Tag Archives: financial

Why Obamacare Means Life and Death…for Both Political Parties

by e0ebri1z Posted on December 3, 2013

Mother Jones

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In politics, hyperbole is routine. It’s common for campaign ads to praise a candidate as a savior or denigrate a contender as the destroyer of worlds. On Capitol Hill, lawmakers regularly claim that a particular piece of legislation will yield everlasting rainbows—or bring about complete devastation. President Barack Obama has been hailed by fans as a champion of hope and change and declaimed by foes as a secret, foreign-born, America-hating Muslim socialist bearing a covert plot to weaken the nation he leads. But every once in the rare while, hyperbole is warranted. And as the fierce mud-wrestling over Obamacare continues, it’s not going too far to say that this clash is darn close to a life-and-death battle between the Democrats and Republicans. Which explains why the conflict is not ending, even as the White House patches up the glitchy Healthcare.gov website. Tea party leader Sen. Ted Cruz (R-Texas) is still tweeting out daily his demand for a full repeal of Obamacare, and Obama, as he demonstrated at a White House event on Tuesday afternoon, is revving up the White House sales campaign for the Affordable Care Act.

With the website somewhat functioning, the fundamental debate over Obamacare resumes, and this debate pits the basic philosophy of each party against the other. Ever since becoming tea partyized, the Republican Party has essentially stood for one notion: government is the problem. After the economic crash of 2008, Republicans tended to blame Washington’s federal budget woes—not the actions of Wall Street dealers and schemers—for the financial calamity that sent the economy into the most severe recession since the Great Depression. They saw little need for government action to re-regulate the financial shenanigans that led to millions of Americans losing their jobs and homes. And they fiercely opposed the idea that government should stimulate the collapsing economy. The tea party victory of 2010 pushed the GOP further in this direction, with new Republican legislators obsessively peddling a single-minded agenda: big government must be crushed. Obamacare, naturally, was the main target of this ideological wrath. So much so that this year, House Speaker John Boehner was outmaneuvered by Cruz-inspired tea party back-benchers determined to shut down the government to thwart health care reform law.

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Why Obamacare Means Life and Death…for Both Political Parties

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How Filibuster Reform Could Help Obama Crack Down on Banks

by MargoRandell Posted on December 2, 2013

Mother Jones

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Last month, Democrats changed the rules of the Senate. Now, confirming President Barack Obama’s judicial and executive-branch nominees will take just 51 votes instead of the previous 60. That is good news for Obama’s efforts to rein in big banks.

Since Obama took office in 2009, GOP senators have used filibuster threats to delay and block scores of executive-branch and judicial nominees. That has greatly benefited the financial industry. Three long-standing openings on the bench of the DC Circuit Court—which hears challenges to rules required by the 2010 Dodd-Frank financial-reform act—have created an imbalance that has tilted rulings to favor big banks. And vacancies on the Commodity Futures Trading Commission (CFTC) and the Federal Reserve Board of Governors, if left unfilled, could slow Wall Street rule-making to a snail’s pace. Last month’s rules change will make it easier for Senate Democrats to confirm Obama’s choices for these posts. That could lead to regulations and court rulings that are more to reformers’ liking.

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How Filibuster Reform Could Help Obama Crack Down on Banks

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Obama OKs pipeline that will help Canada’s tar-sands industry

by sipid34 Posted on December 2, 2013

Obama OKs pipeline that will help Canada’s tar-sands industry

By

Shutterstock

/ Oleinik Dmitri

The week before Thanksgiving, the Obama administration quietly approved a pipeline project that will cross the U.S.-Canada border and benefit the tar-sands industry. But not that pipeline.

This 1,900-mile pipeline will carry gas condensate or ultra-light oil from an Illinois terminal northwest to Alberta, where it will be used to thin tar-sands oil so it can travel through pipelines. Without this kind of diluent, tar-sands oil is too thick and sludgy to transport. “Increased demand for diluent among Alberta’s tar sands producers has created a growing market for U.S. producers of natural gas liquids, particularly for fracked gas producers,” reports DeSmogBlog.

Houston-based Kinder Morgan is the company behind the $260 million Cochin Reversal Project, which will reverse and expand an existing pipeline. The pipeline will be fed by fracking operations in the Eagle Ford Shale area in Texas.

