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Awareness about climate change is increasing. A poll in 2017 shows 61% of people in 38 countries seeing it as a big threat. Only terrorists inspired bigger fear. Even with the U.S. withdrawal from the climate change agreement many cities and states in the U.S. including California and New York are committed to the goals set in the Paris Accords. China is making a shift away from coal and fossil fuels. Yet the huge demands in Asia, particularly India as it shifts from a rural to an urbanized economy, mean that the shift away from fossil fuels is going to be very difficult. In the last decade 2006-2016 energy demand in Asia increased by 40%, according to the Economist, oil and coal use increased by about 3% a year and natural gas at 5.2% a year. Solar energy and wind power use is increasing and solar becoming cost efficient. Yet Asia still depends on fossil fuels. Even the use of electric cars in China as it pushes for higher numbers of electric vehicles means use of energy coming from a electricity grid powered two thirds by coal, producing more carbon dioxide than some very efficient gasoline driven car models. There are short term costs in the shift from coal but this comes with a better cleaner air demanded by urban residents, and less costs in health. In certain countries like India the costs are to be balanced with the need to tackle rural poverty.   ...

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A big hurdle for local brands in China is the Chinese consumer's interest and respect for foreign brands. Asked about local brands buyers say they can't think of any, or say Chinese brands are shoddy in quality and value. Brands such as Haier in consumer appliances and Lenovo in tech are an exception. During the big surge in consumer sales in the last two decades Chinese companies producing local brands thought it adequate to simply imitate foreign brand names rather than take the difficult route of establishing the credibility of their own brand- an effort which might take years. Often the foreign name was changed slightly to keep the resemblance but mean something positive to Chinese consumers in the local language. Common are names such as Adidos, Hike, Cnoverse and Fuma for sneakers. Clio Coste keeps the connection to Lacoste with its crocodile logo. Coca Cola in Chinese is Kekoulele, translated to mean Tasty Fun. Only now are local companies giving serious attention to creating long term brand entity and image. The serious attention to brand names and branding comes at a time when China increasingly depends on consumer sales to power the economy with the decline in real estate and slower manufacturing. For the 11 months of 2014 retail sales were up 12 percent over the prior year period to $3.8 trillion, according to the National Bureau of Statistics. ...

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Property sales are estimated to fall by 28-33% in China, twice as earlier forecast by S&P Global Ratings. This is a steep decline that will affect the Chinese economy so dependent on construction. This week there were reports of property buyers in 100 cities getting together to withhold payments on unfinished apartments. Property developers depend on these payments as they have severe liquidity problems and need cash for operations.

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There may be psychological hurdles in China's growth with the effects on mental health from lockdowns in major cities, the revolt in the property sector with home buyers losing confidence in developers, the loss of confidence of foreign investors from US and EU. The dependence on the property sector to carry so large a burden of growth for the last 2 decades in China may now look like an error. The dependence on foreign investment may also be an error as the loss of confidence could mean some withdrawal and a lack of sustained investment.  It could even be said that restraints on both sectors property and foreign investors could have created alternative paths to growth, and reduced the shift of factories from the US and Europe to China that have now caused trade friction and and a reverse shift of investment back to home countries of US and EU. Trade friction has it appears backfired in a way that extends to the overall relationship which could have been prevented by preventing the hyper growth that happened. Greg Ip of the WSJ has argued that compared to Japan's growth in the sixties and seventies from a country of 100 million the hyper growth for a country of 1 billion for 2 decades created a massive impact on communities in US and EU that were dependent on factories that were lost to China. This has alienated large sectors of the public in the US and EU which could have been prevented by restraints on hyper growth in China. Ip says the growth was too large and too fast for the US to cope. It may have permanently damaged the relations between the two countries showing that trade and globalization had unintended effects when left to business and governments staying away from keeping an eye on how it was happening. ...

