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Global economic future news and discussion

Discussions about the economic and financial ramifications of PEAK OIL

Global economic future news and discussion

Unread postby Graeme » Thu 02 Jan 2014, 22:15:49

AmericanDream just asked me a question about the viability of financing the transtion to a low-carbon (or no carbon!) future in the Energy Technology News thread. I thought it was more appropriate to discuss this issue in Economics and Finance forum. To start the process, I googled "global economic future" and found the following 4 articles. The first one by by Christine Lagarde from the IMF, the second by Yilmaz Akyuz, chief economist at the Geneva-based South Centre, the third from the OECD, which I can't provide a quote from, and finally an article published in the HuffingtonPost about the Future of the Global Economy.

The Future Global Economy and the Future Fund

Chairman Frieden, President Kim, Governors, Excellencies: I am delighted to welcome you, on behalf of the IMF, to our Annual Meetings.
Coming into these Meetings, I spoke of the Great Transition underway in the global economy: the changing patterns of growth; the changing dynamics of monetary policy; and the changes taking place in the financial sector as well as in the real economy. These transitions will be with us for some time.
Even as we grapple with them, we have a responsibility to raise our eyes—and look toward some of the major changes that will transform the global economy over the next generation. I want to take the opportunity today to ask what this might mean for you, our member countries; and what it might mean for the Fund, your institution.
Our “constitution”—the Articles of Agreement that our founders devised nearly 70 years ago—have proven to be a feat of engineering: strong enough to stand the test of time, yet supple enough to respond to the many challenges that have faced our membership.
I am reminded of a Greek proverb about how a society grows great when old people plant trees whose shade they know they shall never sit in.
Our founders planted the trees that shade us today. Together, we must plant the trees that will provide shade for the generations to come.
Over the next generation, the rate and reach of change will be great. With that, the needs of our members will change. So too must the Fund.
The IMF must be flexible in its approach and focused on its core goals to best serve you, our members. Flexibility, focus, service—those are our guiding principles.
In that spirit, I would like to share with you my thoughts on:
i. The road we have taken;
ii. The road we are on; and
iii. The road ahead—some of the long-term trends that will
shape our future.


The Uncertain Future of the World Economy

Five years into the crisis, growth in the U.S. is still below potential, Europe is struggling to pull out of recession and major emerging economies are slowing rapidly after an initial resilience during 2010-2011.

Longer-term prospects are not much brighter largely because the key problems that gave rise to the most serious post-war crisis – income inequalities, external imbalances and financial fragilities – remain unabated and have indeed been aggravated.

The world economy suffers from an under-consumption bias because of low and declining share of wages in the gross domestic product (GDP) in all major advanced economies including the U.S., Germany and Japan, as well as China.

Still, until 2008-2009 the threat of global deflation was avoided thanks to consumption binges and property booms driven by credit and asset bubbles, particularly in the U.S. and the European periphery.

The crisis has not removed but reallocated global trade imbalances.

Longer-term global prospects depend a lot on the U.S. due to its central position in the world economy and the international reserves system. It is highly unlikely that the U.S. can move to wage-led growth in the near future.

Nor can it shift to export-led growth. This would require, inter alia, exports to grow faster than domestic demand and the share of private consumption in GDP to fall. This is difficult to achieve since for several decades the U.S. has constantly lived beyond its means thanks to its “exorbitant privilege” as the issuer of the central reserve currency.

Thus, a key question is if the U.S. would be inclined to go back to “business as usual” and allow credit and asset bubbles in search of relatively rapid growth. This is closely connected to its exit from the ultra-expansive monetary policy.

Clearly, exit implies not just increased policy interest rates but also the normalisation of monetary policy – the federal funds rate to become again the main instrument of policy, a significant contraction in the size of the balance of the Federal Reserve (Fed) sheet and the volume of excess reserves that depository institutions hold at the Fed, and a large shift of the Fed’s asset composition back to short- and medium-term Treasuries.


THE FUTURE OF THE GLOBAL ECONOMY: Towards a Long Boom?

PDF by the OECD.

The Future of the Global Economy Depends on the U.S.-EU Trade Deal

The future of the global economy is at stake. With both the United States (U.S.) and the European Union (EU) economies generating over $15.6 trillion in GDP and accounting for about half of the entire world GDP, we must pay close attention to negotiations for the Trans-Atlantic Trade and Investment Partnership (TTIP).