Yes, fracking and tar sands, together at last.

Here’s a map of the pipeline project:

Kinder Morgan

The existing Cochin pipeline “has had some safety issues in the past,” the Vancouver Observer reports. Last year, Canada’s National Energy Board sent Kinder Morgan a letter citing “significant” stress corrosion cracking failures along the pipeline, and noting that the board had “previously deemed the crack detection methodology employed by Kinder Morgan to be inappropriate.” But we’re sure Kinder Morgan will fix all that when it expands and reverses Cochin, right?

What might this new development mean for Keystone? “While we are hesitant to conclude the Cochin approval bodes well for Keystone XL …, we find the approval interesting as it is for a pipeline that will move a product that should facilitate oil sands growth,” said RBC Capital Markets analyst Robert Kwan.

“Interesting,” yes. But it doesn’t actually tell us anything at all about the administration’s intentions on Keystone. The Obama White House is nothing if not inconsistent on energy policy.


Source
Kinder Morgan secures U.S. presidential permit to transport diluent, Financial Post
Obama Approves Major Border-Crossing Fracked Gas Pipeline Used to Dilute Tar Sands, DeSmogBlog
Obama approves border-crossing fracked gas pipeline used to dilute tar sands, Vancouver Observer

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Israel Ups the Anti-Obama Ante

by Seraphinakbj Posted on November 18, 2013

Mother Jones

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Last week Israel announced it would build 20,000 new settlement homes in the occupied West Bank. It kinda sorta withdrew this plan in the face of international outrage. Then Benjamin Netanyahu went on CNN to blast President Obama’s peace overtures to Iran, while a key advisor told the Financial Times that Israel was ready and willing to bomb Iran whether America liked it or not. Dan Drezner says the technical IR term for this behavior is “wigging out”:

Israeli jaw-jawing about a military strike puts it into a corner with no good exit option. Netanyahu’s definition of a bad nuclear deal seems to include… any nuclear deal. So say that one is negotiated. What can Israel do then? Netanyahu could follow through on his rhetoric and launch a unilateral strike. Maybe that would set Iran back a few years. It would also rupture any deal, accelerate Iran’s nuclear ambitions, invite unconventional retaliation from Iran and its proxies, and isolate Israel even further. If Netanyahu doesn’t follow through on his rhetoric, then every disparaging Israeli quote about Obama’s volte-face on Syria will be thrown back at the Israeli security establishment. Times a hundred.

“Right now,” Drezner says, “Israel is pretty much pissing all over the Obama administration.” Netanyahu obviously has good reason to think that Republicans will support him in this unreservedly, but he better be careful. Even Obama-hating tea party types can start to get a little antsy when a foreign leader is so obviously contemptuous of American interests and the American president.

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Israel Ups the Anti-Obama Ante

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Larry Summers, Secular Stagnation, and the Great Investment Drought

by Lubomyr21t Posted on November 18, 2013

Mother Jones

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This weekend Paul Krugman lavished immense praise on a presentation that Larry Summers gave to the IMF a few days ago, and I’ll confess that I’m a little puzzled by this. Not because it wasn’t a good presentation. It was. But it’s quite short and basically just tosses out an idea without really elaborating on it much. Here’s the idea: we might be in a permanent condition of slow economic growth—i.e., secular stagnation.

The evidence Summers presents is pretty straightforward: during the aughts, we had a huge housing bubble, and yet the economy still performed only listlessly:

Too easy money, too much borrowing, too much perceived wealth. Was there a great boom? Capacity utilization wasn’t under any great pressure. Unemployment wasn’t under any remarkably low level. Inflation was entirely quiescent. So somehow even a great bubble wasn’t enough to produce any excess in aggregate demand.

That’s true enough, and you can argue that this is a new thing. As recently as the late 90s, the dotcom bubble did produce a boom and did push employment to very high levels. That in turn put pressure on employers to offer higher wages, and sure enough, wages went up.

But the housing bubble, despite being even bigger than the dotcom bubble, did no such thing. As Summers says, it didn’t produce high employment; it didn’t push wages up; and it didn’t get the economy running at full capacity. And today, six years after the bubble burst and four years into recovery, with the world’s financial plumbing once again functioning just fine, the economy still isn’t running at high capacity. What’s up?

