LyrArc Article Gist
The sudden change in the prospects for Venezuelan bonds with the sharp drop in oil prices by Dec. 2014. Price of credit default swaps on Venezuela debt show a 61% chance of default in 2015, and a 90% chance of default in the next 5 years. In previous years Venezuela debt was considered safe by emerging market investors because of oil revenues. Venezuela and its state owned oil company, PDVSA, issued a significant amount of debt from 2007 to 2011. Analysts say the debt outstanding for PDVSA and Venezuela is $66 billion. In the short period of a year sharp declines in commodity prices have created a crisis for Venezuela's finances. Fitch Ratings has lowered the credit rating on the bonds to CCC from B. Venezuela's benchmark bonds traded at 46 cents to the dollar on Dec. 19, 2014, after dropping as low as 38 cents. Yields on short dated bonds are above 40%. Problems in Venezuela can create contagion effects for other emerging markets- Russia, Argentina, Turkey, Brazil, India, Indonesia, China- especially with Fed signals about raising rates which lead to capital outflows. ...

LyrArc Article Gist
The Return on Equity (ROE) at China's state owned companies has dropped by half since 2007, according to this analysis in the Asia Nikkei. Swollen capital and asset levels as a result of China's response to the global financial crisis of 2008. A 4 trillion yuan stimulus package was introduced with policy initiatives to have state owned companies to make large investments in China and overseas using credit provided by the government. Recent policy moves under president Jinping have expanded the role of the state in the Chinese economy. President Xi sees the state backed companies as critical to building socialism with Chinese characteristics and critical for the Belt and Road Initiative. In a October 2016 speech he called them "essential forces with strategic importance" for the major programs including Belt and Road Initiative. Leaders of these companies are  told that "their number one role is to work for the Communist Party of China." One example of this drop in return on equity ROE is Petrochina and parent CNPC. During a period of oil prices above $100 a barrel Petrochina made investments in buying assets in oil and gas fields. Some of these assets including over $2 billion in Peruvian oil fields from Petrobras may never pay off. As a result ROE dropped to 1.9% compared to about 6-10% for western oil companies. ...

LyrArc Article Gist
Japanese prime minister Kishida joins president Biden in deciding not to run again with low popularity ratings and cost of living concerns of the public. The LDP administration of prime minister Kishida put through a $100 billion investment package to revive the economy in November 2023. In the first quarter of 2024 the Japanese economy GDP growth suffered from a 0.7% decline. Japanese prime minister Fumio Kishida of the LDP party popularity has remained at around 25% and Kishida has decided not to run again for prime minister. His term expires in 2025. A new LDP leader will be elected. This report says growing voices in the LDP party persuaded Kishida not to run and have a new leader. Inflation which was tame for over a decade has increased with surging prices for oil and gas after the Ukraine war. The situation is similar to the US and EU where rising prices have hurt ordinary people struggling to make a living. Kishida committed Japan to investing 2% of GDP on defense. The effects of economic developments is that the Japanese currency is weakening. ...

LyrArc Article Gist
Hyperinflation of 1 million percent annualized rate for Venezuela. This is the revised estimate from the IMF for 2019, after first estimating it at 13000 percent. Is this even possible for an oil rich country? It shows what can happen with severe economic mismanagement. It is happening as the economy is damaged by failed socialist policies, corruption and a collapsing oil industry. The successor to Hugo Chavez after he died in 2013 has failed to tackle the situation with the government having a hard time paying for the paper to print bolivares, the currency. Electronic money is paid into accounts, A petro currency was created backed by oil supplies, but nothing has worked. As an example dishwasher soap cost 3.8 million bolivares a week ago, today it is 4.9 million. Some families are down to small bits of soap, and cut out proteins from the diet, says this report. For one of the richest countries in Latin America this hyperinflation is an extreme form of impoverishment, say experts. The worst case experts say is that of Hungary after World War II when prices doubled every 15 hours. Zimbabwe and Serbia also recorded severe hyperinflation in recent memory. ...