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This report in WSJ says China's government faces severely strained government finances. Local government entities sale of land financed 40% of local government revenues in China, and most of these have dried up with the very real loss of confidence in property sector. Government now faces $900 billion in shortfall in revenues says this report. There may be psychological hurdles in China's growth with the effects on mental health from lockdowns in major cities, the revolt in the property sector with home buyers losing confidence in developers, the loss of confidence of foreign investors from US and EU. The dependence on the property sector to carry so large a burden of growth for the last 2 decades in China may now look like an error. The dependence on foreign investment may also be an error as the loss of confidence could mean some withdrawal and a lack of sustained investment.  It could even be said that restraints on both sectors property and foreign investors could have created alternative paths to growth, and reduced the shift of factories from the US and Europe to China that have now caused trade friction and and a reverse shift of investment back to home countries of US and EU. Trade friction has it appears backfired in a way that extends to the overall relationship which could have been prevented by preventing the hyper growth that happened. Greg Ip of the WSJ has argued that compared to Japan's growth in the sixties and seventies from a country of 100 million the hyper growth for a country of 1 billion for 2 decades created a massive impact on communities in US and EU that were dependent on factories that were lost to China. This has alienated large sectors of the public in the US and EU which could have been prevented by restraints on hyper growth in China. Ip says the growth was too large and too fast for the US to cope. It may have permanently damaged the relations between the two countries showing that trade and globalization had unintended effects when left to business which has no comprehension of how the macro developments can affect the relations between the peoples if the other effects in the relationship such as community impacts are ignored which business says is not its role,  and governments staying away from keeping an eye on how it was happening and adjusting for ill effects with restraint and redirection of business policies. ...

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China's manufacturing sector contracts in June with the PMI index dropping below 50 - to 49.0.  Exports were also coming in lower. Experts say the increase in interest rates by the US is reducing imports of Chinese goods into the US. This comes as local governments are strained in their finances by $900 billion, and a budding revolt is taking place from property buyers with developers in financial trouble, as reported in the WSJ. Psychological hurdles now loom in the loss of confidence in the public in the property sector, loss of confidence of foreign investors with many constraints in operating, mental health issues for the population in many cities with the covid lockdowns.   The growth has slowed to 0.4% and there is now a realization dawning that there was overdependence both on property sector and foreign investment that set up new factories offshored from the US and Europe that alienated the public in these countries. Unlike wih the situation of Japan in the sixties and seventies for modernizing its economy growth of the scale China was pushed into by misguided and self interested  business interests in the US including its investment banks and local government officials in China without restraint by the central government in Beijing, ultimately led to trade friction and permanent damage to US China friendly relations. Communities in the US and the EU simply could not cope with the hyper growth from hyper shift of factories from the home countries to China that pushed this hyper growth. The property sector played the same role in the domestic front with too big a burden carried by it resulting in hyper growth. This did not have to happen. It happened because of a lack of understanding that this would have consequences in the longer run which is now showing up. ...

