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Decline in capital investment in 2016-2017 expected at Lukoil and Rosneft as the Russian government postponed a reduction in taxes on oil exports for 2016. Russia is dependent on oil exports for a third of its national output, and about half of its budget depends on oil revenues, a major weakness, but this is being managed carefully till oil prices recover. Russian officials say the $50 a barrel assumption for oil revenues in 2016 in the budget is optimistic. Yet Russian output decline is expected to be limited to about 3% a year from 5% for Lukoil in future years from decline in investment, because of drilling new wells and use of horizontal drilling technology on older fields. In 2015 oil output increased modestly to 10.73 barrels a day from 10.58 barrels a day in 2014. Russia's oil industry benefits from a tax system that favors the industry. The export duty on oil and the mineral extraction tax are based on price. A declining ruble which has gone from 35 to the dollar before its invasion of Ukraine in 2014 to 86 to the dollar in Jan 2016, has a favorable impact. This actually helps the industry because workers and oil equipment suppliers in Russia are paid in rubles, and oil revenues are earned in dollars. As a result new technologies such as horizontal drilling now make up one third of oil supplies from 11% in 2010. Chinese suppliers also provide new technology drilling equipment, as China is not part of the sanctions. Gazprom Neft's CEO Dyukov says it can make a profit at oil price of $15 a barrel. Because of the tax system after tax revenues are stable at the oil companies in Russia, even as government tax revenue declines. All this points to resilience in the short run for the Russian oil industry. The decline in the value of the ruble is seen as an opportunity to shift away from an overdependence on imports during the period of high oil prices. Alexei Kudrin, former Russsian finance minister, sees growth returning for the Russian economy in 2017. This may actually be good news for the struggling economies of U.S., Europe, India, China, and other countries which would be boosted by low oil prices sustained over a longer period- something made possible by competition between big oil producing countries Russia, Saudi Arabia, Iraq and Iran, and the profitability of oil production at prices below $30 to $20 a barrel....

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CEO Ryan at CVS/Caremark. An unassuming man with a sharp focus on things, joined CVS right out of pharmacy school at University of Rhode Island. At 29, CVS owner Stan Goldstein gave him the chance to run pharmacy operations for CVS, then a regional drugstore chain in the eastern USA. Over the years CVS has made a number of successful acquisitions, the latest being the acquisition of Longs Drug store chain on the west coast, and it is now one of the largest chains in the USA. It has nearly 7000 stores and more than 50 million users of its CVS loyalty card in the US. As the pharmaceutical business evolved pharmacy benefit management (PBM's) companies like Caremark, Medco, and Express Scripts, came into being to manage burgeoning prescription costs. PBM's work with companies to save money, by filling recurring prescriptionsin 90 day quantities through the mail at reduced per pill cost. Now drug store chains instead of competing with PBM's are either creating or acquiring these larger PBM's. THe result is that a company like CVS which acquired PBM Caremark in 2007 for $27 billion, now has extensive computerized databases with patients information and drug usage histories. Ryan's clear focus is on these IT records as a distinct advantage, if he can use it to help the Obama administration's efforts to control health costs of chronic diseases like diabetes and arthritis, and back or neck pain, high blood pressure, and others, that end up clogging the hospital system and raising health care costs. By using these IT records to flag when a patient is not compliant or taking his medications and call the patient, Ryan can increase drug sales, get more visits into drugstores if the drugs can also be picked up at CVS stores, and increase sales through ancillary purchases during visits. This is now his strategy. It also includes setting up more clinics at stores and at corporate locations that divert the patient flow for small care like sore throats, flu and the like. As this is the way health care costs can be controlled, Ryan sees himself as helping achieve national goals while keeping CVS in the sales and profit picture for the US, even as health care as we know it goes through a complete transformation that removes the waste and unnecessary cost, and improves effectiveness and health. He sees CVS/Caremark right where it wants to be with its large patient drug database from about 1 billion prescriptions it fills each year, and as the largest single buyer and dispenser of prescription drugs in the country. ...

