Nouriel Roubini and Elisa Parisi-Capone of RGE Monitor release new estimates for expected loan losses and writedowns on U.S. originated securitizations:
Washington: Libyan leader Muammar Gaddafi said on Wednesday his country and other oil exporters were looking into nationalising foreign firms due to low oil prices and suggested Tripoli might not stick to production quotas set by the Organisation of Petroleum Exporting Countries (Opec).
Speaking via a satellite link from Libya to students at Georgetown University in Washington, he called the current price of oil "unbearable".
Oil was around $44 a barrel on Wednesday, less than a third of the price in July of $147.
"We would not adhere to Opec's regulations because our livelihood depends on oil," Gaddafi said, without providing any details of how Libya might not stick to the oil-producing organisation's quotas.
Gaddafi, who decides Libya's oil policy, referred to recent Libyan newspaper reports over nationalisation because of the dipping oil prices.
The reports, including in the main state paper widely seen as the mouthpiece of Gaddafi, said this week the Basic People Congresses, Libya's top executive and legislative bodies, should vote to nationalise oil firms when they meet in the next few days.
"Oil-exporting countries may move towards nationalisation because of the rapidly declining prices. This is put on the table and is being discussed seriously," Gaddafi said through an interpreter. "Oil maybe should be owned by national companies or the public sector at this point, in order to control the oil prices, the oil production or maybe to stop it," he told the students. "We may refuse to sell it at this very low price."
Petro-Canada, one of Libya's largest foreign oil producers, said it has heard no talk of nationalising its interests in the North African country.
"We continue to have a co-operative relationship with the government of Libya, both signing agreements last summer and implementing contracts," said Andrea Ranson, spokeswoman for the company.
In June, Petro-Canada signed six long-term exploration and production deals with Libya's state oil company that it said would lead to a doubling of production there.
US companies ConocoPhillips, Hess Corp and Marathon Oil are active in Libya under a consortium called Oasis Group with Libyan National Oil Corp. Other US firms involved there are ExxonMobil, Chevron and Occidental.
Gaddafi said he hoped nationalisation could be avoided by a price rise.
"We hope that the prices will go up again, say $100 a barrel, so that this idea would be discarded, to stop this idea of calling for nationalisation," he said. "However, with the decline, this would remain on the table."
Reports of nationalisation come after Libyan National Oil Corp released a report for 2008 suggesting officials want to modify policy based mainly on production sharing agreements.
Some diplomats argue such reports are aimed at putting more pressure on oil firms in upcoming negotiations.
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
ABU DHABI // At least seven per cent of the energy consumed in the emirate will come from renewable sources by 2020, the Government pledged last night.
The commitment came on the eve of the World Future Energy Summit, a three-day forum that starts today in the capital.
The UAE’s goal of boosting its renewable energy capacity is an important part of the Government’s comprehensive energy policy, which is expected to be published within the next few months.
Mohammed al Bowardi, the secretary general of the Abu Dhabi Executive Council, said in a written statement: “The establishment of a long-term renewable energy target for Abu Dhabi builds on the emirate’s leadership in energy and sustainability.”
The decision to make renewable energy sources more prominent in the capital’s future reflected “the environmental legacy” of the late Sheikh Zayed, founder of the UAE, Mr al Bowardi said.
Considering the size and population of Abu Dhabi, the seven per cent renewable energy target is considered high. In comparison, eight per cent of the energy consumed in China in 2006 came from renewable sources. The EU’s goal is to have 20 per cent of its energy from such sources by 2020.
More reliance on renewable sources such as wind and solar power is seen as a way to slow climate change, which is believed to be caused in large part by the burning of fossil fuels such as oil and coal.
Abu Dhabi’s decision is expected to stimulate the local renewable-energy sector. Almost none of the emirate’s energy currently comes from renewable sources.
Yesterday’s announcement was approved by Sheikh Khalifa bin Zayed, President of the UAE and Ruler of Abu Dhabi, and Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces. It was pushed ahead to coincide with the World Future Energy Summit and was made on the same day that Masdar and the Abu Dhabi National Oil Company signed a deal to collaborate on reducing carbon emissions from the production and processing of the emirate’s oil and gas.
The summit brings together scientists, educators, experts in alternative energy sources, high-level government officials and business representatives. Its purpose is to discuss ways to solve energy demand and environmental challenges.
The Masdar Initiative was launched to position the capital as a research hub for sustainability issues and energy technology.
U.S. exports fell in November, capping the biggest four-month decline in more than a decade and signaling trade will contribute little to economic recovery, even as the recession depresses imports.
