jack sparrowChina Declares War On Pollution And Slowdown And Shadow Banking And…

“Premier Li Keqiang said Wednesday that China would ‘declare war on pollution,’ acknowledging that it was a major problem for the country…Tackling air pollution means capping coal consumption and shutting down inefficient steel smelters, aluminum and cement producers [but] this will be partly offset by investments in clean tech, more efficient consumer goods and renewable energy.”  Meanwhile, the Chinese government is keeping its economic growth goal of 7.5%: “inflation and money-supply targets also matched those of 2013 and the budget deficit as a percentage of gross domestic product will be about the same as last year.”  So a lot of people are pretty skeptical of China’s dueling economic growth, financial reform and environmental goals.  But hey, even if they get like, 7.2% they’ll be pretty happy.  Ironically enough, a solar energy company probably won’t pay its bills on March 7, “in what would be the first default of an onshore bond.”  People are freaking out, but here’s why everything will be OK and why the search for China’s “Bear Stearns moment” is flawed.

Swashbuckling On The Eagle Farrd

John Kemp argues that large oil companies would be wise to separate their on and offshore oil production businesses, as BP plans to do, since offshore oil production is akin to building Ferraris while onshore oil production is the equivalent of building VW Golfs.  “The focus onshore is on the need to be nimbler, more innovative and operate with far less cost, with faster decision-making and shorter project cycle times.”  Furthermore, “there is not a good cultural fit between shale buccaneers and the petroleum engineers and MBAs in the rest of the organization.”  Meanwhile, here’s the devil’s advocate view on natural gas exports and energy costs: “The U.S. is expected to start exporting LNG (liquid natural gas) in 2015.  These new supplies could allow more buyers to purchase gas based on the American natural-gas benchmark, Henry Hub, instead of linking to oil prices…But many will stay linked to oil [since] the Brent oil market is traded around the world, while natural-gas markets are regional, making them less liquid and more volatile.”

Global: Innocence Abroad

New research on the sourcing practices of American firms suggests that “America’s view of offshoring could use an update” : 1) There is a “tale of two economies”: an average of only 4% of primary business functions actually leave the United States, but “for large goods-producing companies the figure was much higher, at 10.5%,” 2) “the majority of offshoring (57% by cost) was to locations with costs that were the same as or higher than America, such as Canada and Western Europe, rather than to low-cost developing countries (29%), 3) “the more companies offshored a particular function, the fewer low-paid jobs they had in the same function at home.”

USA: Obama Budget Seeks To Eliminate Inversions

“Though the Obama budget has little chance of passing in its current form, the proposed crackdown on inversions signals the administration’s willingness to confront a somewhat obscure tax loophole that has become a favorite technique for investment bankers looking to save their clients money.”  “Inversion” refers to “an increasingly popular maneuver that allows United States companies to legally reincorporate in a new country when they buy a smaller foreign corporation, thereby avoiding paying the Treasury Department millions or even billions of dollars in taxes.”  Current rules permit foreign reincorporation as long as the US company transfers 20 percent of its shares to foreign owners; the proposal would raise that minimum to 50 percent, “essentially requiring a United States company to buy a foreign entity larger than itself.”

JPN: Even As Japan Baulks At Trade Concessions, Farmers Move On

“Even as Japan rebuffs international pressure to scrap import tariffs on food items, including beef, some Japanese farmers are stepping outside the heavily protected co-operative system anyhow, worried that the biggest threat is not trade liberalisation but Japan’s rapidly ageing population and its changing tastes…This quiet but significant shift suggests Japan’s tough TPP (Trans-Pacific Partnership) stance aimed at protecting the country’s farmers is losing some of its foundation as more commercial pressures come to bear in Japan and farmers and their buyers work around an inflexible traditional system.”

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