countries may increase their production by the next 6 months or one year and take Iran's share,"  Rokneddin Javadi, Iran National Oil Company.
Meanwhile Brent crude price below $28/barrel

The Wall Street Journal, Wednesday, January 20:
China-- Sinosteel extends debt payment deadline for 3rd time.
Oil price collapse forces belt tightening in Asia:  Petronas (Malaysia) plans $11.37 billion reduction in capital and operating budgets over next 4 years.  Cnooc (China) cuts capital expenditures 44 percent versus 2014.
Maersk-EEE class container ships, (capacity more than 18000 teus) $185 million each, coming on line when existing overcapacity is estimated at 30% of the total. Freight rates start 2014 at $1765 per container, fall continuously, and average $620 per container for 2015.
Nothing encourages overproduction like overproduction.

Journal publishes special section targeting the World Economic Forum.  Articles:
"Global Economy Loses Steam,"  "Welcome to the Crisis Economy, Where Tumult Reigns," "A Clouded View From the Commanding Heights," "An Era of Seismic Shifts," "Market Rout Starts 2016 Off on Wrong Foot," "China's Debt Binge Isn't Over Yet, and That's the Problem," "US Comes to Grips with Slow Growth," "Dear Business Leaders:Invest in Optimism, Not Buybacks," "Behind the Rise of Populism, Economic Angst," "Shifting Alliances, Sectarian Strife Dot the Middle East Landscape," "Slow Growth Clouds Fight Against Poverty," "Brics' New World Order is Now on Hold," "An Emerging Mismatch in Global Growth Picture," "Sharp Slump In Goods Trade Seen Lingering" "Oil's Long Plunge Upends Global Order," "Uneven Growth Vexes Africa," Behind Latin America's Woes Stands China," --and closes with the article, "The Future is Here.  It Just Needs a Big Push" (as the executioner said to the condemned man).
None of this is, or should become, schadenfreude. The bourgeoisie are in power. Their power is not threatened.  Capital rules. That rule has not been attacked.

The rich make it better through poor times than the poor.

S. Artesian
January 22, 2016

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