Slated to be the largest trade deal ever negotiated once completed, TTIP would not only spur economic growth and job creation in the U.S. and the EU but also serve as a blueprint for future negotiations between third country trading partners. Given the magnitude of this trade deal, the Internet Association urges the U.S. and EU to incorporate policies that sustain the Internet industry's future -- a proven catalyst for economic growth.

Reaching 2 billion users across the globe and facilitating about 8 trillion dollars in e-commerce annually, the Internet affords market access to new competitors and revolutionizes daily transactions. Once dominated by traditional industries, small and mid-sized businesses now have the ability, because of the Internet, to participate in the global market. A McKinsey Global Institute study found that small and mid-sized enterprises reap significant benefits from Internet use. More specifically, the total revenue shares earned from small and mid-sized exports that utilized the Internet was more than twice that of others.

The flourishing Internet economy, which the global economy relies upon, is made possible by laws that preserve the vitality of an open, consumer-oriented platform. U.S. and EU negotiators must ensure that TTIP reflects this modernized landscape by enacting policies that encourage growth in the Internet industry and ultimately across global markets.

First, being able to access information or transfer data no matter the country where the information originated allows businesses in every sector to flourish. From instant communication to prompting real-time responses in business operations, providing businesses with the capacity to share data across borders increases efficiency and productivity. Free flowing data also plays an important role in a company's ability to innovate by creating an open, collaborative environment. Despite these benefits, many governments have adopted restrictive policies preventing the free flow of information. Historically, the European Union falls under this category of taking a prescriptive approach to data flows. The EU policy is to restrict international data flows unless there is a legitimate reason to free its data -- which is the opposite approach taken by the U.S.


I think there is plenty of scope here for anyone to comment about even though there are other related threads. Is the global economy going to continue to grow or decline? Your thoughts on this please.
Last edited by Graeme on Thu 02 Jan 2014, 23:35:36, edited 1 time in total.
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Re: Global economic future news and discussion

Unread postby Tanada » Thu 02 Jan 2014, 23:01:34

If you grew up with incandescent light bulbs you probably know the saying "The bulb burns brightest right before it burns out."

I think this is the HooRah period, the economy is going to burn bright for a little while right before we fall off the peak plateau and into physical decline. Then the economy burns out.
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To strive, to seek, to find, and not to yield.
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Re: Global economic future news and discussion

Unread postby ralfy » Thu 02 Jan 2014, 23:36:27

The problem isn't probably so much financing as energy returns. That is, alternative sources used have to meet the equivalent of around one Saudi Arabia every seven years, and probably more to meet a growing global middle class (estimated to reach almost 50 pct by the end of the decade), combined with problems for conventional oil production.
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Re: Global economic future news and discussion

Unread postby Graeme » Thu 02 Jan 2014, 23:41:41

You could be right. I think there will be as many views on this topic as there are economists. I searched in the news section of Google "global economic future" and found the following Telegraph report which supports your view.

A world economy on the brink of fracture

What will happen in 2014? The Chinese economy will slow; the price of oil will sink; Germany will slide into recession; the UK will remain intact and the internet will begin to Balkanise.

Up against a gathering credit crunch, the Chinese economy will slow to almost stall-speed; the price of Brent crude will sink below $80 a barrel; Germany will slide back into recession; the eurozone will remain intact and the internet will begin to Balkanise, leading to a boom in encryption technology but problems for the big global online brands.

’Tis the season for self-indulgent – and mainly futile – crystal ball gazing. What does the future hold for the economy and markets? Normal health and wealth warnings apply.

My big prediction is for $80 oil, from which much of the rest of my outlook for the coming year flows. It’s hard to overstate the significance of a much lower oil price – Brent at, say, $80 a barrel, or perhaps lower still – yet this is a surprisingly likely prospect, the implications of which have been largely missed by mainstream economic forecasters.


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Re: Global economic future news and discussion

Unread postby Graeme » Thu 02 Jan 2014, 23:54:25

And here is a completely different view:

Global development in 2014: 6 things to watch out for

You know the old saying that it’s dangerous to make predictions, especially about the future? Well, for the new year ahead and in a fast-changing global development landscape, I’m going to chance it. Here are six things to watch for in 2014.