LyrArc Article Gist
Kristof of the NYT writes about DJT Action in Venezuela January 3, 2026.  Some of the least understood aspects of the US president's language on Venezuela- The president's reference to oil resources is not for the US to benefit from the oil reserves. It is about oil in the sense that the oil industry in Venezuela is in total disrepair and broken from years and decades of nationalization followed by lack of investment, lack of western technology.  Sanctions put a huge price on the Venezuelan economy with the brunt of it borne by ordinary people- the same people that a socialist like Hugo Chavez thought he could help with his erratic ideology. As China, and now India has learned the only way to get ahead in this world for nations is to invest, invest, invest with larger and larger pools of capital, technologies and labour. By alienating the US or EU there is a loss of technologies and of investment so that one is going to bat with only one strike and you are out, so that from Day 1, China under Mao, India under Nehru had lost the race, so did all the "socialist" regimes in the world. Conversely China under Deng and successors, and India under Modi are breaking development records. How does the US change this? First it removes the sanctions on the Venezuelan economy. Second it gives Chevron the green light for increased production. Oil facilities of the Venezuelan oil company will get foreign investment and US investment from American oil companies with returns for both and the state oil revenues invested under a government that is able to invest it free of corruption or it being funneled out of the country to support other regimes in Latin America. This will rebuild the country's health system, its broken infrastructure, restore its finances, and make it in a decade one of the advanced economies in Latin America. But only if- the gangs and other private militias, the other military elements from the two decades of utter mismanagement and drug trafficking are  removed. A new way will have to be devised that the US as to work out ad hoc meaning in the process of doing, invented that meets the conditions of getting this done and the process of reconstruction of Venezuela under the Monroe doctrine of keeping the entire western hemisphere free of such elements. The US achieved this with the help of Great Britain in 1823 when it was only 50 years since it's founding in 1776. The US has the resources in 2026 to make this happen in the interests of the people of the western hemisphere, in the quality of life of people in the western hemisphere. It does not seek any country's resources, it seeks the development of the countries in the western hemisphere in the great tradition of Jefferson, Monroe, Lincoln, FDR and JFK. ...

LyrArc Article Gist
The NYT's Thomas Erdbrink makes a road trip from Mashad in the west to Tehran, just before elections in 2017. He sees abandoned factories and other signs of the impact of sanctions particularly on small businesses. Iran's economy has not rebounded from the sanctions period in the way it was expected. Lower oil prices have had an impact. Signs of decay and the effect of sanctions on people's lives can be seen, including the isolation from the outside world. It reminds one of a road trip across Cuba following the lifting of sanctions recently.

LyrArc Article Gist
The prices of soyabeans have fallen by half since July and corn prices dropped from $7.54 a bushel in July in central Iowa to $3.81 a bushel Oct 21. But fertilizer and seed costs could go up 40% for next spring's plantings. This year net US farm incomes will hit $95.7 billion up 10% from $86 billion in 2007 and nearly double the $58 billion of 2006, according to the Agriculture Department. In the boom years farmland prices shot up where prices jumped by double digits percentages for 4 years, now Purdue University economist predicts declining prices moderately for next 5 years. The farmers are being squeezed on both sides. Declining farmland prices reduces borrowing power. With the commodities boom prices of everything from fertilizer to harvesting combines went up. Prices of fertilizer are not coming down even as the price of oil has come down. So farmers are reducing the amount of plantings they will make this coming year which should lead to reduced farm production and lower agricultural exports. In the boom years swelling middle class in places like China increased demand for US agricultural products. But with the global crisis and reduced demand from other countries prices are coming down. ...

LyrArc Article Gist
After all the talk about spending Saudis fall to sixth place in soccer league spending as oil prices decline and there is just not enough for all the mega projects.

LyrArc Article Gist
Bilateral trade between China and Russia is down 31% for the first half of 2015, and Chinese investment in Russia down by 20%, according to Moscow Carnegie Center. This is a result of the fall in oil prices, declining demand for commodities in China, and the economic downturn in Russia. After the western sanctions on Russia Chinese investors are cautious about making investments. This means Russia's large expectations that this would act as an offset for economic relations with Germany and other western nations is not working out in reality. The contract for the second gas deal for gas from western Siberia, for which a memorandum was signed with China in Nov. 2014, was not signed during Putin's visit to Beijing in September 2015. Experts say the economic environment is not favorable for gas deals with the uncertain economic outlook in China.

