November 19, 2017

Oil prices could double if Middle East conflict escalates

The war that would transform oil markets

Scarcity doesn’t really justify the upward price movement. There isn’t a shortage of oil in the world. But there could be, in the worst case, if missiles start flying between two of the world’s largest oil players: Saudi Arabia and Iran.

Maybe it won’t happen. But maybe it will. And that’s what the “geopolitical risk premium” is all about. It’s an anxiety surcharge that’s tacked onto every barrel of oil, in fear of supply disruption on a moment’s notice. And the fear is back.

After three years of naivety we’re back to acknowledging the known unknowns of the Middle East, the uncertainties that strap a 10-to-20 percent premium on the price of a barrel.

Paying a risk premium for oil is nothing new. It’s been around for decades and has gone up and down with the hostility thermometer of the Middle East.

Unusually, the pricing of risk dropped to zero around 2015. Three main reasons prompted a sense of world peace: the promise of the Iranian nuclear deal; a feeling that booming oilfields in Texas could offset any disruption; and a growing surplus of oil inventories in storage tanks around the world.

Of late, the notion of oil obsolescence has also perpetuated a feeling of nonchalance. “Who cares about the Middle East and their oil?” has been a question driven by the utopian narrative: “I’m not worried, everyone will be driving electric cars in a few years anyway.”

But it’s all been a false sense of security.

Electric cars are still rare. Oil remains vital to the world economy. Its geographic concentration is such that a large proportion of the world’s needs is produced from underneath layers of geopolitics, religious antagonism, authoritarianism, civil strife and corruption.

When I reflect on the extremes of oily politics, I pull out my old copy of Life Magazine from 1973, the year of the Arab oil embargo. Back then, in a rare moment of unity, Arabs came together to curtail oil shipments to the west, demanding that Israel cede lands it captured in the 1967 war.

I’m struck by the two-page spread showing a Dutch freeway that’s completely empty, not a car on the road due to widespread gasoline and diesel shortages. The disruption was less than three percent of world supply and lasted only a few months, but it was enough to momentarily paralyze transportation in affected countries—and change attitudes about energy security too. The fallout led to big changes in personal mobility—smaller cars, greater fuel economy and alternate modes of transport like high-speed rail—especially in Europe and Japan.

Juxtaposed on the fuel-starved image is a photo inset of a meeting between various leaders of the embargo. The snapshot is taken at a moment with lots of laughter, suggesting the not-so-subtle message that they were pleased with their destabilizing accomplishment. Maybe.

FILE PHOTO Members of Saudi security forces © Ahmed JadallahWar between Iran Saudi Arabia could send oil to $300 per barrel impoverish the world

But no one is laughing now. Regional animosity is elevated, the weaponry is lethal and it’s hard to figure out allegiances and regional political ambitions. And the scale of consequence is bigger too: In 1973 oil consumption was almost 56 million barrels a day. Today it’s pushing 100 million bpd, with a quarter flowing through the Strait of Hormuz, a narrow, strategic chokepoint between Saudi Arabia and Iran.

The geopolitical premium is likely to increase over the next year. Oil markets are slowly heading back towards what OPEC calls “balance” and global inventories are gradually draining. The calculus is pretty simple: Progressively thinner margins for error, plus greater risk of disruption, equals more volatile prices to the upside.

If oil supply is pinched again, for whatever machination or military operation, the price of a barrel could easily double (prices quadrupled as a result of the 1973 embargo). And 20 years from now we may look back at a magazine spread of a freeway, this time showing a handful of cars—only the electric variety.

Higher oil prices are generally welcomed by petroleum producers and their upstream stakeholders. Yet amplified volatility and the potential of another oil crisis is a greater friend to purveyors of electric vehicles; they are the natural beneficiaries to their rival’s instability.

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/410268-oil-prices-could-double-middle-east/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

‘Bitcoin is a gift from God to help humanity sort out mess it has made with its money’ – Max Keiser

Max Keiser: Why JPMorgan is in a bubble and not bitcoin

“Bitcoin will dominate and lead crypto going forward. Hundreds of obituaries have been written about bitcoin and none of them have come true and none will. Fact is, bitcoin is a gift from God to help humanity sort out the mess it has made with its money,” Keiser told RT when asked if alternative coins will dethrone bitcoin.

According to Keiser, the value of bitcoin will increase to $100,000 from the current record of $8,000. Speaking about alt-coins, Keiser said the top-20 are likely to survive the turbulence on the digital money market.