1. Pressure eases on official aid budgets, but donor reform continues apace

For some of the world’s biggest bilateral donors, the first years of this decade have been spent largely on the defensive when it comes to aid budgets. In the wake of the financial crisis and global recession, governments in the developed world were caught in bitter debates about austerity, with foreign aid imperiled. Fortunately, strong coalitions built over the prior decade largely protected investments in global health and development. In the United Kingdom, a tough austerity program led by a conservative government specifically ring-fenced the aid budget. In Canada and Australia, conservative governments have put aid budgets under real pressure, but made no major cuts. Even liberal governments, such as the Hollande administration in France, felt the pressure but managed to keep their aid budgets steady. The European Commission’s seven-year budget set in 2012 included, after some struggle, a small increase in development aid. In the United States, 2013 ended — at long last — with a two-year budget deal that preserved the Obama administration’s development commitments.

As we enter 2014, the global economy is set to improve significantly. The U.S. and U.K. are likely to see substantial economic growth, and much of Europe is rebounding too. Japan is experiencing significant growth and economic optimism for practically the first time in two decades. This global rising tide will improve fiscal conditions across the developed world and provide some breathing room for advocates who have been fighting in the trenches just to preserve aid budgets. But the donor reform movement — much of which was propelled by the need to show “value for money” in times of austerity — isn’t going away. That’s because the underlying factors that have led to a wave of reform at nearly every major donor agency in the world aren’t tied just to the budget environment. They include the reality that many developing countries are now middle-income economies and powers in their own right; the emergence of business models for development that are challenging the traditional project-oriented approach; new technologies and innovations that both empower the poor to have more voice in their own development and question the often top-down approach of some development financing; and the growing role of the private sector (the subject of my next prediction).

2. Global corporations get a seat at the development policy table

The line from aid ministers about how small aid flows are as a percentage of total investments in developing countries cues eye-rolling nowadays, as it should. Of course the situation is more complex than that, particularly when you look at the data on a country-by-country basis. But donors also look at engaging with global corporations in a similarly simplistic way. For the most part, big corporates are called in to help make the case for development aid to their governments. And they are increasingly brought into partnerships that connect development goals to their business goals. But when it comes to setting overall development policy, global corporations barely register. That’s likely to change. As companies increase the scale of their social investments and begin baking sustainability into their businesses, they have more at stake in the developing world and in development. Expect them to turn their political influence and lobbying power to push for a seat at the table when the World Bank, U.S. Agency for International Development, U.K. Department for International Development and others set their development agendas.

3. Individual philanthropy grows into a serious force

Rising global economic growth has benefited the rich above all else. There are now some 1,400 billionaires in the world and 12 million millionaires. As these wealthy individuals have begun setting up foundations and trying to outdo each other in both the scale of their giving and the results they can show, the global development community is starting to see the impact. This is likely to be a breakout year for individual philanthropy. For one thing, the improving global economy will put rising income inequality into even starker relief; and in this environment, the wealthy may be more sensitized to increasing their giving. For another, now that Michael Bloomberg is no longer mayor of New York City, he is turning much of his attention and his $20 billion fortune to philanthropy. While the Gates Foundation has dominated the foundation space thus far, look to Bloomberg Philanthropies (a foundation already giving on the scale of the Ford and Rockefeller Foundations) to make its own mark and to drive a new agenda on the global stage.

And it’s not just wealthy individuals for whom 2014 could be a breakout year; crowdfunding may well come into its own this year. Facebook’s launch of a “donate” button last month that lets users make credit card payments to nonprofits right from their fan pages is no small thing. And now that Kiva, DonorsChoose, Kickstarter and other crowdfunding platforms are reaching a point of maturity, people are becoming more and more accustomed to making small donations via their cell phones, apps and websites. Our estimate is that approximately $2 billion has already been crowdfunded for development and the rate of acceleration is significant. This may well be the year that nonprofit leadership, new technologies and the changing attitudes of small-dollar donors combine to make crowdfunding an industry shifting trend in 2014. It’s something we’ll be following closely at Devex.

4. Pendulum swings from BRICS to fragile states

This decade began with much focus on the BRICS (Brazil, Russia, India, China and South Africa). Last year, there was buzz of a BRICS bank to rival the World Bank. There was a focus on the BRICS as bilateral donors and on the huge percentage of the world’s poor that live in BRICS countries and for whom a different development approach would be needed. The result of this focus was a sense that so-called “traditional development” was becoming less important. That’s likely to change in 2014 as the new focus becomes the rising tide of insecurity and fragile states — places where long-standing development organizations and the aid workers and development professionals who know how to work in the most difficult circumstances are irreplaceable.