Exports decreased 15.2 percent from August to November, the most since at least 1992, according to Commerce Department figures released today in Washington. The trade deficit narrowed to $40.4 billion, the smallest since November 2003, as imports fell to the lowest level in three years.
“The key message from this report is bad news,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. “It is slim comfort that the U.S. cut its demand for imports more rapidly than the rest of the world cut its demand for U.S. exports. That might cushion the U.S. downturn a little, but it is not a route to recovery.”
American exports and imports are both contracting as the global economy faces the first simultaneous recession in the U.S., Japan and the euro region in the postwar era. While plummeting demand helps trim the nation’s purchases of foreign goods, falling exports of U.S.-made products will hobble American factories and jobs.
Trade has contributed to growth in the U.S., the world’s largest economy, since the first three months of 2007.
Americans bought 12 percent fewer goods and services from abroad, reducing imports to $183.2 billion as demand for foreign crude oil, automobiles, computers and televisions sagged. Exports dropped 5.8 percent to $142.8 billion in November, today’s figures showed. Foreign purchases of automobiles were the lowest since October 2006.
Decline in Trade
“The real story is the contraction in important export volumes that underscores the decline in world trade,” John Ryding, chief economist at RDQ Economics LLC in New York, wrote in a note to clients. “An economy cannot grow its way out of a recession by reducing imports, especially one the size of the U.S.”
Slumping demand for American-made computers and semiconductors contributed to the drop in November exports. Intel Corp., the world’s largest chipmaker, said this month that fourth-quarter sales dropped 23 percent, more than it projected in November, as the global recession intensified.
Intel Chief Executive Officer Paul Otellini, 58, has said he expects the current U.S. recession will be the worst of his lifetime. The Santa Clara, California-based company’s chips run about 80 percent of the world’s PCs, making it a bellwether for technology spending.
To contact the reporters on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
They're trying to sell more U.S. goods overseas despite the decline of both global demand and U.S. competitiveness.
Exports currently make up about 13 percent of the country's total economic activity, far less than the 70 percent taken up by production for domestic consumption. But that's where economic growth can still happen, analysts say, especially as the domestic housing and credit crises promise to freeze spending at home for at least another year.
Economists and business leaders suggest the incoming Obama administration implement export-friendly measures such as streamlining U.S. customs operations, negotiating more free trade agreements and developing industries such as alternative energy that can become the next generation of U.S. economic powerhouses.
"The role of exports is colossal," said John Murphy, vice president of international affairs at the U.S. Chamber of Commerce. "Over the past two years, exports were one of the few bright spots for the U.S. economy. We're going to need strength there in any recovery."
That's been the strategy of St. Charles, Ill.-based motor manufacturer Bison Gear & Engineering, which has seen its international sales jump by 50 percent over the past three years despite an overall decline of 10 percent since 2004 in the general motor market.
The company, like other exporters, benefited from the U.S. dollar falling by 22 percent between 2002 and 2008, which made many of its products cheaper overseas. The dollar's recent rebound, however, has erased some of that advantage.
"I see (exports) as an important component to our future," said the company's owner, Ron Bullock. "We're investing in that area and adding people to support it."
While the rest of the economy suffered, U.S. exporters had their best year ever in 2008, when they fueled an all-time high 12.8 percent of total U.S. economic activity, Murphy said.
The top U.S. exports were aircraft, entertainment products, machinery and transport equipment. Manufactured goods made up 60 percent of all U.S. exports.
Export growth was crucial to keeping the U.S. economy expanding, albeit at a meager pace, rather than falling into an early recession over 2006 and 2007, Murphy said.
Spurring more U.S. exports, however, will prove tough as global economies cool this year.
The National Association of Manufacturers expects new data to show "a dramatic slowdown" in export growth over the last three months of 2008 as a result of the economic crisis, said the association's chief economist David Huether.
With one in five manufacturing jobs dependent on exports, U.S. manufacturing had already sunk to its lowest level in nearly three decades, according to a recent study by the trade group the Institute for Supply Management.
U.S. companies have long been fighting a losing battle against some foreign competitors, who can pay workers less and avoid often costly U.S. regulations.
The Congressional Budget Office found that while U.S. manufactured exports rose by 58 percent between 1999 and 2007, manufactured imports grew by 78 percent and the U.S. trade deficit doubled
| Trade & Investment Mission to Dubai & Abu Dhabi -- Accounting Services, Airport/Ground Support Eq., Aviation Services, Building Products, Construction Eq., Computer Software, Financial Services, Information Services, Investment Services, Water Resources Eq./Services | ||||
| ||||
| Event Summary: | ||||
| Contacts: | ||||
| Bobby Hines, Los Angeles (Downtown) International Trade Specialist Phone: 213-894-4231 bobby.hines@mail.doc.gov | ||||
| Johnny Brown, U.S. Export Council Phone: 404-300-9303 jebrown@usexportcouncil.com | ||||
| Michael Elterman, U.S. Export Council Phone: 310-691-2419 michael@usexportcouncil.com | ||||
Jan. 2 (Bloomberg) -- Manufacturing in the U.S. shrank in December at the fastest pace in almost three decades as the recession deepened and spread overseas.