“Ninety percent of trading is in the top 20 coins, and that will continue. Coins will come and go. The composition of the top 20 will change less frequently. It’s similar to the thousands of stocks that trade on the NYSE and NASDAQ. Over the years, many disappear, new ones are listed. The difference being that with crypto, things move 100 times faster,” he told RT.

However, Keiser severely criticized bitcoin cash, the third most popular cryptocurrency, saying it uses the name of the original bitcoin to earn a buck. He accused it of plagiarism.

“Bitcoin cash is an alt-coin that has its fans just like many alt-coins. I don’t think anyone who uses bitcoin’s name and applies it to an alt-coin like bitcoin cash does is adhering to acceptable business practices. In other words, bitcoin’s brand is being stolen by a competitor that calls itself bitcoin cash and this is outright fraud in my opinion, just like it’s fraudulent to use Coca-Cola and Nike’s name to sell soft drinks or shoes,” said Keiser.

Bitcoin’s wild rollercoaster ride continues reaching record $8,000

According to Keiser, bitcoin is not a hyper-inflated asset, but the US dollar is.

“Bitcoin has been hyper-DEFLATING. The supply of bitcoin continuously shrinks until no new bitcoin will exist at all. I can buy ten times more Lamborghinis this year than I could last year with the same amount of bitcoin. The US dollar is an inflating asset. There are trillions more of them every year. The amount I need to buy a Lamborghini keeps going up, not down. It’s garbage,” he said.

Anyone who doesn’t believe in bitcoin can be compared to Michael Dell of the Dell IT firm, who was bearish about Apple, when the company was worth less than $100 million, according to Keiser.

“I remember when I bought Apple stock in the late 1990’s when it was valued for less than $100 million, Michael Dell publicly said that Apple should shut its doors and stop the embarrassment of being in business. Twenty years later, it’s approaching a $1 trillion market cap, and nobody talks about Michael Dell anymore.”

Article source: https://www.rt.com/business/410252-bitcoin-god-gift-keiser/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Media Memo: The Kochs Are Inching Closer to Becoming Media Moguls

Meredith, the Iowa-based company behind popular monthly magazines like Family Circle and Better Homes and Gardens, has arranged for a $600 million cash infusion from the Koch brothers through their private equity arm, Koch Equity Development, these people said. Under the terms of the proposal, Koch would receive preferred shares in the company.

According to people involved in the talks, Meredith has also lined up $3 billion in financing from four banks: Citibank, Barclays, Credit Suisse and Royal Bank of Canada. Meredith has been busy lately reviewing Time Inc.’s financials, which have become somewhat complicated, because the company had been in the process of selling several magazines including Sunset and Golf and a stake in Essence.

Meredith has indicated that it would acquire all of Time Inc.’s properties, but was still seeking clarification about the status of those sales, these people said.

The Kochs have long tried to shape political discourse through their support of nonprofit organizations, universities and think tanks. Beyond their flirtation with Tribune, they have expressed little interest in running a media company.

Some Koch allies suggested that the brothers’ investment would be passive and would not give them any operational control over the company. These people said that the Kochs saw a potential moneymaker in Time Inc., rather than a megaphone for advancing their free-market ideology. For that to happen, the storied company, which Henry R. Luce helped found in 1922, would have to morph into an entity able to thrive in the fraught 21st-century media business.

Other Koch associates, however, surmised that the Kochs’ involvement in the possible deal was partly driven by their desire to advance their views. Should Meredith succeed in acquiring Time Inc., Koch Industries would have a stake in a company with access to millions of online and print readers.

“Knowing the Kochs, I think they’d have to see it as a business that could at the same time further their political interests,” said Stanley S. Hubbard, a longtime associate of the brothers and a donor to their advocacy groups.

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Although it now has a diminished role in the crowded landscape, Time magazine, with its influential Person of the Year and Time 100 issues, still reaches a weekly paid audience of roughly three million.

Photo
The trading floor of the New York Stock Exchange. Time Inc. is seen by some as a potential moneymaker for the Koch brothers. Credit Richard Drew/Associated Press

Mr. Hubbard said he doubted the Koch brothers approved of Time in its current form. “In their view,” he said, “they probably see Time magazine as a left-wing rag. I’m sure that they would like to see it be more objective and also to straighten it out to make it a profitable venture.”

Mr. Hubbard, who owns television and radio stations across the United States, said he had not talked with the Kochs about the possible acquisition but had discussed other prospective media investments with them over the years.