When I’ve talked about this before, I haven’t framed it as a problem of the natural interest rate going below zero, as Summers does. Instead, I’ve usually framed it as a problem of an investment drought. There simply aren’t enough promising real-world investments available, which means that lots of money is either sitting on the sidelines or else getting diverted into financial rocket science.

Now, in one sense, this is just two ways of saying the same thing: there aren’t enough promising real-world investments at current interest rates. It doesn’t matter that real interest rates are already negative. Reduce them even further, and more investments will look like winners. And yet, if Summers is right and this is a permanent condition,1 we’re still left with a question: what happened to produce a world in which, for an extended period of time, even negative interest rates aren’t low enough to make real-world investments attractive in sufficient quantities to get the economy humming?

The answer matters, because it determines our response. Krugman mentions demographics as one possible answer: slowing population growth means slower economic growth. Another possibility is increased automation: as machines take over more and more work, there are fewer jobs available and less income to spend. There’s also Tyler Cowen’s great stagnation thesis. Or the possibility that increasing income inequality means that the future will have fewer and fewer middle-class buyers to power a consumer economy, and investors know it. Or perhaps, as Jared Bernstein suggests, the culprit is the financialization of America (and the world):

I wonder if the key is “secular,” as in sector, as in sectoral misallocation. Many observers of the US economy have worried about the impact of financialization—the relative growth of the finance sector—on growth. Part of the concern is the bubble machine, and part is the devotion of considerable resources to non-productive activities.

And the misallocation is profound. Who out there thinks financial markets are playing their necessary role of allocating excess savings to their most productive uses? Anyone?

Not me. And yet, I wonder if this is really something that can be blamed on Wall Street? I’m all for reining in the size of the financial sector, but I confess to thinking that there must be something deeper than this that underlies our problem. Wall Street would happily allocate more money to real-world investment opportunities if the demand were there. But it’s not, even with essentially free money. For some reason, the investment community doesn’t believe that expanding production of real-world goods and services to maximum levels will pay off. If Summers is right, this is not a temporary condition that can be solved with monetary policy, it’s a permanent change in the economy. But why? One way or another, the answer has to get back to the real world. That’s where everything starts.

1Something that’s still up in the air. Usually, when bad economic times last long enough, people start to thing they’ll last forever. Ditto for good economic times. It may be that we’re just in an usually bad recession and need more time to pull out. However, the evidence of the aughts really does suggest that something happened to the economy starting around 2000, which means it’s been going on for an awfully long time.

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Larry Summers, Secular Stagnation, and the Great Investment Drought

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U.S. says poor countries’ calls for climate compensation could screw up climate treaty process

by maciao85 Posted on November 14, 2013

U.S. says poor countries’ calls for climate compensation could screw up climate treaty process

By

NASA

The U.N. climate treaty process, hatched in the ’90s, was intended to fight the looming threat of climate change. But as climate negotiators meet in Warsaw this month to develop a successor to the Kyoto Protocol, they are doing so not under the looming threat of climate change — they are doing so in a world currently being throttled by climate change.

That change in the weather is changing the tone of the negotiations. And it’s doing so in a way that some say is a distraction from the original purpose of the treaty process, which was to try to arrest climate change.

No longer are poor countries asking rich ones merely to shoulder the financial burden of reducing emissions. (In past talks, wealthy countries committed to pouring $100 billion a year by 2020 into the new Green Climate Fund to help the others reduce emissions and adapt to climate change.) Now developing countries are also demanding compensation for “loss and damage” caused by climate change, such as the typhoon that just ravaged the Philippines.

And the U.S. fears that bid is going to derail climate negotiations, particularly those now under way in Warsaw. The Guardian explains:

At last year’s climate talks in Doha, the US fought off calls from African nations, the Pacific Islands and less developed nations for a “loss and damage mechanism” to channel finance to help nations cope with losses resulting from climate change, such as reduced crop production due to higher temperatures.

The member nations of the G77+China, which includes most African and some Latin American countries, cannot leave Warsaw without agreement on a loss and damage mechanism, said G77 lead negotiator Juan Hoffmaister.

“We can’t only rely on ad-hoc humanitarian aid given the reality that major climate-related disasters are becoming the new normal,” Hoffmaister said.