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Why polluting industries and colluding local government officials who are judged on the rate of economic growth achieved have come together and become entrenched to thepoint where its hard for the central government to implement pollution control measures. Deng's response to a sluggish socialist bureaucracy was to give power to local government officals to promote growth and to be judged on that basis. The environmental ministry and the environmental protection departments are very small and lack the resources to control these industries. And NGO's and the informed public and citizens are powerless to demand change as they are seen by the government as risking social stability by risking growth. After the East Asian crisis China anticipating a slowing down in competition with recovering Asian economies pushed harder for more economic growth. As a result production of steel set new records and the addition of power generating capacity each year surpassed the total power generation of countries like Britain and France.But this power generation does not use the modern technology available as it is costlier and takes longer to build. So a lot of short run decisions are being made in the interests of growth. An effort to introduce Green GDP backed by President Hu Jintao was dropped after it ran into a lot of resistance. Using this about 3 points of GDP were deducted from the 10% growth as environmental cost. This was based on modest environmental costs estimates and did not take into account the entire cost of pollution to health and the environment. China's own environmental experts think that Western estimates of environmental costs are if anything on the conservative side as they are based on models used in the west and conditions in China have little precedent in the scale and range of environmental degradation. Coal is burned to produce two thirds of the energy and uses older technology for power generation, it is a big polluter of the environment. And the modest energy efficiency goals set by the central government are not being met as a result China is already expected to be consuming as much energy in 2010 as it was expected by its own planners to be consuming in 2020. To informed outsiders it appears that the polutting process is systemic in its nature and only political change that allows people who are suffering the worst effects of this pollution to make their voice heard, can lead to reversing the trends that have been set in place from the Deng period of economic change that started in the 80's. ...

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Empty storage tanks and empty supertankers and idle storage terminals are to be seen in the area of Cameron Parish, in coastal Louisiana. This is where Cheniere Energy opened a $1.4 billion liquefied natural gas terminal recently. This was part of a $7 billion construction of 8 new LNG terminals over the last 5 years around the Gulf of Mexico and the Atlantic coast. Only a year ago this seemed like an attractive investment as LNG supplies to the USA appeared to be on the rise. But that is not the way it turned out. By October its estimated that the USA will have in storage 3.1 trillion cubic feet of gas, about 1 trillion less than the full storage capacity.This is after the summer use and reduced LNG imports. This is 1 trillion feet of idle unused capacity or about 25% idle capacity. What has happened is that with a nuclear plant down in Japan because of an earthquake and drought conditions in Spain limiting hydroelectric dam electricity prices these countries pay has jumped and LNG tankers have been diverted to these places instead of the USA. Because natural gas prices unlike oil prices are set on a regional basis, prices in other regions and countries are several dollars higher than the US price of $11.80 per thousand cubic feet, which is itself up from $7.50 per thousand cubic feet at the beginning of 2008. The reason for all this unused capacity is that imports are 40% of what they were for last year and capacity has been doubled. Producers have also put more supplies on the spot market and less on long term contracts to make higher profits thus raising prices even higher. Some analysts believe that it was a bad thing for the US not to import more as 3.1 trillion cubic feet of gas in storage will not meet expected demand in the winter heating season of 2008-2009. And with global demand up and global supplies not coming up fast enough gas prices may increase still further. Demand is growing at about 7% in the developing world, and about 2.6% worldwide so demand in the USA is not increasing at this time. The new refineries and petrochemical plants going up in the Middle East and Asia will increase demand further for natural gas. The whole issue has not been prominent because the US meets only 3% of its natural gas needs through LNG. ...

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New GI Bill taking effect August 2009, has not received much attention but it will help bring more equity into the system and provide better opportunities for university education to those who serve in the armed forces and thus help increase mobility in the USA, with those previously unable to afford an education or restricted to small community colleges able to take advantage of the best opportunties they can work hard for and use their potential and abilities. It makes for a more educated and effective military as young people with high school diplomas are more likely to take advantage of military service for 3 years to get a good university education. So its quite probable that more people and better and more intelligent and able recruits would join the military service at the same time that some of the military recruits who have already served three years go to colleges to take advantage of the new GI Bill. It costs the military $5.7 billion in incentives and other recruitment costs to meet the demand for service personnel over the next 5 years, but this can now be used towards the cost of the GI Bill. Also there is some fairness and equity in the idea of the GI Bill, and something that would appeal to candidates like Obama who believes that the income gaps in the country and the educational gaps in the country between the affluent and the those struggling at the lower end of the class structure has widened considerably in the last two decades. See Obama's interview with the WSJ on June 17, 2008, during his visit to Flint, Michigan, for an economic theme speech. Previously the educational assistance went upto only $39,000 and could not be passed onto a spouse or child, something that candidate MCain added to the bill. It also includes a monthly stipend for living expenses in addition to the tution, so its fair and generous program for GI's, and may bring some of the benefits in bringing mobility between the classes and new infusion of energy through a more equitable system for young people who may otherwise be left out of opportunities for a better education and better job opportunities even after risking their lives for service. Getting in the brighter more motivated for education people who otherwise might not opt for the military who then pursue higher education will help the miltary improve quality of personnel and help bring more dynamism into society with their energy and enthusuasm and hard work and discipline....