Spokesmen for Koch Industries and the Kochs’ political operation both declined to comment. Spokesmen for Time Inc. and Meredith also declined to comment.

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For Meredith, which was founded in 1902, the addition of the Time Inc. titles to its stable would represent the culmination of a yearslong courtship. In 2013, a deal between the two publishers collapsed after Meredith reportedly said it had no interest in some of Time Inc.’s most robust titles, including Time, Fortune and Sports Illustrated.

Meredith was also among the parties circling Time Inc. earlier this year before it walked away in part because it could not secure sufficient financing.

Until now, the Kochs — who lead a company that brings in more than $100 billion in annual revenue — have sought to influence public discourse at some remove from the media business. If Meredith, with the Kochs’ help, succeeds in buying Time Inc., the brothers would join a growing list of billionaire business people with significant stakes in media properties. Warren Buffett’s Berkshire Hathaway company, for instance, owns 31 daily newspapers, and Jeff Bezos owns The Washington Post. Sheldon G. Adelson, a casino magnate and powerful Republican donor, acquired The Las Vegas Review-Journal in late 2015.

The Kochs, who have made a name for themselves as philanthropists with their donations to Lincoln Center, the Metropolitan Museum of Art and the American Museum of Natural History, have preferred to wield their influence away from the glare that comes with owning major media properties. Through a network of conservative donors and advocacy groups, they have spent or raised more than $1.5 billion in an effort to reshape American policy around an ideology based on free-market Austrian economics.

Their foundations have helped fund organizations affiliated with conservative media outlets, including the libertarian Reason magazine and the Daily Caller website. The Charles Koch Institute, one of the brothers’ philanthropic arms, offers a yearlong media and journalism fellowship. David Koch has donated millions to public television.

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Media properties with a wider reach than, say, Reason magazine, like those in the portfolios of Meredith and Time Inc., could amplify the Kochs’ message and complement the work of the groups they support, including the nonprofit advocacy group Americans for Prosperity. The completion of the proposed deal may also give the Kochs a way to merge the vast trove of voter information held by a data analytics company controlled by their network, i360, with the publishers’ data on consumers.

Still, the Kochs would make for unlikely media players, given that they have not exactly been champions of reporters in the past.

Known for harboring a distrust of the mainstream media and what they see as its liberal bias, the Kochs have taken a closed-fist approach to journalists. Until 2015, a website affiliated with Koch Industries, KochFacts.com, published blog posts intended to combat negative coverage of the company and to raise questions about reporters who, in the Kochs’ estimation, had written about them unfairly.

In her book about the Kochs and their influence on modern politics, “Dark Money,” which came out last year, the investigative reporter Jane Mayer described how a private investigation firm had tried to dig up dirt on her after The New Yorker published “Covert Operations,” her 10,000-word exposé on the Kochs. She wrote that she suspected the Kochs had been involved.

In an interview last year with The Financial Times, Charles Koch said he wanted to show that he was not the “evil guy” the press has made him out to be. He also suggested a desire to control a narrative that had long eluded his grasp.

“We’re being attacked every day by blogs, other newspapers, media, people in government,” he said, “and they were totally perverting what we do and why we do it.”

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Article source: https://www.nytimes.com/2017/11/17/business/media/koch-brothers-time-meredith.html?partner=rss&emc=rss

Americans Are Watching Netflix at Work and in the Bathroom


Photo
About 37 percent of Americans who streamed shows or movies outside their homes said they did so at work. Credit Christophe Ena/Associated Press

Behold the versatile public restroom: It’s a refuge, a place to steel one’s nerves and, for some, a personal theater.

According to new data from the video giant Netflix, about 12 percent of Americans who watch television shows or movies outside of the home admit to having done so in a public restroom. And 37 percent say they’ve watched at work.

That’s according to the results of a survey commissioned by Netflix and conducted in the late summer by SurveyMonkey. The poll was based on responses from tens of thousands of people around the world, including 1,600 Americans, balanced by age and gender. It found that two-thirds of Americans stream movies and TV shows in public.

The use of both smartphones and streaming services is on the rise, according to the Pew Research Center. But details about how American viewing habits are changing are hard to find. Streaming companies, including Netflix, have been reluctant to share such data except when it serves their own interests, and third-party trackers have been slow to catch up.

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Still, the Netflix survey, released on Tuesday, provides some insight into a growing phenomenon: As Americans spend more time watching video on computers, smartphones and tablets, media consumption patterns and social customs are shifting.