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Zhou Xiaochuan, is head of the People's Bank of China since 2002. For a long time Zhou has tried to convince party leaders in China to make financial sector changes. The new leadership of Jinping-Li Keqiang has now adopted most of the road map and priorities drawn up by Xiaochuan. The first is bank deposit insurance, which would especially protect small depositors and provide a basis for new private banks to compete with large state owned banks, creating competition in the financial sector. By supporting creation of privately owned banks impetus could be given to loans to the private sector to rebalance the economy away from state owned banks and state owned enterprises. This is a key goal in the road map drawn up by the think tank Development Research Center (DRC) which has the backing of premier Li Keqiang. Competition from new private banks would let banks compete to offer higher rates to depositors, another goal. In a September article for the Communist Party Seeking Truth magazine, Zhou pointed out the pressing need for " supporting private capital to set up private banks and guide them to position themselves in serving small and micro companies." These new companies especially in tech and information technology fields can be the new drivers for growth in the future as the burst of infrastructure building generated growth slows down. The one area Zhou faces resistance is his idea of opening up China to foreign capital inflows and outflows. Here critics,including younger economists, say this protected China in the Asian financial markets crisis of 1997, and would protect China in the event it faces outflows of the type that are happening in India in 2013 after the U.S. Fed's plan to withdraw from its quantitative easing. Xiaochuan sees the flow of foreign capital as another way for capital to flow to new private companies and balance away from the state owned enterprises, and for China's savers to be able to obtain more attractive returns. Zhou says his plan would include the option for China to reintroduce capial controls in a crisis. As China's debt to GDP ratio is set on a trajectory to approach the levels reached in Japan before its banking crisis there is greater awareness from party leaders about the need for prudence. Xiaochuan has worked with party leader Jinping's key economic advisor Liu He for years, and has the support of He and Jinping for introducing deposit insurance as a top priority. President Jinping and Premier Li Keqiang see the need for Xiaochuan's experience and foresight "as a talent who can be counted on," as the sense of importance of changing the economic structure has deepened in 2013. Mandatory retirement for Xiaochuan at 65 was set aside to give him a third five year term, and his road map long ignored by former premier Wen Biao, is now at the top of China's agenda. ...

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The tensions that exist in Australian society, as a result of the large Chinese investments and imports of infrastructure building commodities such as iron ore, natural gas and other commodities. Australia's Pilbara region in the northwestern part of the country, has become one huge quarry for China, as an estimated 1 million tons of iron ore raw material is loaded onto 2 story high trucks each day- with automated driverless trucks system being implemented- and shipped by 2 mile long trains to waiting ships on the coast. Australians remember this done on a smaller scale in the 1980's by Japan. At the time Japan brought in Japanese workers. The same is true today but on a bigger scale, with China bringing in workers with lower pay. The concern now is what it was then, as one local leader put it- are we going to have towns with mines or mines with towns, he asked. The mining companies are looking at it purely as a commercial venture, and not investing in the towns. The towns now fear they will find the boom times gone someday and nothing tangible to show for it, no schools, hospitals and no infrastructure. And because the mining project companies fly people in and out, the 8000 aboriginal people in Pilbara- the original people of this land- see little of the mining expansion's benefits. Wandoan, a small place with 300 homes in the outback in Queensland, in eastern Australia, is an example of the gut wrenching change taking place in the mining areas. The lives of the people from the local pharmacy, the local supermarket, and the local ranchers, depend on the mining decisions made in China. This area was part of a planned, on again off again, $6 billion coal mine -part of a A$150 billion complex of natural gas and coal projects for exports to Asia in Queensland- and involved Xstrata buying 70,000 acres of the best grazing land for 7 coal mines. With the locals selling off, the mining uncertain, the supermarket closing, the whole town has the feeling of being up in the air, and fading out someday. Australian public sentiment recognizes this feeling, and at the same time is ambivalent about the impact. Polls conducted by the Lowy Institute for International Policy, show 73% of Australians feel Chinese economic growth has a positive impact, and at the same time 57% feel that there is now excessive Chinese investment, and 46% feel China will be a military threat in 20 years. Australians remember the same feeling about Japan's investments in raw material sources in the eighties. In 1988, polls then showed 70% of Australians saying there was too much Japanese investment, even though they also recognized that Australia had benefitted. The difference now is that there are also fears of China's influence, and foreign investment guidelines limit investments in Australian mining companies to below 50%. China's investment in Australia's natural resources comes in several ways: in the year upto July 2009 A$42 billion in export demand, A$3 billion in direct investment in Australian companies, and about A$5 billion in project financing. Iron ore sales to China amount to A$22 billion each year, and about one fourth of Australia's exports went to China, growing at a rate of 31% in 2009. According to the chief economist of Austrade, the government trade organization, Australia benefits from the economic relationship with China- this adds A$3,400 per year to every Australian household. Efforts to use some of the profits made by mining corporations for infrastructure and other public purposes, by increasing the mining tax have failed; as the mining industry launched a campaign against the government of Kevin Rudd, who was removed from office by his party. In the recent national elections, the ruling Labor party lost its majority, after losses in the resource rich states of Western Australia and Queensland. In the meantime the Australian currency has become the currency used by currency speculators who cannot use the yuan to make a bet on the currency- as the yuan is pegged to the dollar- and instead use the Australian dollar as a proxy. This makes it volatile, with the Australian dollar losing 10% of its value in a single day, when pessimism increased about China's growth forecasts. It also shows how much of the good story of employment and gdp growth in Australia is tied to the story in China, and the extent of the negative impact a reversal in this area can mean for Australians; especially now that the bad debt in the post-2008 explosion of bank lending poses risks to China's banknig system. ...