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Should Arthur Levinson and some of the team he has assembled at Genentech leave it will be a big loss for Roche, as it was his team that helped bring a series of new drugs to the market such as Avastin, Herceptin, and Rituxan to bring Genentech sales from $1 billion in 1999 to $9 billion in 2007. As drug companies buy biotechs in large numbers, with $70 billion in deals this year almost twice the toal for 2007, the question remains whether the drug companies have succeeded in retaining talent as consolidation yields cost savings but does not improve drug discovery. Drug companies are struggling with this, and a couple of models have emerged for keeping minds engaged in scientific discovery satisfied that they have the freedom to operate as they always have and work with the teams they have assembled, similiar to the work style and in the similiar culture as before. Almost like walking into the offices they use as if its like before. J&J has come up with a hub and spoke model to acquire companies and then leave them alone- preserving their management teams, unique cultures and brands. Centocor was bought in 1999 by J&J and 10 of the top executives stayed on and developed Remicade, a drug for inflammatory disease that has sales of $3.3 billion. Glaxo has developed a new structure under new CEO Andrew Witty, which breaks up the primary research labs into "discovery performance units" or DPUs, which also include new biotech startups. In April Glaxo acquired Sitris, a Cambridge, Massachusetts startup. The company had come up with a new science for tackling heart disease, diabetes and other diseases associated with aging. Harvard trained scientist and CEO, Christoph Westphal, went with Glaxo turning down other companies because the independence of the DPU appealed to him. Each DPU has a 3 year budget and this also appealed to Westphal. He could walk into the labs, says Westphal as if nothing had changed. Is Roche making a mistake in acquiring Genentech when it could have left it alone. Are the consolidation savings worth it if some of the discovery team at Genentech leaves and there is the feeling that the culture will change, and if Levinson feels that he was not consulted about Roche's move. These are questions that remain even when Roche's CEO, Severin, says he does not want to change things at Genentech because Roche's actions will speak louder than its words. ...

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Ed Thorp and Bill Gross of PIMCO on risk management techniques they use which build on one basic fact avoid overleveraging. If you have a 5% edge from an information standpoint or over your opponent bet only 5% of your wealth on each toss of a coin. What do they think of today's markets? In the hedge fund world they say there has been a large flow of capital into it in the last 15 years from $100 billion in the early 1990's to $2 trillion now. But the amount of available investing opportunities have not gone up by much. So you have a large number of bets in a pool of assets that are of declining quality and the overbetting phenomenon that leads to gambler's ruin. And as the edge available diminishes one needs more leveraging to generate same returns which leads to the overleveraging that got Carlyle Capital and Bear Stearns collapse. The puts a big dent into the perceived stable situation creating huge crises in confidence and declining spiral.