In 2013, DfID announced it would pull its funding from South Africa and India, two of the BRICS, as it seeks to focus its funds where they are needed most. Look for more of this from other donors, as Syria, Egypt, Somalia, South Sudan, Central African Republic, and even Myanmar and Ukraine take center stage. The tragedies and hopes in these states undergoing various degrees of instability will reinvigorate NGOs, development implementers and aid workers who have sometimes felt sidelined in the past few years as they were told countries like India and Brazil could handle their own development thank-you-very-much. And the sheer scale of instability this year is likely to ignite a fresh debate about how a development paradigm so shaped by Iraq and Afghanistan can adapt to new challenges in countries where development workers are on the front lines alone.


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Re: Global economic future news and discussion

Unread postby KaiserJeep » Fri 03 Jan 2014, 10:03:19

This idea is just silliness. We have not yet successfully modeled global climate, which is a relatively simple system compared to a global economy. We can not predict "future news" and it would be a waste of time to discuss such.
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Re: Global economic future news and discussion

Unread postby westexas » Fri 03 Jan 2014, 10:50:15

The following Telegraph article (on a recent IMF paper) has a very interesting graph, showing Gross Total External Debt, as a percentage of GDP, for 22 advanced and for 25 emerging economies. Note the huge increase in the ratio for advanced economies, starting around 2002. I couldn’t help but notice the correlation to my GNE/CNI* ratio charts.

*GNE = Combined net oil exports from top 33 net oil exporters in 2005, EIA data, total petroleum liquids + other liquids

CNI = Chindia’s net oil imports

GNE/CNI Ratio* Vs. Annual Brent Crude Oil Prices:
Image

GNE/CNI Ratio* Vs. Total Global Public Debt:
Image

GNE/CNI Ratio* 2002 to 2012, with 2005 to 2012 rate of decline extrapolated to 2030:
Image

Telegraph Article: Debt burdens in developed nations have become extreme by any historical measure and will require a wave of haircuts, warns IMF paper

http://www.telegraph.co.uk/finance/fina ... -high.html

Excerpt:

The paper says the Western debt burden is now so big that rich states will need same tonic of debt haircuts, higher inflation and financial repression – defined as an “opaque tax on savers” – as used in countless IMF rescues for emerging markets. “The magnitude of the overall debt problem facing advanced economies today is difficult to overstate. The current central government debt in advanced economies is approaching a two-century high-water mark,” they said.

Debt as a percentage of GDP chart:


Image

My comments:

What I define as Available Net Exports (or ANE, i.e., GNE less CNI) fell from 41 mbpd (million barrels per day) in 2005 to 35 mbpd in 2012. While there has been a rebound in US consumption, there is some question about how accurately the EIA is accounting for product exports in the short term, but in any case I would argue that the dominant post-2005 pattern, at least through 2012, was that developed net oil importing countries like the US were gradually being forced out of the global market for exported oil, via price rationing.

To the extent that we have seen a rebound in the US economy and in US oil consumption, it’s important to remember how many trillions of dollars in deficit spending we have seen in recent years (largely financed by the Fed).

I think that the fundamental reality we are facing is that we are in the middle of a relentless transformation from an economy focused on “Wants,” to one focused on “Needs.” But governments in developed net oil importing countries refuse to acknowledge, or are incapable of acknowledging, this transformation, and they are desperately trying to keep their “Wants” based economies going via increased deficit spending, despite the post-2005 decline in the volume of Global Net Exports of oil available to importers other than China & India.
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Re: Global economic future news and discussion

Unread postby Lore » Fri 03 Jan 2014, 10:56:11

KaiserJeep wrote:This idea is just silliness. We have not yet successfully modeled global climate, which is a relatively simple system compared to a global economy. We can not predict "future news" and it would be a waste of time to discuss such.


You're talking apples and oranges. One is based on evidence that applies to the science of physics. The other on the chaotic vagrancies of human nature. For example if I throw the apple into the air I can successfully predict that it will fall back down to earth. If I buy the orange from someone, it is much more difficult to determine where my money ends up.