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Coal India, is a state run monopoly which is a huge stumbling block for India's economic development. India lags behind Brazil, Indonesia, Thailand, Vietnam and Malaysia in the percentage of the population having electricity. Production methods do not use modern technology similiar to mines in other countries, and the average age of the 333,000 employees is 45-50 years. An eight hour shift at some mines produces as much coal as a mine in the U.S. does in 5 minutes, because of the lack of modern technology. About 300 million Indians lack electricity. The Modi administration's focus is on improving efficiency, introducing competition, and bringing major technological changes to the coal industry. Piyush Goyal, India's Coal minister faces one of the biggest challenges in the Modi administration. His focus is on efficiency, and the Modi administration has set a target of 1 billion tons for 2020, a 15% increase in production each year for the next 5 years.

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What oil prices are doing to the redistribution of wealth across the globe. How rich and poor countries are coping. Money going to gasoline is still only 4% of disposable income of U.S. households and the USA hasn't lost its addiction to large vehicles, though there has been a moderate shift to smaller cars and SUV's. Chinese demand keeps growing. Fuel Economy standards are only now being changed and few alternatives are emerging quickly enough to make a difference in the short run. Though a worldwide recessionary climate could change things, no major change is expected. Airlines and the auto industry will be the most affected industries. Global warming and CO2 emissions will be a factor in evaluating how well these alternative are working. With oil and gas prices high, unfortunately coal use is increasing both in China and elsewhere. And ethanol hasn't won popularity because it uses up scarce resources of land, water and energy. A big change is the shift to most of the action going to government oil companies of developing countries, which are much larger now and have the resources to handle what the oil majors did before. Western oil service companies are working with government oil companies bringing access to technology....

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During 2012 and 2013 the U.S. put pressure on China and India to cut oil imports from Iran to increase the effectiveness of sanctions. As negotiations eased the sanctions, China increased oil imports in 2014 by 30% in 2014 over the prior year. China's Foreign Ministry sees a "win-win spirit" in the nuclear deal that opens up economic relations with Iran. Analysts say China has setup three new storage facilities on its eastern coast with about 45 million barrels of new capacity, which could be filled with new supplies as its growth slows and demand decreases. China's imports were about 7 million barrels a day in June 2015.