This issue is also a priority for other nations including India, small island states and the least developed countries. …

Trigg Talley, the US senior negotiator at Warsaw, acknowledged this week that some developing countries are experiencing costly damages and losses but said the US has “technical and political issues” with any loss and damage mechanism.

The US briefing document indicates that the Obama administration believes a focus on loss and damage will be “counterproductive from the standpoint of public support” for the UN climate talks.

There are two prickly issues for negotiators to pick through here. (1.) Should developed countries that have been responsible for most of global warming so far help the poor ones patch up damages caused by carbon-juiced storms, droughts, and floods? (2.) If so, is the U.N. climate treaty process an appropriate mechanism for dealing with that compensation?

Those are tough questions, and how they play out during the next week, and then over the coming years, will dramatically shape the future of the world.


Source
US fears climate talks will focus on compensation for extreme weather, The Guardian

John Upton is a science fan and green news boffin who tweets, posts articles to Facebook, and blogs about ecology. He welcomes reader questions, tips, and incoherent rants: johnupton@gmail.com.

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U.S. says poor countries’ calls for climate compensation could screw up climate treaty process

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Australia’s climate-denying prime minister is convinced he’s the authority on climate change

by VedaGLWCow Posted on October 28, 2013

Australia’s climate-denying prime minister is convinced he’s the authority on climate change

By

Foreign and Commonwealth Office

Global warming is bringing droughts, heat waves, floods, and fires to Australia. The good news for the land down under, however, is that its new prime minister, Tony Abbott, is the self-declared expert on all things climate related. And he says everything is just fine.

The Australian state of New South Wales has been enduring some of its worst bushfires in recent history, fueled by unseasonably hot and dry spring conditions. Asked by CNN about the fires and global warming, Christiana Figueres, executive secretary of the U.N. Framework Convention on Climate Change, explained that there is “absolutely” a link between climate change and wildfires in general: “the science is telling us that there are increasing heat waves in Asia, Europe, and Australia; that these will continue; that they will continue in their intensity and in their frequency.”

Abbott dismissed those comments by saying that Figueres was “talking out of her hat.” (Which might well be true, if her hat was fashioned from her résumé cataloging her many years of international climate policy work.)

When that failed to shut up the journalists who kept connecting the dots between bushfires and climate change, Abbott piled on the rhetoric, describing their coverage as “complete hogwash.”

Andrea Schaffer

Don’t worry about those little bushfires, like this one that spewed smoke over Sydney on Oct. 17.

Meanwhile, Abbott is urging Australia’s senate to pass legislation that would dump the former government’s carbon tax, saying he will replace the tax with something he has called “direct action,” in which the government would pay companies to reduce their carbon footprints. Fairfax Media asked 35 prominent university and business economists whether they thought a price on carbon or “direct action” would be more effective in reducing carbon emissions:

Thirty — or 86 per cent — favoured the existing carbon price scheme. Three rejected both schemes.

Internationally renowned Australian economist Justin Wolfers, of the Washington-based Brookings Institution and the University of Michigan, said he was surprised that any economists would opt for direct action, under which the government will pay for emissions cuts by businesses and farmers from a budget worth $2.88 billion over four years.

Professor Wolfers said direct action would involve more economic disruption but have a lesser environmental pay-off than an emissions trading scheme, under which big emitters must pay for their pollution.

BT Financial’s Dr Chris Caton said any economist who did not opt for emissions trading “should hand his degree back”.

In the face of this blowback, do you suppose Abbott is easing up on his misplaced self-assuredness? Surely not. Instead, he’s sticking to his favored trash-talking approach to politics. He told The Washington Post that the recently ousted Labor Party government — which introduced the carbon tax and other climate change–fighting initiatives that he’s now working to destroy — was “wacko,” “incompetent,” and “embarrassing.”


Source
Tony Abbott says UN climate head is ‘talking through her hat’ about fires, The Guardian
‘Complete hogwash’? When Bolt grilled Abbott, it sure was, Crikey
Tony Abbott’s new direct action sceptics, Canberra Times

John Upton is a science fan and green news boffin who tweets, posts articles to Facebook, and blogs about ecology. He welcomes reader questions, tips, and incoherent rants: johnupton@gmail.com.