Models in general are predictive not absolute. If I knew nothing about the game of golf, after watching for awhile, I could make a prediction with a high degree of certainty that the object of the game is to put the ball into the cup, even when no one has actually accomplished it yet.
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Re: Global economic future news and discussion

Unread postby AndyA » Fri 03 Jan 2014, 15:24:26

When it comes to chaotic systems, random walk is generally the most accurate. Today will be like yesterday, tomorrow will be like today. Obviously you miss the big one off events, but in general you will be right more often then not, and outperform most other forcasts.
So it is reasonable to expect the near future to be similar to the near present.
It is definitely viable to start the transition on profitable parts of the necessary infrastructure, always has been. As to those things that we could do that wont make a profit, unlikely.
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Re: Global economic future news and discussion

Unread postby ROCKMAN » Fri 03 Jan 2014, 16:37:17

Interesting that the thread started with: "...the viability of financing the transition to a low-carbon (or no carbon!) future". I'll assume the focus is on the USA. So this is about a country that has gone $17 TRILLIONS in debt primarily financing BAU. In fact, not just BAU with regards to energy, but have used the economic stability created by taking on more debt to increase oil and NG production to record levels along with US coal exports. And the current momentum seems to be pushing the country further in that direction. So if one cannot forecast a change from this perpetually financed BAU it's difficult to see any meaningful amount of financing available for such a transition.

It's as true today as it ever was: If you discover you're digging yourself into a hole the first thing you do is stop digging. Currently it more appears that the US is borrowing money to buy a bigger shovel. Granted it's fun to fantasize about a transition. But it's difficult to reconcile that the country is making an all out effort to maintain, if not expand, it's fossil fuel footprint. And that's just the US. Consider that China is using it's $3 TRILLION in foreign currency reserves (a fair portion of which comes from interest US interest payments from the debt we've accumulated to finance BAU as well as the purchase of Chinese goods) to greatly expand their fossil fuel footprint. Painfully ironic: China is using just some of the interest from our debt to pay for their 500%+ increase in US coal imports which creates income or coal company investors and the employees which allows them to consume more fossil fuel fuels and Chinese imports which to fund more consumption of all fossil fuels and funds the acquisition of more fossil fuels by China. A dynamic which so far no one seems willing to interfere with.

Again, nothing wrong with postulating theoretical solutions to the situation as long as one remembers they'll remain theoretical until a method of forcing them to be applied is created.
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Re: Global economic future news and discussion

Unread postby Plantagenet » Fri 03 Jan 2014, 16:54:04

ROCKMAN wrote:?... this is about a country that has gone $17 TRILLIONS in debt primarily financing BAU. In fact, not just BAU with regards to energy, but have used the economic stability created by taking on more debt to increase oil and NG production to record levels along with US coal exports......


The 17 trillion is just to fund the federal government. When you add in the money borrowed by the private sector to increase oil production and by the public to fund college and buy houses and cars etc the levels of US debt are far far far larger.
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Re: Global economic future news and discussion

Unread postby ROCKMAN » Fri 03 Jan 2014, 18:00:14

P - True. Made me curious so I looked it up: http://www.calculatedriskblog.com/2013/ ... onomy.html

All consumer debt is a tad under $12 trillion. Down from the peak in '09. So combined with the fed debt (which is a debt of the US citizens who are paying hundreds of $billions of interest yearly) is almost $30 trillion. Which, if I got the decimals correct, is about $100,000 for every man, woman and child. I always get tickled when some says that's not too bad because we'll never have to pay it off. Just like the person who thinks they're in good financial shape as long as they can keep making the minimum payment on their credit cards. Yep...just keep paying that interest year after year...no problem. Hey...you don't hear the Chinese and our other creditors demanding we pay off the loan. LOL.
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Re: Global economic future news and discussion

Unread postby Graeme » Fri 03 Jan 2014, 19:01:09

China is No. 1 risk for world economy: Soros

Don’t worry too much about the U.S. or Europe, says George Soros.

The major uncertainty facing the world today is China, writes the billionaire investor in a column for the Project Syndicate website. He says: “There is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years.”

The People’s Bank of China moved to rein in debt in 2012, but then the world’s No. 2 economy experienced “real distress,” Soros writes. So China’s Communist Party reasserted its supremacy, ordering steelmakers to restart their furnaces and bankers to ease credit.

China’s economy turned around, and party leaders also announced major reforms in November. “These developments are largely responsible for the recent improvement in the global outlook,” Soros says.

What happens next? The 83-year-old Hungarian-American sees two possibilities:

“A successful transition in China will most likely entail political as well as economic reforms, while failure would undermine still-widespread trust in the country’s political leadership, resulting in repression at home and military confrontation abroad.”

Beyond China, Soros argues that a lack of proper global governance is the “other great unresolved problem.” That could continue indefinitely, while the Chinese conundrum will come to a head in the next few years, he says.