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During a public dialogue during the federal government's open day German Chancellor Scholz takes time to go over the origins of the war in Europe as he understands it. Of Russia acting "clearly with the intention of conquering its neighboring country," in an imperialist manner. Here is what he said- On Nato During talks before the war started in February when he met Putin in Moscow Scholz assured Putin that Ukraine would not join NATO "in the next 30 years." NATO was never a threat to Russia even though Putin says NATO's increasing eastward expansion was to the detriment of Russia's interests. On the origins of the war in Europe- Scholz says Putin launched the war for "completely absurd reasons." During his talks with Putin for example he says Putin told him that Belarus and Ukraine should not be independent states. "This is a war that Putin, Russia, started, clearly with the intention of conquering its neighboring country. I think that was the original goal." "Putin actually had the idea of swiping a felt-tip pen across the European landscape and then saying, 'This is mine and this is yours.' " Something Germany could not accept. Scholz condemns Putin's imperialism. He compares Russia's actions to the early days of imperialism. Scholz was reported to be reading Cambridge historian Brendan Simms book Europe- The Struggle for Supremacy in Europe from 1453 to the Present, before the war started. Simms shows a Europe that fought intermittent wars for supremacy between European powers Spain, Britain, Dutch, French, Germany, Austria- Hungary, Russia, Sweden over most of the period 1450 to 1950. The last part of the period was marked from 1850 to 1900 by an openly imperialist land grab for territory in Africa and Asia between Britain, France, Japan and Germany.  The period 1950 to 2000 marked by the Cold War between the US and the Soviet Union and China.    On planning for the war in advance- DW.com reports that Olaf Scholz is convinced that Putin planned this war long before the Russian invasion of Ukraine on Feb. 24. On the future of the war- Scholz says he will not end the dialogue with Putin. Scholz and Germany, Biden and the US want to show that the imperialist type of expansion into neighboring states is no longer accepted, not for Russia or China. Scholz says Russia is currently engaged in gaining territory in eastern Ukraine, but it is not certain that it will stay that way, so giving in is not a sensible strategy.  Ukraine needs the Black Sea ports and the area around Kherson on the Dnieper river to maintain its economy through exports of foodgrains. There is international consensus that these exports are essential to most of Africa and other parts of the world. The war in the remaining part of 2022 into the winter is being fought in this area. Another area of international consensus is that of the refugees mostly women and children in other parts of eastern Europe, and the displaced people within Ukraine moving from the east and south to the west. For the first time the US and Germany are providing Ukraine with the air defense systems that it needs to protect refugees, something that was missing for the many early months of the war leading to millions of refugees inside and outside Ukraine.       ...

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Andrew Stuttaford's excellent review of a book on the hyperinflation of Weimar Germany. In early 2010, the out of print book, "When Money Dies," by Adam Fergusson was trading for four figure sums. It describes life under hyperinflation in Germany and the events leading to it, the efforts to find a solution, and the collapse of the German economy with the worldwide great depression. The book describes the death of the German mark, with 20 marks needed to buy one British pound in 1914, going to 310 billion in late 1923! The story starts with the onset of war in 1914, and the fateful German decision to fund the war effort largely through debt and the printing presses. What exacerbated the situation was the relatively shallow capital markets in Germany, the creation of 'loan banks' funded by a printing press used by the central bank, and the muffling of all information. The stock markets were closed during the war and foreign exchange rates were not published. The destruction of the war, revolution, protests, imposition of reparations by the victorious powers, and terrotorial occupation worsened the situation. The efforts of central bank president, Rudolf Havenstein, to prevent mass unemployment by devaluing the currency to keep exports competitive, worked only for a time. In the end, says Fergusson, the music stopped. Lacking a reliable pricing mechanism and faced with huge strains, including the onset of the worldwide depression, the whole German economy stopped functioning at even the most basic level. The whole economy was reduced to barter. Rent was payed with butter and lumps of coal were bartered for something else. The only time an economy was reduced to barter in recent times (in the last 2 decades) was the situation in Argentina after a sharp devaluation. The Russian economy also faced a trying period in recent years with the collapse of communism and a collapse of the currency. And the Asian economies faced a difficult period during the 1997 Asian financial crisis. But nothing compares with what happened in Weimar Germany. The book was originally written for a British audience at a time of rapid inflation in the 1970's, and it reminded readers of the connection between the quantity of money in circulation and price stability. Financial crises play out in different ways in different periods, but it is a sobering warning for the need for prudence in financial affairs, avoiding excesses, the need for global cooperation and a measure of peaceful coexistence in world affairs that enables financial systems to work. With excesses in asset bubbles of the stock market or housing kind, bad loans in the financial system, overleveraging in the financial system, lack of reserves, or huge trade deficits, posing the new types of risks in today's environment. Bad loans in the financial system caused problems in Japan in the past and pose risks in China today, overleveraging caused problems in the US in 2008, lack of reserves in S. Korea in 1997, a collapse of the currency in Russia in the 1990's, and a sharp devaluation with a lack of reserves in Argentina. Too much money in the system, as in China today with the sharp increase in bank lending as part of the stimulus following the 2008 crisis, can distort the functioning of the financial system with excesses in real estate speculation and overproduction. The nature of the crises are different but all have a common factor of tolerance for excesses over a long period and a lack of prudence, exacerbated by international tensions and wars that weaken a country's finances. The twin wars in Iraq and Afghanistan are estimated to cost a trillion dollars each and this can only exacerbate the finances in the US, when coupled with other factors such as bad real estate loans in the financial system, and huge trade deficits....

