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Several factors make it likely that oil prices will remain low for an extended period of time into 2016 and beyond. As Ailworth points out nobody is blinking. The Saudis plan no change to their high production. U.S. oil producers in the Gulf of Mexico have already made investments for deep sea drilling wells following the end of the moratorium on drilling in the Gulf. Many of these wells are producing at very low marginal cost as most of the investments have already been made. It makes economic sense to produce even in a low price environment, according to Andarko. Shell continues to invest in the deep waters of the Gulf. Its production is up 10% to 250,000 barrels a day. American shale oil drillers have not cut back as much as expected, partly because many companies with large debts need the cash flow to pay interest on debt. And some of the 1200 wells that were drilled but left untapped may also be brought on stream to slow production declines. As a result the overall production of American crude, according to monthly federal information, has declined by about 3% to 9.3 million barrels from the peak reached in April 2015. This helps the U.S., Europe, China and India, at a time when their economies are experiencing different problems. It hurts Russia, Venezuela, Nigeria, and Iran. Russia is coping as its exporters convert dollars into rubles after the sharp depreciation in the ruble, and helps local industry including steel producers, as well as wheat exports. Venezuela's economy is the worst hit. And Iran now has to produce at high levels in 2016 to improve its economy following the lifting of sanctions....

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Risks to China's banking system from the bond market in China. China's bond market has grown rapidly to 25.5 trillion yuan or $4.1 trillion yuan, especialy in the period following the stimulus. But it is not similiar to bond markets in developed countries, the U.S., Japan and France. It has a patchwork of regulators, is closed to foreign investors, and does not offer protections to investors. It also lacks an effective ratings system. Most bonds are held and traded by the banks, which concentrates the risks in the banking system. In developed countries the risks are spread out among investors. Bond markets offer the advantage of reducing dependence on banks for lending but with banks holding most of the bonds in China, including that of local governments, the risks if bond issuers default are concentrated in the banking system.

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Questions raised by Nicholas Kristof of the NYT on Russian hacking during the 2016 U.S. presidential election. Kristof says the implausible or far fetched idea of foreign interference in U.S. elections is not as implausible as it may appear.

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India's central bank chief, Rajan, favors a lower inflation target of 4%, with fluctuations of 2% up or down. Lower inflation is critical for India to achieve higher growth rates. The World Bank lowered the rate of growth in the global economy but kept the rate of growth of 6.4% for India unchanged. Rajan also favors creating a more formal system for setting rates, with a committee like the Open Market Committee in the U.S. deliberating over the different factors for such a decision. Rajan was a professor at the University of Chicago, and chief economist at the IMF, before joining the central bank. Central bank policies have helped stabilize India's currency, the rupee. The lower cost of oil for India with an oil import bill of $100 billion is a big boost for economic growth. For the global economy this comes at a time when China's growth rate is slowing to below 7%.

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Mexico, Chile, Columbia and Peru will sign an agreement in Cali, Columbia, eliminating tariffs on 90% of merchandise trade between their countries and set a 7 year timetable for the remaining 10%. Visa requirements for citizens of these countries have been removed and plans are being developed for a common market. These countries have a private sector that plays a major role in their economies compared to Brazil and Argentina where the state plays an important role. The combined GDP is as large as Brazil's in the Latin American region- about 35%. The regional stock exchanges of these countries have created a single bourse. Their is potential for more regional trade- the Economist estimates intra-regional trade in South and Central America at a low of 27%, compared with 63% in the European Union and 52% in Asia.

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Moritz Kramer, a managing director at S&P, says Spain, Italy, France and Portugal cannot depend on austerity measures and cuts in spending alone to resolve the eurozone crisis. This is only one aspect of the problem facing the countries in southern Europe. The major reason for the problem is the lack of competitiveness in their economies. Nobel winner Stiglitz also points this out and adds that its important to note that the human and natural resources of Europe are the same and the potential just as good today as before the eurozone financial crisis. He says southern Europe has failed to utilize its human and capital resources and improve its technologies in ways that would make it more competitive with Asian countries. Experts point to the decade it took Germany to address problems created by inflexible labor markets, wage competitiveness, and investments in technology and human resources to get to where it is today.

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Efforts to increase investment in exploration for oil and natural gas by the Indian government include an increase in the state mandated price of natural gas to bring it closer to world prices.

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The effects of China's slowing economy on food exports of Argentina and Uruguay is likely to be small because of China's continuing need for imports and the food contamination from widespread pollution. Commodity producers of iron ore in Australia and Brazil see the rising wages in China and pollution controls reducing the gap between locally produced iron ore and imported iron ore.

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The devaluation of the Argentine peso from 9.8 to the dollar to 13 to the dollar in Dec. 2015 by president Macri is leading to higher inflation hurting the working class. The cutting of export taxes is helping farmers. Removing most currency controls is designed to help increase foreign investment by letting foreign companies freely repatriate profits. Also expected to be removed are bureaucratic procedures that limit imports of new equipment for manufacturers. Middle class voters see the moves helping the economy in the long run with new foreign investment and changing the outlook for investment. A former central bank president Mario Blejer points out that after 12 years of the previous Kirchner administration Argentina needs investment- by improving the outlook for investment and removing import controls the government plans to stimulate investment to lead to economic growth. Inflation is up 25% and Macri is keeping Mrs. Kirchner's price control programs in place to prevent a surge in inflation beyond the impact of the devaluation. ...

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Tourists from China went up by 20% in 2015, going over 1 million. Foreign enrollment at Australian educational institutions was up significantly in 2015, going up to 645,000, up 25% over 2012 with the weaker Australian dollar. Australia's services sector including inbound education and tourism exceeded in value the minerals and metal ores exports in the last two months of 2015. This enabled the Australian economy to grow by 3% in the 4th quarter of 2015 over the prior year.

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Major decline in oil prices in Oct. 2014 as prices drop to $81 per barrel and are forecast to reach $70. U.S. oil production increased by about 56% or 3.1 million barrels a day since 2004. U.S. demand for gas and fuel declined 8% compared to 2004. Initially instability and wars in the Middle East sustained high oil prices in 2012-2013. Yet with growing output from shale and other sources in N. America and slowing economies of Europe and China, the situation reached a point in 2014 where supply exceeds demand. This shift more than offsets any instability in trouble spots. The situation affects the U.S. consumer favorably with an estimate of $1 billion in savings for American consumers with every one cent drop in price at the gas pump, by one estimate from Deutsche Bank analysts. Typical American families gained an extra $50 a month from the decline June to October 2014, according to analysts at Gasbuddy.com. The declines are a boost for the slowing economies of Europe, Japan, China, S, Korea and India. China's imports for 2015 are estimated at 61% of oil consumption, using official estimates. In the current slowdown the lower prices offer relief. India which imports 75% of its energy benefits signficantly, as this helps lower inflation and reduces cost of fuel subsidies for state run companies. Russia is adversely affected by the declines as it depends on oil and gas exports for 50% of the nation's budget. Estimates by AFK Sistema economists show the Russian economy contracting in 2015 with oil at near $90 per barrel (Brent crude is at about $85, and WTI at $81 in early Oct. 2014). Russia's former Finance Minister Alexei Kudrin reflects opinion among Russian executives and politicians, when he told state television that Saudi Arabia may be pushing prices lower to target Russia's oil resource based economy and Mr. Putin, in an effort to broaden the effect of sanctions. (The Saudis have strongly protested the Putin intervention in Syria.) Venezuela has used $120 per barrel and Angola $98 for its budget, leading to a strong hit for the economy. ...