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Something funny about those oil company profits

by Posted on August 2, 2013

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Something funny about those oil company profits

Posted 2 August 2013 in

National

It’s no surprise that the big oil companies continue to bring in enormous profits while gas prices soar — our friends at the Renewable Fuel Association were even more surprised when they looked into where some of these profits are coming from. If you only listened to the American Petroleum Institute, you’d think that RIN credits and renewable fuel are hurting their bottom line. But if you listen to the oil companies themselves on their earnings reports, it turns out they’re actually benefiting from RIN values in some cases. That’s right – the industry is using its muscle to attack a policy that attempts to break the oil monopoly, while making money from the policy itself.

Let’s examine a few of these firms (see the full post from RFA for citations):

 

BP

With respect to RINs, BP told analysts and investors that the company is “…quite well positioned in the short term. We’re net long RINs. We’ve been able to trade into this spike recently and done quite well out of it. I’m very pleased about that.” According to Reuters, “BP also blends a fair amount of ethanol with gasoline at its terminals on the U.S. East Coast and Gulf Coast, which generates RINs…”

 

ExxonMobil

The nation’s largest refiner stated during its earnings call that RINs have had little or no effect on the company’s financials. “We are a net purchaser of RINs, but I will tell you we are pretty well balanced. We do generate the majority of our credits by blending our biofuels directly. …it’s not real significant,” said David Rosenthal, Vice President of Investor Relations & Secretary. When asked by an analyst if RINs had any material impact on ExxonMobil’s quarterly financial performance, Rosenthal replied, “No, not at all.”

 

Phillips66

Phillips66 CFO Greg Maxwell reported that RINs have not necessarily affected strong refining margins or refinery runs: “…with the market cracks where they are, they’re still encouraging high run rates.” Maxwell also noted that while RINs may represent a cost for Phillips66’s refining business, they are a profit for the company’s blending and marketing business. “All of the RINs that are generating through our blending activities show up as a benefit in Marketing and Specialties, and then the cost of those RINs or the value, if you will, are transferred over to Refining.” As noted by OPIS, “…the company operates on both ends, getting RINs from blending through its terminal systems and buying RINs when it sells unblended gasoline.” OPIS further reported that Executive Vice President Tim Taylor said “…the company may increase [biofuel] blending to reduce its RIN exposure.”

 

Hess Corporation

According to Chief Financial Officer John Rielly, “Our retail and terminal networks generate more renewable credits than we require to meet our supply needs. We’re generating around $20-million/month of excess RINs. [For the third quarter] if you were to take the current pricing in place right now and say you sold all the RINs at that price, you could expect us to record an after-tax benefit of $35-40 million.” Rielly also stated that “…the cost of RINs rising in recent months has led to some RIN sharing at wholesale levels, which is reducing our retail fuel margins and offsetting some of the direct benefit from selling the excess RINs.” This means Hess is passing along some of the value of the RIN to customers.

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BP, Shell, Statoil accused of fixing oil prices

by sreg2 Posted on May 20, 2013

BP, Shell, Statoil accused of fixing oil prices

By John Upton

Shutterstock /

Rob Wilson

Have we been paying too much for gas?

The good folks at BP, Shell, and Statoil would never break the law and screw over their customers in a quest for inflated profits, surely.

Yet that is the very accusation coming out of Europe, where the industry giants are suspected of colluding to fix prices for crude, biofuel, and refined oil products at artificially high levels, allowing them to reap greater profits than the laws of supply and demand would dictate in a truly competitive economy.

Offices of the companies were raided last week by European Commission officials, and the Justice Department is being urged to investigate whether the alleged price fixing spilled over onto American shores.

From The Hill:

The Senate Energy and Natural Resources Committee Chairman aired his concerns about the recent probe by EU officials into potential oil price manipulation in a Friday letter to Attorney General Eric Holder.

[Sen. Ron Wyden (D-Ore.)] said price fixing in commodity markets “has been an area of abuse within the U.S. in the past,” noting the Enron power market scandal.

“It is critically important to determine whether or not similar efforts have been made to manipulate U.S. oil indices by these firms or others,” he added.

EU investigators raided the European offices of Statoil, BP and Shell earlier this week. The officials are looking into whether the firms submitted false information to Platts, a price-reporting organization owned by McGraw-Hill Financial.