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China's GDP growth in the second quarter of 2012 over the prior year quarter slowed to 7.6%, according to govrnment data.

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Electricity production and consumption data from the provinces has been overstated say experts making the decline in economic growth in China look less severe than it really is. Coal stockpiles at one key storage location in Qinhuangdao port reached 9.5 million tons in June, says an analyst for Wood Mackenzie, global energy consulting firm, a level not seen since the level of 9.3 million tons in November 2008 during the height of the 2008 financial crisis.

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Prakash and Ghosh in the Hindusthan Times remind readers that even though India has ambitious plans for renewable energy much remains to be done in shifting to clean coal technologies. An estimated 80% of India's coal plants use obsolete technologies, making this an obvious area for improvement. India plans to make solar the source of 100GW of 175GW it plans to generate in renewable energy by 2022. Yet it must not be forgotten that coal is a dominant source for the foreseeable future and shifting to clean coal technologies is an area that should get top priority from the government. Today India is the third largest in terms of carbon emissions after the U.S and China.

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Pearlstein says the major news stories of today all are about the same theme- of how the US was encouraged to live beyond its means by trading partners who prospered as this went on, with the tacit agreement of financial and political leadership in the US who raised no alarm about this. These stories are: the G-20 meeting in South Korea with the goal of rebalancing the world economy, the President's Deficit Commission Report recommending bold steps in changing the tax and spending policies of the US, the criticism of the Fed's decision on $600 billion of quantitative easing, and the renewed concerns about Ireland where severe cuts in public spending have failed to reverse a downward slide.These trading partners prospered by lending Americans the money to consume more than they produce. It was he says a wonderful arrangement while it lasted, because it helped bring millions out of poverty in Asia, while letting Americans enjoy a transitory period of a higher standard of living. This unsustainable arrangement converted the US from world's biggest creditor nation after World War II to the world's bigggest debtor nation. He credits Geithner for coming up with a more convincing and less confrontational way to correct the imbalances by setting limits on the deficits and surpluses of trading nations. He points out that the Chinese have barely budged on the issue of an undervalued currency, the world be damned. And the German and Chinese criticism rings hollow he says, as both countries are the main beneficiaries of the current system. The normal mechanism of correcting imbalances with a floating rate exchange system is hardly relevant, as it is incompatible with state run economy and strategy of export growth of China. Erskine Bowles and Alan Simpson have presented he says a bold deficit reduction plan that is credible, fair, economically sound. Even though it was received with the usual complacency and lack of awareness both in the media and in Congress. The simple reality after all the awfully complicated details and the painful implications is this: Americans have to consume less and produce more, and trading partners have to consume more and produce less. And this shift cannot be pushed into the future as our trading partners would like....

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After over two decades of focus on GDP growth targets, China under prime minister Li Keqiang is giving more emphasis to job growth and problems of air pollution, education, and quality of life indicators. Premier Keqiang tells a news conference in Beijing in March 2014 that China needs to create 10 million new jobs each year. More bond defaults can be expected as the financial system is being changed with new rules. Li says China will no longer be "preoccupied" with GDP growth targets. Li made the new priorities clear-"The GDP growth we want is one that brings real benefits to our people, helps raise the quality and efficiency of economic development and contributes to energy conservation and environmental protection."