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Apple shares are down 25% says this WSJ article and asks the question whether Apple's best days are past. In the fastest growing markets in Asia and Africa, Apple iPhones are beyond the reach of about 95% of the population. The number of Apple iPhones sold in India have dropped 40% in 2018 compared to 2017. Apple's market share in India has fallen from 2% to 1%, according to Canalys research firm. The $1.8 billion in Indian sales is about half of what Apple executives had hoped for when Tim Cook visited India in 2016. Some call it a rout. Tim Cook seldom mentions India now. At the center of this is Apple's reluctance to change its business model of getting the highest margins, making not a range of handsets, but a few models selling at high prices. This is the strategy that Apple has used to revive the company from near bankruptcy in 1997. Competitors including Xiaomi, the Apple for China and India, tweak their phones constantly to address local concerns for battery life, and lower prices to get market penetration. Only 24% of Indians have a smartphone and India is fastest growing market. Friction with the Modi government which cannot be favorable to Apple's plans to push a high  margin product when competitors have similar but better value packages.   In price sensitive markets of Africa and Asia most people buy phones outright and use pay as you go plans, Apple is not popular. Even in China Apple's market share is down from 12.5% in 2015 to 8% in 2017, according to Canalys. Apple is reluctant to make many models offering lower prices and to address concerns such as battery life in India. In India 39 million people will add smartphones in 2018 with 75% costing less than $250, 95% costing less than $500. In Apple's lineup the iPhone 7 costs around $550. Competitors such as Xiaomi, OnePlus, Oppo, and Vivo flooded India with smartphones costing less than $200. Unlike Apple which spurns market research these companies do extensive research work on local situation. OnePlus has focussed on battery life and gained 30% share of the premium segment to Apple's 25%. By making the devices in India these companies avoid having to pay the 20% tariff. Apple has so far not put up a new plant with the restriction that India places of single brand retailers over 51% foreign owned to buy locally 30% of manufacturing materials. The Modi government felt Apple was not focussed enough on bringing high tech jobs to India and helping local manufacturing, a perception not conducive to expansion in India where "Made in India" is the government plan. This means opening Apple stores in India is less likely now.  The turnover of Apple India executives is also increasing with 3 new CEO's 2017- 2019. Apple's strategy of targeting wealthier Indians makes it not even a fringe player in the Indian market down to 1% of the market. Just as it shrinks in the Chinese market where most customers are price sensitive and the economy is slowing.   ...

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A decision by management of the Ginori porcelain tableware company near Florence, Italy, to compete at the low end leads to its bankruptcy. Ginori was considered a prestigious maker of porcelain tableware since 1735, and hired top designers. The decline in formal dining led to a decline in demand. The decision to move to the low end is considered by workers to have been a mistake as low end Chinese imports have dominated the market in Italy. The difficulty of competing at the low end and the need to come up with a product and technological advantage that commands a higher price is a challenge facing Italy's manufacturing industry.

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The P5+1 talks with Iran are stalled and not ending in agreement by August 2012. The former head of military intelligence of Israel, says the Obama administration needs to tell the Israeli parliament Knesset directly that preventing a nuclear Iran is a U.S. interest and the U.S. will take military action if needed. He points out that the U.S. with its larger operational capabilities can take additional time compared to the Israeli capabilities, but this goes against Israel's creed of not relying on the U.S. for its defense or outsourcing defense. For the Israelis to rely on the U.S. it needs this clear committment and statement of intention. In addition the Obama administration needs to take five steps to reassure Israel says Yadlin: a statement to Congress in writing that the president reserves the right to take military action, increased military presence in the gulf, provide advanced military technology and intelligence to Israel to enlarge Israel's window for military action in exchange for giving sanctions and diplomacy more time, talk publicly about the dangers of reconstitution of Iran's nuclear program, and commit to the security of U.S. allies in the gulf. The strategy Yadlin emphasizes is that if this is going to work for a peaceful goal, preparing for war is essential....

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Tom Friedman explains why Applied Materials is one of the largest solar panel manufacturers in the world but makes its panels in 5 factories in Germany, four in China and one each in India, Taiwan and Italy. With no factory in the USA. And all 14 factories put up in the last 2 years, put up overseas. Applied Materials is opening its largest worldwide research facility in Xian, China, in October 2009. Applied develops the knowhow for solar energy at its research facilities for manufacturing technology. These solar panel factories says Applied CEO Splinter go for about $200 million each. Solar panels technology can vary from thin film coated onto glass with nanotechnology using crystalline silicon, to other technologies. Germany is at the forefront of the world solar energy industry. It is the second largest industry in Germany employing some 50,000 people. China is putting a new emphasis on pollution free energy. What Germany has done says Friedman after visiting Applied Materials research facilities, is to allow any business or homeowner to generate solar energy, and if they decide have the power utility to connect them to the grid as well as buy the solar power at apric and duration attractive to the homeowner or business user. Something the USA has still to do. As a result solar energy consumption in the USA lags way behind these countries. Applied Materials largest USA customer is a German owned company in Oregon says Applied CEO Splinter. Splinter points to the fact that solar energy is becoming an important industry, similiar to the way the auto industry assumed importance. For Applied Materials this means revenues of $1.3 billion in the last 12 months, according to Splinter. ...