Regarding the U.S., Soros sounds upbeat, pointing to themes like the energy boom, less polarization lately in politics and improvements in the banking and housing sectors. When it comes to Europe, he says the “revival of a threat from Russia may reverse the prevailing trend toward European disintegration.”


marketwatch

Why optimism may be bad news

ALMOST every year since the end of the financial crisis has started with rosy expectations among American forecasters, and this one is no different. Stockmarkets are buoyant, consumer confidence is improving, and economic seers are raising their growth forecasts for 2014. America’s S&P 500 share index is at a record high, after rising 30% in 2013—the biggest annual gain in almost two decades. Powered by America, global growth of close to 4%, on a purchasing-power-parity basis, seems possible. That would be nearly a full percentage point faster than 2013, and the best showing for several years.

Yet amid the new-year cheer, it is worth remembering that almost every year since the financial crisis upbeat expectations have been disappointed. The biggest danger this time round is the optimism itself.


economist

This thread has raised my interest in this subject so I will pay more attention to it from now on. What is clear is that many in the peak oil community and the oil industry equate a decline in oil production with a corresponding decline in the global economy. I'd like to challenge that view. I want to find out whether the global economy can be or is being decoupled from oil and/or energy growth. I will post more on this next. I've already seen evidence of this in the UK. I'm now trying to see if there is any for Germany; a country which is well advanced into the energy transition. I hope someone from Germany can contribute to this discussion.

Here is the article I saw from the UK. Click on the Editorial link by Steve Hodgon on the "Decoupling of Energy Use from Economic Growth".
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Re: Global economic future news and discussion

Unread postby Graeme » Fri 03 Jan 2014, 20:49:30

Green growth in action: Germany

Germany, the third largest economy in the OECD, has been proactive in developing ambitious environmental policies during the last decades, both nationally and internationally. The country’s strong environmental framework makes it not only a pioneer in environmental protection and sustainable development, but also constitutes a good example on how a cleaner low-carbon economy is compatible with growth.

In 2002, Germany adopted its National Strategy for Sustainable Development, making sustainability a guiding principle for national policies. The Strategy is underpinned by concrete targets and sustainability indicators, which are evaluated in regular progress reports. Germany also launched major cross-cutting initiatives on biodiversity, climate change, energy and resource efficiency.

In its Energy Concept, for example, Germany has formulated guidelines for an environmentally sound, reliable and affordable energy supply. The key elements of this are expanding the use of renewable energies and increasing energy efficiency. In electricity production, Germany aims to raise the share of renewables from 17% today to more than 80% in 2050, while completely phasing out electricity production from nuclear power plants by 2022. Greenhouse gas (GHG) emissions would be cut by 40% by 2020 and at least 80% by 2050. In the field of energy efficiency, Germany intends to reduce primary energy consumption by 20% by 2020 and 50% by 2050 compared with 2008. Overall, the Energy Concept contains more than 100 specific measures in the fields of electricity, heat and transport.

Another example is the recently adopted German Resource Efficiency Programme, a comprehensive programme addressing the sustainable use of raw materials. Germany’s goal is to decouple economic growth as far as possible from resource use, both to reduce the burden on the environment and to strengthen the sustainability and competitiveness of its economy. The programme includes, for example, efficiency advice for small and medium-sized enterprises, supporting environmental management systems, integrating resource aspects into technical standardisation processes, placing greater emphasis on resource-efficient products and services in public procurement, strengthening voluntary product labelling and certification systems and enhancing closed cycle management.

These and other ambitious environmental programmes helped Germany to significantly increase the energy, resource and carbon efficiency of the economy. According to the 2012 OECD Environmental Performance Review, Germany has achieved one of the highest levels of resource productivity among OECD countries and is one of the few countries that achieved to reduce GHG emissions absolutely, while GDP continued to grow for much of the 2000s.


oecd

And this study from Austria.
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Re: Global economic future news and discussion

Unread postby Graeme » Sat 04 Jan 2014, 18:39:06

The six biggest business stories to watch in 2014

1. Eric Reguly: Falling oil prices and the rise of bubble talk

2. Sophie Cousineau: The year of the consumer

3. Omar El Akkad: Spies take a toll on Silicon Valley

4. Kevin Carmichael: Politics will guide U.S. recovery

5. Boyd Erman: The great debt run begins to slow

6. Jeffrey Jones: Oil patch turnarounds show their shape

Falling oil prices and the rise of bubble talk
By Eric Reguly in Rome

On the U.S. Gulf Coast, home to the world’s biggest collection of refineries, oil is in such plentiful supply that the industry is talking about a “glut.”

That’s quite a turnaround. In 2007 and 2008, when world oil prices went to a record $147 (U.S.) a barrel, the lexicon was one of fear. Oil executives and economists warned about vanishing supplies, “peak oil” and deep recessions as prices galloped forward, chewing into disposable incomes.