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Article source: https://www.nytimes.com/2017/11/17/business/media/watch-netflix-at-work.html?partner=rss&emc=rss

Many Admit to Watching Netflix at Work and in the Bathroom


Photo
About 37 percent of Americans who streamed shows or movies outside their homes said they did so at work. Credit Christophe Ena/Associated Press

Behold the versatile public restroom: It’s a refuge, a place to steel one’s nerves and, for some, a personal theater.

According to new data from the video giant Netflix, about 12 percent of Americans who watch television shows or movies outside of the home admit to having done so in a public restroom. And 37 percent say they’ve watched at work.

That’s according to the results of a survey commissioned by Netflix and conducted in the late summer by SurveyMonkey. The poll was based on responses from tens of thousands of people around the world, including 1,600 Americans, balanced by age and gender. It found that two-thirds of Americans stream movies and TV shows in public.

The use of both smartphones and streaming services is on the rise, according to the Pew Research Center. But details about how American viewing habits are changing are hard to find. Streaming companies, including Netflix, have been reluctant to share such data except when it serves their own interests, and third-party trackers have been slow to catch up.

Advertisement

Continue reading the main story

Still, the Netflix survey, released on Tuesday, provides some insight into a growing phenomenon: As Americans spend more time watching video on computers, smartphones and tablets, media consumption patterns and social customs are shifting.

Continue reading the main story

Article source: https://www.nytimes.com/2017/11/17/business/media/watch-netflix-at-work.html?partner=rss&emc=rss

Myths of the 1 Percent: What Puts People at the Top

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Dispelling misconceptions about what’s driving income inequality in the U.S.

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Nov. 17, 2017

Income inequality inspires fierce debate around the world, and no shortage of proposed solutions. As global billionaires bid up the price of a da Vinci painting on Wednesday, to $450.3 million, Congress debated tax reforms that many analysts said would give the largest benefits to the richest 1 percent of taxpayers.

In the United States, the richest 1 percent have seen their share of national income roughly double since 1980, to 20 percent in 2014 from 11 percent. This trend, combined with slow productivity growth, has resulted in stagnant living standards for most Americans.

No other nation in the 35-member Organization for Economic Cooperation and Development is as unequal, and none have experienced such a sharp rise in inequality.

In Denmark, the share of income going to the top 1 percent rose to 6 percent from just 5 percent. In the Netherlands, there was essentially no increase from 6 percent levels. Britain (6 percent to 14 percent) and Canada (9 percent to 14 percent) had notable increases in top-income earnings, but not as large as those in the United States.

Before looking into some of what’s behind this, let’s address common misconceptions.

No, It’s Not Trade

A rise in international trade — as a share of G.D.P., measured as either imports or exports using data from the Penn World Tables — is associated with equality, not inequality. The United States imports only a small fraction of the value of its total economy, whereas Denmark and the Netherlands are highly dependent on imports.

Or the Rise of Information Technology

Countries with higher rates of invention — as measured by patent applications filed under the Patent Cooperation Treaty, an indicator of patent quality — exhibit lower inequality than those with less inventive activity. As it happens, tech industries in the United States have contributed just a tiny bit to the rise of the 1 percent, and the salaries of engineers and software developers rarely reach the 1 percent threshold of an annual income of $390,000.

What About Unions?

Unions are thought to redistribute income from owners to workers, but there is no correlation across countries between the change in labor’s share of G.D.P. since 1980 and an increase in the income share of the top 1 percent. Britain saw an increase in the labor share of G.D.P. but also one of the sharpest increases in inequality. The Netherlands saw a large fall in labor’s share but no rise in inequality.

Image
A woman holds up a paddle with an image of Leonardo da Vinci’s “Salvator Mundi” as she arrives at Christie’s before bidding on the painting Wednesday night in New York. The work sold for a record $450.3 million.CreditTimothy A. Clary/Agence France-Presse — Getty Images

Scandinavian countries are heavily unionized and egalitarian, but Denmark experienced a large decrease in the share of workers represented by unions from 1980 to 2015, according to O.E.C.D. data, and very little change in inequality. Unionization rates dropped precipitously in the Netherlands and especially New Zealand over the period, but inequality rose as much if not more in Spain, where unionization rates rose.

Not Immigration, Either

Nationalists attribute rising inequality to mass immigration and the supposedly low skills of immigrants.

There is no correlation between changing immigration shares since 1990 and rising top-income shares. In fact, the countries that have absorbed the most immigrants — on a per-capita basis — have seen overall income inequality (measured by the Gini coefficient) fall.