The Economist puts the scale of the growing scandal in some perspective:

The volumes of oil and products linked to these benchmark prices [submitted to Platts] are vast. Futures and derivatives markets are also built on the price of the underlying physical commodity. At least 200 billion barrels a year, worth in the order of $20 trillion, are priced off the Brent benchmark, the world’s biggest, according to Liz Bossley, chief executive of Consilience, an energy-markets consultancy. The commission has said that even small price distortions could have a “huge impact” on energy prices. Statoil has said that the commission’s interest goes all the way back to 2002. If it is right, then the sums involved could be huge, too.

If true, the accusations wouldn’t just mean that motorists have been paying too much at the pump. Energy prices affect everything from food to consumer goods. From The Telegraph:

Ed Davey, the [U.K.] Energy Secretary, has promised companies will face the “full force of the law” if their behaviour is found to have “driven up” petrol prices.

However, his Department of Energy and Climate Change also acknowledged the impact of oil market rigging could be bigger than simply affecting petrol prices.

It said manipulation of the oil price could have driven inflation and pointed out that the market is an important benchmark for many financial transactions.

High oil prices also feeds through to bigger bills for food, clothes and other essentials because it pushes up the cost of transport and manufacturing.

A high oil price will also fuel inflation, which erodes the value of people’s savings, and can stifle economic growth, by pushing up businesses’ costs.

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BP, Shell, Statoil accused of fixing oil prices

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Tesla turns a profit, mulls driverless feature

by Andrew Karolitz Posted on May 9, 2013

Tesla turns a profit, mulls driverless feature

By John Upton

John UptonTesla roadsters charging in the parking lot at the company’s Silicon Valley headquarters.

Electric-car pioneer Tesla just reported its first ever quarterly profit, jolted into the black by strong sales of its all-electric sedans and by a form of carbon trading under California’s clean-cars program.

And with that achievement under its belt, the Californian company is moving on to conjuring another type of magic. Tesla is in talks with nearby Google to develop a car that can run not only without any gas in the tank, but without anybody in the driver’s seat.

First, the financial news. From CNNMoney:

The electric-car maker announced its first-ever quarterly profit on Wednesday, blowing past analyst estimates.

That’s no small feat in the challenging electric-car business. California-based carmaker Coda filed for bankruptcy last week, and fellow Tesla competitor Fisker appears near bankruptcy as well, having laid off most of its employees last month.

The ten-year-old Tesla said last month that it was expecting to finish in the black for the first quarter, but its results still came in better than expected.

Electrifying. Tesla has taken a steady-as-she-goes approach to business growth, which has drawn criticism from some impatient pundits, by first offering exclusive products to well-heeled consumers. It initially sold high-performance roadsters for more than $100,000 apiece. Then it released the Model S sedan, which has won a number of industry awards and costs $70,000 and up — although federal incentives can bring that price down by $7,500. Within a few years, the company says it aims to start selling vehicles for as little as $30,000. It also develops and produces components for other auto manufacturers, and it is trading in a form of carbon credit. Again from CNNMoney:

Tesla’s earnings were also boosted by its sales of zero-emission-vehicle credits to other automakers, which generated $68 million in revenue for the quarter.

The credit system was set up by the California state government to push automakers to produce environmentally friendly vehicles. Manufacturers of gasoline-powered vehicles can purchase the credits accrued by green-car producers like Tesla.

Now, from the good news to the fun news. Tesla is joining the rush of automakers looking to equip their vehicles with driverless technology. The idea isn’t so much that you clamber out of the driver’s seat, sprawl out in the back, sip on some Bacardi and rum, and take in the scenery as you barrel down the Pacific Coast Highway. Rather, the technology Tesla is looking at is meant as a driving aid, ready to take control away from the driver as needed. From Bloomberg:

Elon Musk, the California billionaire who leads Tesla Motors Inc., said the electric-car maker is considering adding driverless technology to its vehicles and discussing the prospects for such systems with Google Inc.

Musk, 41, said technologies that can take over for drivers are a logical step in the evolution of cars. He has talked with Google about the self-driving technology it’s been developing, though he prefers to think of applications that are more like an airplane’s autopilot system.

“I like the word autopilot more than I like the word self-driving,” Musk said in an interview. “Self-driving sounds like it’s going to do something you don’t want it to do. Autopilot is a good thing to have in planes, and we should have it in cars.”

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