The Gulf Coast is swamped with oil because new pipelines are providing a market for surging American oil production. So much oil is spewing into refinery land that the price gap between Light Louisiana Sweet crude and Brent, the global benchmark, is at an all-time high, according to the U.S. Energy Information Administration. In the first eight months of last year, the Louisiana crude averaged $1.45 more than Brent. Since then, it has traded at more than $7 below.

While the Gulf Coast is a peculiar market, the talk is of amply supplied, even oversupplied, oil markets elsewhere on the planet, thanks to everything from slowing growth in China and rising Iranian oil exports to more efficient cars and expanding sources of renewable energy. Little Portugal routinely sees days when most of its electricity comes from wind, hydro and other types of non-hydrocarbon sources.

It is hardly stepping out on a limb to forecast that oil prices will drop in 2014. The big question is: By how much? My guess is that a fall of $10 to $15 a barrel is not out of the question (on Friday, Brent traded at $108 while West Texas intermediate was at $95). That may not sound like a lot but it’s enough to trigger huge problems in the oil-exporting countries, like Russia, where national budgets are dependent on oil exports. In extreme cases, budget shortfalls could lead to civil unrest as politicians find themselves unable to pay off their people.

The forecast for lower oil prices – and lower commodity prices in general – is not universally shared. That’s because the United States is returning to compelling growth and the euro zone is clawing its way out of recession. Historically, energy prices rise in tandem with gross domestic product. While true, the link between GDP growth and energy consumption is breaking down. In the developed world, where services, not manufacturing, are becoming the dominant economic activity, energy efficiency is climbing relentlessly. Meanwhile, growth in the developing world is tapering off. The upshot is that a 3- or 4-per-cent rise in global GDP may not deliver a rise in oil prices.

Soaring U.S. oil production has emerged as the most bearish factor on prices. The International Energy Agency expects the United States to surpass Saudi Arabia as the top oil producer in 2015. Credit shale oil production. Five years ago, the Bakken field in North Dakota produced nothing. Today it pumps out one million barrels a day. The Eagle Ford in Texas spews out 1.3 million b/d. Those two shale fields alone have higher production than the entire Alberta oil sands.

Surging American oil production means lower American imports. Lower demand for imports by the world’s biggest energy consumer can only put downward pressure on prices. At some point, the legislation will change to allow the United States to export oil, an unthinkable scenario two or three years ago. Then, watch out.

The Saudis are not just worried about shale oil; they worry about rising production in Iraq, Libya and Iran, each capable of throwing millions more barrels onto market. Before the 1979 revolution, Iran was producing about six million barrels a day. That fell to as little as one million when the sanctions were at their tightest. At the OPEC meeting last month, Iran’s Oil Minister, Bijan Namdar Zanganeh, said his country would produce four million barrels a day when the sanctions are lifted. Will the Saudis scale back production to make room for its new rivals? Doubtful.

While energy importing countries couldn’t be happier, energy exporters face a grim few years as prices come under pressure, taking down export earnings. Among the big exporters, Russia has the most to worry about.

Oil and gas prices can make or break its economy. The Russian economic collapse of the 1990s was largely driven by sinking crude prices, which dipped below $11 a barrel in 1998. Russia defaulted that year, wiping out most of its banks and sending its debt-to-GDP ratio to more than 80 per cent. The country was saved when prices reversed direction. Oil contributes about 50 per cent to federal government revenues and the embarrassment of riches was spent on social programs, defence and the Sochi Winter Olympics, whose bill is estimated at $50-billion, the highest in the history of the Games.

Russia’s Alfa Bank economists have estimated that Russia this year will need an oil price of $115 a barrel to balance is budget. There’s a good chance Russia will be running a deep deficit this year since prices are already below that level.

There was no doubt that oil was in a bubble in 2008, before the price duly collapsed. With vast new supplies reaching the global markets, and economies becoming less energy intensive, oil could be in one again.


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Re: Global economic future news and discussion

Unread postby Graeme » Sat 04 Jan 2014, 19:23:51

Top U.S. Green Economy Trends and Predictions for 2014

Sustainability

The year to come may prove a challenging one for sustainability. According to an Ecova report, the growth of sustainability in 2014 will be complicated by increased energy and resource prices. The report titled 2014 Energy and Sustainability Predictions: Findings from Leading Professionals is based on a survey of 500 energy and sustainability professionals.