An assumption implicit in this argument is that immigrants drag down earnings at the bottom of the distribution, making inequality worse. If this were an important factor, rising inequality should coincide with large gaps in income between foreign-born and native-born adults. It doesn’t.

My analysis of data from the Gallup World Poll from 2009 to 2016 shows that foreign-born adults earn 37 percent less than native-born adults in the Netherlands, after adjusting for age and gender. This is the largest gap among O.E.C.D. countries, and yet, the country saw no change in top-income inequality. Canada (minus 8 percent) and Britain (minus 7 percent) have small gaps but high and rising inequality.

In the U.S., Managers Are a Minority of Top Earners

Most top earners in the United States are neither executives nor even managers. People in those occupations make up just over one-third of all top earners in the United States. This share has been falling — particularly for corporate executives — and is lower than in many other advanced countries. In Denmark, Canada and Finland, close to half of top earners are in managerial occupations, according to my analysis of data from the Luxembourg Income Study.

So What’s Going On?

Almost all of the growth in top American earners has come from just three economic sectors: professional services, finance and insurance, and health care, groups that tend to benefit from regulatory barriers that shelter them from competition.

The groups that have contributed the most people to the 1 percent since 1980 are: physicians; executives, managers, sales supervisors, and analysts working in the financial sectors; and professional and legal service industry executives, managers, lawyers, consultants and sales representatives.

Without changes in these largely domestic services industries — finance, health care, the law — the United States would look like Canada or Germany in terms of its top income shares.

The United States also stands out in terms of how much money its elite professionals earn relative to the median worker. Workers at the 90th percentile of the income distribution for professionals make 3.5 times the earnings of the typical (median) worker in all occupations in the United States. Only Mexico and Israel, which have very high inequality, compensate professionals so disproportionately. In Switzerland, the Netherlands, Finland and Denmark, the ratio is about 2 to 1.

This ratio, the elite professions premium, is very highly correlated with income inequality across countries.

Others are noticing these trends. A new book, “The Captured Economy” by Brink Lindsey and Steven Teles, argues that regressive regulations — laws that benefit the rich — are a primary cause of the extraordinary income gains among elite professionals and financial managers in the United States and of a reduction in growth.

This year, the Brookings Institution’s Richard Reeves wrote a book about how people in the upper middle class have shaped both legal and cultural norms to their advantage. From different perspectives, Joseph Stiglitz, Robert Reich and Luigi Zingales have also written extensively about how the political power of elites has undermined markets.

Problems cited by these analysts include subsidies for the financial sector’s risk-taking; overprotection of software and pharmaceutical patents; the escalation of land-use controls that drive up rents in desirable metropolitan areas; favoritism toward market incumbents via state occupational licensing regulations (for example, associations representing lawyers, doctors and dentists that block efforts allowing paraprofessionals to provide routine services at a lower price without their supervision).

These are just some of the causes contributing to the 1 percent’s high and rising income share. Reforming relevant laws can make markets more efficient and egalitarian, and in contrast with trade, immigration and technology, the political causes of the 1 percent’s rise are directly under the control of citizens.


Jonathan Rothwell is the Senior Economist at Gallup. He is writing a book on political equality and its relationship to economic opportunity. You can follow him on Twitter at @jtrothwell.

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Alexander Shalgin/TASS, via Getty Images
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Timothy Egan

The problem is not the Russians — it’s us. A huge percentage of the population can’t tell fact from fiction.

Dr. Lee Cook-jong, who operated on a wounded North Korean defector, on Wednesday showed journalists photographs of worms found in the defector’s intestines.
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South Korean doctors operating on an injured North Korean soldier found parasitic worms crawling in his dietary tract, a symptom of poor hygiene and nutrition.

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Republicans held a news conference on Capitol Hill after the House of Representatives passed a tax reform bill.
Al Drago for The New York Times

Our tax burden could increase by tens of thousands of dollars, based on money we don’t even make.

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Article source: https://www.nytimes.com/2017/11/17/upshot/income-inequality-united-states.html?partner=rss&emc=rss

Norway’s $1 trillion wealth fund looks to dump oil & gas stocks

Norway’s trillion-dollar sovereign wealth fund has proposed dropping investment for oil and gas companies. The plan, backed by the central bank, still needs approval by the finance ministry, but it would see the fund gradually divesting itself of oil and gas stocks over time. Currently, fossil fuel investments account for about 6 percent of the fund’s assets, or $37 billion.