The Institute for Supply Management’s factory index fell to 32.4, below forecasts and the lowest level since 1980, from 36.2 the prior month, the Tempe, Arizona-based private group said today. Readings less than 50 signal contraction. The group’s price measure fell to the lowest level in almost six decades.
Clogged credit markets, the collapse in housing and mounting job losses have hurt demand for everything from furniture and appliances to automobiles, driving General Motors Corp. and Chrysler LLC to the brink of bankruptcy. The slump will extend into 2009 as downturns in Europe and Japan also depress exports.
“It’s a breathtaking plunge in manufacturing,” said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, whose estimate tied for lowest among economists surveyed. “The exports numbers are reflecting recessions abroad. The world is very much coupled.”
The group’s gauge, which covers about 12 percent of the economy, was projected to drop to 35.4, according to the median estimate of 57 economists surveyed by Bloomberg News. Forecasts ranged from 34 to 40 and the measure averaged 51.1 in 2007.
Stimulus Plan
The manufacturing slump underscores why President-elect Barack Obama, who takes office Jan. 20, has said his first priority will be to pass an economic stimulus plan that will invest in public works and create or save 3 million jobs. The package may be worth as much as $850 billion.
Stocks advanced on the first day of trading in 2009, following the biggest annual drop for the Standard & Poor’s 500 Index in 71 years, on expectations government stimulus efforts will curtail the recession. The S&P index rose 1.1 percent to 913.47 at 10:40 a.m. in New York. Treasury securities were little changed.
Manufacturing deteriorated around the world in December, signaling a worsening global recession, other reports today showed. The euro-area’s gauge fell to a record low, while industry in China contracted for a fifth month. Indicators for the U.K., Sweden, Hong Kong and Australia also showed factories in decline.
Such data “confirm a sharp contraction in global investment, output and trade activity, consistent with the deepest global recession since at least the early 1980s,” said Lena Komileva, head of market economics in London at Tullet Prebon Plc.
Orders Collapse
The ISM’s gauge of new orders dropped to the lowest level since records began in 1948, while export demand was also the weakest since those records started in 1988. The group’s employment index decreased to 29.9 from 34.2 in November.
The gauge of prices paid fell to 18, the lowest level since 1949, reflecting the drop in commodity costs. Economists had projected that the measure, which averaged 65 in 2007, would drop to 20.
All 18 industries tracked by the group contracted last month, the first time that’s happened since Norbert Ore took over as chairman of the ISM’s factory report in 1996.
“We’ve seen a tremendous amount of demand destruction,” Ore said during a conference call with reporters. “There is a significant inventory correction taking place,” he said, and added he couldn’t predict when manufacturing would recover.
Auto Decline
Automakers have been among the hardest hit as November sales plunged to the lowest level in a quarter century, according to industry figures. President George W. Bush announced Dec. 19 that General Motors and Chrysler will get $13.4 billion in initial government loans to keep operating while they restructure operations to return to profitability.
The carmakers last month expanded their traditional holiday shutdowns to clear out unwanted stock. Chrysler idled all 30 of its assembly plants on Dec. 17 for at least a month, while GM announced output cuts Dec. 12 that affected 20 plants.
The closings will extend into this month. Ford Motor Co. said 9 of 15 North American factories would shut for the first week in January.
The U.S. Treasury this week issued broad guidelines for aid to the auto industry, opening the door to using taxpayer money to finance a wider array of companies, such as GM’s bankrupt former parts unit Delphi Corp.
Spreading Slump
The factory slump has spread well beyond autos as demand from abroad also weakens. Ingersoll-Rand Co., the maker of Thermo King and Hussmann refrigeration equipment, said last month that profit will fall short of fourth-quarter and full-year estimates after demand declined “sharply” in North America and Western Europe.
“Probably the U.S. and developed world are in recession,” General Electric Co. Chief Executive Officer Jeffrey Immelt said in his annual outlook address on Dec. 16. “The environment is still the toughest, for people of my generation, that we’ve ever seen.”
U.S. exports dropped in October for a third straight month, leading to an unexpected widening in the trade gap, figures from the Commerce Department last month showed. The drop indicated the economy was sinking even faster than previously estimated.
To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net
US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