The combination of cost cutting pressures and environmental disclosure will push firms to develop a total energy and sustainability management strategy to remain competitive and meet resource management needs, says Jeff Heggedahl, Ecova president and CEO.

A total of 70 percent of respondents predicted that water will emerge as the top sustainability initiative in 2014. The report indicates that water is percieved as a significant opportunity for savings and improvement. The survey states that water concerns are second only to energy. Ford’s 2014 Trend’s Report concurs with the Ecova assessment that water will be the priority issue this year as does a Credit Suisse report titled Water: The Next Challenge.



Renewable energy

While there is both good and bad news for the U.S. renewable energy industry in 2014, overall, the skyward trend continues. As reported in Renewable Energy World, on December 20 Credit Suisse released a highly favorable report that predicted unprecedented growth for renewable energy in the US.

They attribute their bullish forecasts to a combination of state Renewable Portfolio Standards (RPS) and cost competitiveness of renewables when compared to conventional power generation including natural gas. Their report predicts that renewable energy will meet 85 percent of future power demand growth through 2025. This translates to a forecast of 100 GW of new renewable capacity with wind and solar market share more than doubling from 2012 to 2025, accounting for approximately 12 percent of US electricity generation.


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Re: Global economic future news and discussion

Unread postby Graeme » Mon 20 Jan 2014, 21:20:15

Global Economy To Improve In 2014 and 2015: United Nations Report

Global economic growth will speed up modestly in 2014 and 2015 compared to last year’s levels, if U.S. monetary policy doesn’t derail emerging economies, according to a United Nations economic report released Monday.

The U.N. forecasts global economic growth of 3 percent in 2014 and 3.3 percent in 2015, up from an estimated 2.1 percent in 2013.

Economists cited the end of a recession in the euro zone, a U.S. economic recovery, and exaggerated fears of an economic slowdown in China as key drivers of a comforting economic landscape in 2013.

But the U.N. economists warned that as the U.S. Federal Reserve unwinds its $85 billion monthly bond purchases, emerging nations may have the most to lose.


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Re: Global economic future news and discussion

Unread postby Graeme » Tue 21 Jan 2014, 17:23:38

IMF growth forecast upgrades

The International Monetary Fund has handed a boost to the Governor of the Bank of England (BoE) by pledging its support for continued economic stimulus, even as it ramped up growth projections for Britain’s economy.

The organisation forecast on Tuesday that Britain will grow by 2.4pc this year, against the 1.9pc prediction it made in October.

The IMF also upgraded its predictions for the US, China and the eurozone, although it warned that the vulnerable state of some European and emerging nations meant a global recovery was “not yet out of the woods” and that central banks should continue to nurse economies back to health.

“In advanced economies, output gaps generally remain large and, given the risks, the monetary policy stance should stay accommodative while fiscal consolidation continues,” the IMF said in its report.


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Re: Global economic future news and discussion

Unread postby Graeme » Wed 22 Jan 2014, 18:35:13

With global economy recovering, top economic official warns of 'cut-throat' years ahead

DAVOS, Switzerland - The head of a leading international economic body says the post-crisis period is likely to be a "cut-throat" business as everyone tries to recover the ground lost during the last few years.

Angel Gurria, the secretary-general of the Organization for Economic Cooperation and Development, said Wednesday that "everybody's going to try to recover the jobs they lost, the welfare well-being they lost, the exports they lost and they are going to recover it in the shortest period of time."

In an Associated Press interview at the World Economic Forum, Gurria says the global recovery is "patchy" and that governments have to make sure the spoils are spread through society.

He says they have to leave room in their spending to help those that are "effectively victims of the crisis."


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Re: Global economic future news and discussion

Unread postby Graeme » Thu 23 Jan 2014, 19:49:29

Davos 2014: global economy not safe until 2020, says Barclays chief Antony Jenkins

The global market will not be fully safeguarded against a repeat of the global financial crisis until the end of the decade, warned Barclays chief executive Antony Jenkins, as he cautioned that banks were not the only threat to the system.

Mr Jenkins said that despite increased regulation across the banking system, there was still much work to be done, and that the focus should not be on banks alone.

“It is very difficult to argue the financial system is not safer than it was in 2008, the question is how much safer,” said Mr Jenkins.

“Levels of supervision are more favourable…the emphasis that institutions place on culture and conduct has reduced the probability that the events of 2008 will be repeated. But it does not eliminate them.

“We still have a significant amount of work to conclude – this will not happen until close to the end of this decade.


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