Iceland wants UK to join Nordic alliance of non-EU countries

“Our advice is to simply remove the oil and gas sector, as it is defined in the FTSE reference index, from the fund’s reference index,” Deputy Central Bank Governor Egil Matsen told Reuters in an interview. “That would mean all companies that the FTSE has classified with the sector, should be removed from our reference index.”

The global movement for fossil fuel divestment has been one of the fastest growing divestment campaigns ever witnessed. According to Fossil Free, a project of 350.org, an estimated 808 institutions from around the world have committed to divestment, totaling $5.57 trillion in assets. The type of groups are varied – about 27 percent of them are faith-based, another 20 percent are philanthropic foundations, 18 percent are government, 16 percent are education institutions, and 10 percent are pension funds.

But the potential move by Norway’s sovereign wealth fund is one of the most significant pledges yet, for a few reasons. First, the size of the fund, with $1 trillion in assets, is obviously notable. Second, the fund was built on oil and gas money, so a diversification away from fossil fuels has symbolic importance. But third, the justification for divestment, according to the fund, is not because of concerns over climate change, which is the usual reason why most other institutions have opted to divest.

World’s largest wealth fund in Norway reaches record $1tn

Norway’s sovereign wealth fund wants out of fossil fuels in order to avoid exposure to oil price fluctuations.

The sovereign wealth fund is a massive investor in oil and gas, so the news of a shift in investment strategy is significant. According to Reuters, Norway’s sovereign wealth fund holds a 2.3 percent stake in Royal Dutch Shell, 1.7 percent stake in BP, 0.9 percent stake in Chevron and 0.8 percent of ExxonMobil.

But, as any energy investor would know, oil and gas stocks have been poor performers for the past few years. “It clearly stands out, perhaps not surprisingly, but not obviously, that indeed there is a substantial difference … in return between the oil and gas sector and the broad stock market in periods when the oil price changes substantially,” Matsen said. “Oil price exposure of the government’s wealth position can be reduced by not having the fund invested in oil and gas stocks.” The sovereign wealth fund, like other investors, would have been better off putting their money in other sectors of the global economy.

It isn’t just the most recent downturn that Norway is worried about. Over the long-term, peak oil demand looms. Pulling out of companies like Royal Dutch Shell and BP would make Norway’s wealth “less vulnerable to a permanent drop in oil and gas prices,” according to the country’s central bank, the FT reported.

Norway likely winner from OPEC-Russia oil production cuts

The sovereign wealth fund is seeded with revenues generated from oil and gas sales, so it is already vulnerable to oil price fluctuations. Moreover, the Norwegian government owns a substantial portion of Statoil, making the country even more dependent on oil and gas revenues. One way to reduce the country’s financial risk would be for the sovereign wealth fund to get out of the oil business.

Critics of the divestment campaign often note that liquidating one’s assets does very little to influence the actions of the oil and gas industry. After all, even if divestment dragged down the valuation of an oil company, its share price would merely be discounted for opportunistic investors to scoop up the asset on the cheap. But that was never the overarching goal. The objective of the divestment movement was to make fossil fuels so toxic in the minds of the public that it forces governments to change policies to force a transition towards cleaner energy. That fight is ongoing.

However, the proposal from the Norwegian sovereign wealth fund opens up an entirely new front on the oil and gas industry. Hard-headed central bankers are concerned about the long-term investment case for fossil fuels…unrelated from climate change. The largest sovereign wealth fund in the world simply doesn’t think it makes sense to hold onto oil and gas assets anymore.

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/410160-norways-trillion-wealth-fund-dump-oil/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Myths of the 1 Percent: What’s Putting People at the Top

Advertisement

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Dispelling misconceptions about what’s driving income inequality in the U.S.

By

Nov. 17, 2017

Income inequality inspires fierce debate around the world, and no shortage of proposed solutions. As global billionaires bid up the price of a da Vinci painting on Wednesday, to $450.3 million, Congress debated tax reforms that many analysts said would give the largest benefits to the richest 1 percent of taxpayers.

In the United States, the richest 1 percent have seen their share of national income roughly double since 1980, to 20 percent in 2014 from 10 percent. This trend, combined with slow productivity growth, has resulted in stagnant living standards for most Americans.

No other nation in the 35-member Organization for Economic Cooperation and Development is as unequal, and none have experienced such a sharp rise in inequality.

In Denmark, the share of income going to the top 1 percent rose to 6 percent from just 5 percent. In the Netherlands, there was essentially no increase from 6 percent levels. Britain (6 percent to 14 percent) and Canada (9 percent to 14 percent) had notable increases in top-income earnings, but not as large as those in the United States.