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The Economist argues that a grand coalition in Japan of the Democratic Party of Japan with the old LDP is a bad idea, because it means going back to the old ways. It is these old ways with a collusion between government and the nuclear industry, says the Economist, that led to the nuclear crisis at Fukushima. Better for the DPJ to go to the country and seek a mandate in new elections.

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With domestic oil consumption growing at 10% a year, and the Arab Spring leading to increased subsidies and social spending, the Saudis are looking at nuclear power to generate some of the supply of electricity. Saudi Arabia expects to have no reserve margin of supplies by 2020 at current levels of domestic consumption. In 2011 the Saudi government setup the King Abdullah City for Atomic and Renewable Energy, or KA-CARE, for coming up with nuclear energy policies. KA-CARE has an agreement with French supplier AREVA.

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The Obama administration denied approval for the TransCanada Keystone pipeline. President Obama made it clear that the decision was made because of the "arbitrary" February approval deadline imposed by Republicans in Congress, and said this "is not a judgement on the merits of the pipeline." The administration suggested that TransCanada reapply. TransCanada CEO Russ Girling says the company is "fully committed to the construction of Keystone XL, and that it "will reapply for a presidential permit and expect a new application would be processed in an expedited manner to allow for an in-service date of late 2014." Experts say the U.S. could reuse some of the studies and analyses and that the process would take 18-24 months. Alberta's premier, Alison Redford, says she believes the project will get approved.

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Questions about the whereabouts of Masataka Shimizu, president of Tokyo Electric Power Company, which owns the Fukushima nuclear plant. Shimizu was last seen in public appearances at a news conference on March 13, 2011. The chairman of the upper house of Japan's Diet, the parliament, calls this "inexcusable." The governor of Fukushima prefecture, Yuhei Sato, tells Japanese television that the people there cannot accept apologies, "because their anger and anxiety are extreme." Protestors walk past Tepco headquarters, chanting "No more Hiroshimas."Toko Kanoh, a former Tepco vice president, and for 12 years member of the Diet upper house, says Shimizu should talk to the public as soon as possible. This kind of disappearance is not uncommon in Japanese corporate circles. During the Toyota recall crisis, the chief of Toyota was also unavailable. Shimizu like other senior executives in the corporate elite is a lifer, having joined Tepco at 23, after graduating from Keio University. Because of the size and influence of Tepco, it produces one third of Japan's energy, he is also vice chairman of the Nippon Keidanren, the Japan Business Federation. Shimizu's role at Tepco was marked by an effort to restore profitability after the 2007 earthquake that damaged a nuclear plant. Shimizu decribed Tepco's core mission in the last annual report as "cost-cutting. He describes the need to construct "disaster resistant nuclear power stations," but at the same time in somewhat of a contradiction, says that the company had cut the cost of inspections not "by postponing them but by reducing their frequency." Just as Toyota went through a wrenching crisis after cost cutting and insulated corporate executive behaviour, which combined with technology and user behaviour put its safety reputation in risk, Tepco finds itself in severe shock. Tepco has lost two thirds of its value on the Tokyo stock exchange, and is looking for $25 billion in emergency loans. ...

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Experts discuss how to draw on your interests and passions for using time in the 20 some retirement years with good health.

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Different perspectives on the "zero tolerance" policy implemented by Martin O'Malley when he was Mayor of Baltimore during 2000-2006, are described here by WSJ's Laura Meckler. O'Malley sees the policy as having reduced crime in the city, yet David Simon a reporter for the Baltimore Sun, who created the HBO series 'The Wire,' sees this differently. The HBO series was critical of the Mayor and painted a less flattering picture of the city, showing city leaders and institutions not tackling the real problems facing the city. Following the riots in Baltimore the conflicting versions of progress and lack of progress are emerging. Simon says the pressure on the police to show reduced crime led to arrest of people for minor offences.