LyrArc Article Gist
The WSJ responds to president Biden ramping up renewable energy plans and linking Republicans with Senator Rick Scott's plan for sunset provisions on federal legislation every 5 years that Biden says would include Medicare and Social Security. WSJ is critical of Biden's renewable energy plans and calls for increasing production of oil and gas to meet energy shortages and price increases. It is also against a wealth tax, Biden's $2 trillion Workers and Families Plan, and Biden's plan for Medicare to negotiate drug prices. WSJ says real disposable personal income increased $4205 under the Trump presidency 2017-2020, and has since declined by $374 with high inflation depressing purchasing power. The impact of climate change requiring brave choices and strong action is missing in the Republican plan as Republicans focus on attacking Democrats controlling the presidency and Congress on the issue of inflation. The issue of remaking supply chains are on both the Republican and Democratic agendas with president Trump giving more rhetoric against China's role in dominance of supply chains and Mr. Biden taking stronger action in Theodore Roosevelt's style of carrying a big stick and quiet posture in restoring America as a manufacturing powerhouse. The impact of climate change is short term rather than long term as seen by the heat wave in South Asia today, the fires in North America and Europe. Republicans are losing sight of the importance of making the shift on renewable energy quickly with some short term pain, as they push for oil and gas solutions and a less effective program for renewable energy. Mr. Biden is taking on bigger risks in the short term in the midterms and beyond but following a sound policy of aggressively pushing renewable energy. This can also be seen in the importance renewable energy is being given even in countries with a need for coal and natural gas such as India. Modi's plans in India are to buildup renewable energy capacity with aggressive targets for 2030. ...

LyrArc Article Gist
The Reserve Bank of India (RBI), India's central bank, left rates unchanged in October 2012. RBI Governor Subbarao says inflation could go above 8% by January 2013. High global oil prices and a weaker currency are adding to food price increases to push inflation higher. The RBI lowered its growth forecast to 5.8% from 6.5%. Mr Rangarajan, chairman of the Prime Minister's Advisory Council said the RBI will not lower rates till January 2013 unless there is a significant tendency for a decline in inflation before then.

LyrArc Article Gist
Casey describes the crucial policy errors in Brazil with over spending and lack of transparency in the years leading to the crisis in 2014-2015. Brazil raised interest rates half a percentage point in May 2015 to 13.25%. Inflation was at 8.13% in Brazil in March 2015. Brazilian companies have large dollar denominated debt accumulated during the boom years which needs to be refinanced as its currency the real declines. With current policies economic growth is likely to continue at 0-1%. Russia made policy errors with the departure of Kudrin as finance minister for Putin's second term as president. Policies to attract foreign investment, controlling military expenditures, and continuing growth were reversed as Russia took positions on Ukraine that led to western sanctions, capital outflows, and a sharp decline in the ruble. By May 2015 the ruble and oil prices had recovered from lows, but the ruble was still 35% below the level in June 2014, and the oil prices were still only two thirds of the peak in 2014. Russia sees the decline in the ruble as a way to reduce imports and increase import substitution for many products. The economy is weakened by high inflation- inflation was 6.9% in March 2014, going up to 16.9% in March 2015. In May 2015 Russia lowered the target repo rate by 1.5 percentage points to 12%. Russia faces stagflation- high unemployment with low GDP growth, and high inflation....

LyrArc Article Gist
The Obama administration is pushing for new U.S. fuel efficiency standards of 56.2 mpg by 2025. In May 2009 President Obama announced domestic car and light truck fuel efficiency standards of 35 mpg by 2016. Europe is expected to reach fuel efficiency of 60 mpg by 2020. This would still leave Europe considerably ahead of the U.S. in fuel efficiency for automobiles, but the gap would be much smaller. For the last several decades the U.S. has fallen sadly behind Europe and Japan in fuel efficiency. The perception of poor fuel efficiency hurt the automakers badly during periods of high fuel prices and when buyers were facing difficult economic choices. The automakers are beginning to grasp this fact. Mark Reuss, president of General Motors, commented that- "it's very challenging, but its upto us engineers to provide high value to the customer and support the environment." This is an issue that has serious national and global implications as it affects the future prices and demand for oil, emissions, and future economic growth. It would also bring the U.S. in line with Europe and Japan when it comes to fuel efficiency of automobiles. ...

LyrArc Article Gist
Indian Oil's losses at its 17,800 gas stations in India run at about $76 million a day as prices do not reflect market prices because the government it to sell gasoline and diesel and cooking oil at subsidized prices.