Before looking into some of what’s behind this, let’s address common misconceptions.

No, It’s Not Trade

A rise in international trade — as a share of G.D.P., measured as either imports or exports using data from the Penn World Tables — is associated with equality, not inequality. The United States imports only a small fraction of the value of its total economy, whereas Denmark and the Netherlands are highly dependent on imports.

Or the Rise of Information Technology

Countries with higher rates of invention — as measured by patent applications filed under the Patent Cooperation Treaty, an indicator of patent quality — exhibit lower inequality than those with less inventive activity. As it happens, tech industries in the United States have contributed just a tiny bit to the rise of the 1 percent, and the salaries of engineers and software developers rarely reach the 1 percent threshold of an annual income of $390,000.

What About Unions?

Unions are thought to redistribute income from owners to workers, but there is no correlation across countries between the change in labor’s share of G.D.P. since 1980 and an increase in the income share of the top 1 percent. Britain saw an increase in the labor share of G.D.P. but also one of the sharpest increases in inequality. The Netherlands saw a large fall in labor’s share but no rise in inequality.

Image
A woman holds up a paddle with an image of Leonardo da Vinci’s “Salvator Mundi” as she arrives at Christie’s before bidding on the painting Wednesday night in New York. The work sold for a record $450.3 million.CreditTimothy A. Clary/Agence France-Presse — Getty Images

Scandinavian countries are heavily unionized and egalitarian, but Denmark experienced a large decrease in the share of workers represented by unions from 1980 to 2015, according to O.E.C.D. data, and very little change in inequality. Unionization rates dropped precipitously in the Netherlands and especially New Zealand over the period, but inequality rose as much if not more in Spain, where unionization rates rose.

Not Immigration, Either

Nationalists attribute rising inequality to mass immigration and the supposedly low skills of immigrants.

There is no correlation between changing immigration shares since 1990 and rising top-income shares. In fact, the countries that have absorbed the most immigrants — on a per-capita basis — have seen overall income inequality (measured by the Gini coefficient) fall.

An assumption implicit in this argument is that immigrants drag down earnings at the bottom of the distribution, making inequality worse. If this were an important factor, rising inequality should coincide with large gaps in income between foreign-born and native-born adults. It doesn’t.

My analysis of data from the Gallup World Poll from 2009 to 2016 shows that foreign-born adults earn 37 percent less than native-born adults in the Netherlands, after adjusting for age and gender. This is the largest gap among O.E.C.D. countries, and yet, the country saw no change in top-income inequality. Canada (minus 8 percent) and Britain (minus 7 percent) have small gaps but high and rising inequality.

In the U.S., Managers Are a Minority of Top Earners

Most top earners in the United States are neither executives nor even managers. People in those occupations make up just over one-third of all top earners in the United States. This share has been falling — particularly for corporate executives — and is lower than in many other advanced countries. In Denmark, Canada and Finland, close to half of top earners are in managerial occupations, according to my analysis of data from the Luxembourg Income Study.

So What’s Going On?

Almost all of the growth in top American earners has come from just three economic sectors: professional services, finance and insurance, and health care, groups that tend to benefit from regulatory barriers that shelter them from competition.

The groups that have contributed the most people to the 1 percent since 1980 are: physicians; executives, managers, sales supervisors, and analysts working in the financial sectors; and professional and legal service industry executives, managers, lawyers, consultants and sales representatives.

Without changes in these largely domestic services industries — finance, health care, the law — the United States would look like Canada or Germany in terms of its top income shares.

The United States also stands out in terms of how much money its elite professionals earn relative to the median worker. Workers at the 90th percentile of the income distribution for professionals make 3.5 times the earnings of the typical (median) worker in all occupations in the United States. Only Mexico and Israel, which have very high inequality, compensate professionals so disproportionately. In Switzerland, the Netherlands, Finland and Denmark, the ratio is about 2 to 1.

This ratio, the elite professions premium, is very highly correlated with income inequality across countries.

Others are noticing these trends. A new book, “The Captured Economy” by Brink Lindsey and Steven Teles, argues that regressive regulations — laws that benefit the rich — are a primary cause of the extraordinary income gains among elite professionals and financial managers in the United States and of a reduction in growth.

This year, the Brookings Institution’s Richard Reeves wrote a book about how people in the upper middle class have shaped both legal and cultural norms to their advantage. From different perspectives, Joseph Stiglitz, Robert Reich and Luigi Zingales have also written extensively about how the political power of elites has undermined markets.