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Spain's central bank was lauded for macroprudential supervision before the housing bubble burst. Will China's central bank and financial authorites which have managed the housing bubble upto this point face similiar problems? Can China be the sole exception even as housing bubbles burst with wide repercussions in the U.S., UK and Spain? Nicholas Lardy, of the Peterson Institute of international Economics, says urban housing stock makes up 41% of Chinese household wealth in 2011. The same figure for the U.S. is 26%. Chinese buyers invest in homes because low interest rates on savings accounts cannot keep up with inflation. Real estate investment was 13% of GDP in 2011. Home ownership is a recent development in China, only since 1990, Chinese have never experienced large price declines. Household debt as a percentage of disposable income has increased significantly in recent years, up to 53.6% in 2011 from 31.3% in 2008, according to Lardy.

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Tyler Cowan says slower growth in India is a troubling sign in 2012, and as significant if not more than the eurozone crisis. A less mentioned and major problem is the low productivity in agriculture, and he points to Japan, Taiwan, and S. Korea where major increases in agricultural productivity preceded successful industrialization. With growing population and continued growth India will be one of the largest economies in the world. The other major problem is shortages of energy supplies and the inability of state owned company, Coal India, to upgrade technology and increase output.

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The shift away from Iranian oil with U.S. pressure and sanctions, and higher oil prices, could pose challenges for the Indian macroeconomic outlook in 2020.

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Important year end reveiw of the oil price forecasting work of so many anlaysts and where they failed . The IEA and the US Enery Dpt forecast have year after year underestimated this pirce by over 20%. Analysts change the price forecasts within a couple of weeks based on changing information and assumptions. Of all this the Saudi Arabian forecasts have ben within 12 % of what has actually ocurred according to a study by Ronald Berger Strategy Consultants of Muich, Germany. And whats their forecast for 2008. By extrapolating from the Saudi budget and the assumptions, used such as giving a wide margin to avoid a deficit in the budget if oil prices undershot by a wide margin, one gets $75 for US benchmark crude. Forecast by experts are in the neighborhood of $80 average for the whole year 2008. Goldman recently revised theirs upwards from $85 average for 2008 to $95 within a 4 week period. How good is the Goldman forecast. No one really knows. Lehman has a forecast of $84 average for 2008 and bases it on the opacity of the market because no one knows what OPEC will do with supply and China does not provide good information on demand. So basically anlysts are adding an uncertainty premium to the price of oil. And this is especially so because as the Chief Economist at IEA says global space capacity is so thin and any event can influence price. Last year the rhetoric about Irans nuclear intentions was enough to stir up the price, as were other smaller events disrupting supplies. But the Iranian situation has since cooled down and diplomatic solutions are in the works. So what to expect in 2008 in the way of political uncertainty. Iraq, Iran, Palestine, Lebanon have all seen a cool off in the ast couple of years and the Bush administration rhetoric has become outmoded as has other rhetoric from Iran so that does'nt look like it will stir up oil prices in 2008. Still there will be some uncertainty premium about supply from OPEC and demand from China and India. And demand from the Middle Eastern oil producing countries themselves as well as the increasing demand in India and China will mean that lower demand in the US because of a recession will still mean an increase in global demand over 2007 of 1.5 million barrrels a day over 2007's 85 million barrels a day. What will change the dynamics of this situation is the government mandated fuel economy for all vehicles on the road with Europe more aggressive in this area under the pressures of global warming. If this impacts India, China and Russia as these fuel saving technologies are transferrred there overall consumption should see an impact. Europe's targets are only 4 years away for 2012. And the environment may cause China to bring in newer technologies that both contribute to improving environment and conserving energy. Because China's environmental record is almost catastrophic one could see some of this happen much sooner than expected after the Olympics in 2008. All that might change the way the world looks at oil and its use, and all energy sources and their use. ...