Problems cited by these analysts include subsidies for the financial sector’s risk-taking; overprotection of software and pharmaceutical patents; the escalation of land-use controls that drive up rents in desirable metropolitan areas; favoritism toward market incumbents via state occupational licensing regulations (for example, associations representing lawyers, doctors and dentists that block efforts allowing paraprofessionals to provide routine services at a lower price without their supervision).

These are just some of the causes contributing to the 1 percent’s high and rising income share. Reforming relevant laws can make markets more efficient and egalitarian, and in contrast with trade, immigration and technology, the political causes of the 1 percent’s rise are directly under the control of citizens.


Jonathan Rothwell is the Senior Economist at Gallup. He is writing a book on political equality and its relationship to economic opportunity. You can follow him on Twitter at @jtrothwell.

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Article source: https://www.nytimes.com/2017/11/17/upshot/income-inequality-united-states.html?partner=rss&emc=rss

JPMorgan busted for money laundering after accusing bitcoin of doing the same

Bitcoin is fraud and will blow up – JP Morgan CEO

The sanctions are reportedly related to breaches of due diligence in connection with money laundering standards. That literally means the Wall Street banking giant assisted in money laundering.

The ruling was reportedly issued on June 30, but the regulator did not make it known as JPMorgan has been actively trying to prevent the publication. The Federal Administrative Court has since dismissed an appeal by the bank.

It is two months since JPMorgan CEO Jamie Dimon slammed bitcoin, the world’s leading cryptocurrency, labeling it a fraud. According to Dimon, bitcoin could be useful “if you were a drug dealer or a murderer.”

Dimon also compared bitcoin to the 17th-century Dutch tulip mania bubble. At the time, the CEO predicted the eventual demise of the digital currency and pledged to fire any trader trading bitcoin for being stupid.

“A fiat currency is when a government says this is your legal tender, you have to give it and accept it, and of course the central bank can misuse it and inflate it. But what is the use case for bitcoin? You’re in Venezuela, North Korea, you’re a criminal. Great product!” he said during a news conference in Washington.

Responding to the allegations of money laundering, JPMorgan said the bank is trying its best to support the safety and soundness of the global monetary system.

“We have made and continue to make significant enhancements to the firm’s anti-money laundering program to ensure we are meeting regulatory expectations,” the bank said in an emailed statement sent to Bloomberg.

JPMorgan refused to provide any further details as FINMA’s ruling in June isn’t public.

Article source: https://www.rt.com/business/410137-jpmorgan-busted-money-laundering-bitcoin/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Bitcoin’s wild rollercoaster ride continues reaching record $8,000

“I recommended bitcoin in 2011 at $3 with a price target of $100,000. The price has been compounding at approximately one percent a day for this entire run and will continue to do so until it reaches $100,000 when I foresee the price leveling off,” Max Keiser, host of RT’s financial program ‘Keiser Report’ said.

Keiser previously predicted bitcoin would be worth $1 trillion in the foreseeable future.

Bitcoin reached its latest high after altcoin bitcoin cash suffered a sharp decline, plummeting more than 25 percent in under 48 hours, according to CoinMarketCap data.

Bitcoin surges to $13,500 in Zimbabwe after military coup shortage of hard currency

Recent trading has been volatile for the world’s most popular cryptocurrency. After reaching a record $7,882 on November 8, bitcoin plummeted to $5,519 on Sunday. This week saw its price surge back to record levels.

The two digital currencies, bitcoin and its offshoot, have been competing for investment. Developers behind bitcoin have postponed the SegWit2x hard fork, which resulted in an over $2,000 decline in the bitcoin price, while bitcoin cash surged more than 50 percent.

“My sense is that today’s rally is driven by a resurgence in interest and viability for the SegWit2x hard fork,” Spencer Bogart, head of research at Blockchain Capital, told Bloomberg.

“Despite the fact that it was called off, there is still some group of people that will follow through with the intended fork. As a result, I believe some capital is rotating out of other crypto-assets and into bitcoin to make sure they receive coins on both sides of the fork,” he said.

In Zimbabwe, bitcoin is approaching $14,000 after the military coup which ousted 93-year-old President Robert Mugabe, who has been ruling the nation for 37 years. The country has faced hard currency shortages. Zimbabwe hasn’t had its own currency since 2009 when hyperinflation wiped out the local dollar.

Article source: https://www.rt.com/business/410134-bitcoin-price-record-high/?utm_source=rss&utm_medium=rss&utm_campaign=RSS