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Japan Prepares For Mass Evacuation Of 60,000 Citizens From South Korea

September 4, 2017 Tyler Durden 0

It won’t be the first time that a near-panicked Japan has came close to the edge when it comes to North Korea, and in preparation for an “emergency” was planning to evacuate its citizens located in South Korea. The last such notable spike in escalation…

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Gazprom’s Gas Dominance Grows In Europe

September 4, 2017 Viktor Katona 0

It is doubtful that there could be a less appropriate time to increase Russian gas exports to Europe, yet that is exactly what Gazprom is doing. Despite sanctions from both the U.S. and the EU, and Europe’s determination to reduce its reliance on Russian gas, Russia has been setting all-time highs in its exports throughout the past eight months. Although Gazprom has not yet surpassed its January 27, 2017 daily exports record of 636.4 MCm per day, it has been setting all-time summer season export records, with current gas flows oscillating…

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RBI’s Rajan Warned Modi About “Short-Term Costs” Of Demonitization

September 4, 2017 Tyler Durden 0

In what’s likely to be remembered as one of the most spectacular policy failures in recent Indian history, Prime Minister Narendra Modi’s decision to abruptly cancel high-denomination banknotes – a move meant to punish corrupt officials and criminals – instead destroyed the savings of middle- and low-income Indians and caused widespread chaos in the country’s financial system.

And now, less than a year since the “war on cash” was announced, prominent former government officials are speaking out and placing the blame for the policy squarely on Modi’s shoulders, including former Reserve Bank of India governor Raghuram Rajan, who told the Times of India that he had cautioned the government that the short-term costs of demonetization would outweigh the long-term benefits, and suggested “alternatives” to achieve the goal of stamping out black money.

Raghuram Rajan

When Modi announced in November that Rs1,000 ($16) and Rs500 notes would no longer be legal tender, he suggested that corrupt officials, businessmen and criminals — popularly believed to hoard large sums of illicit cash — would be stuck with “worthless pieces of paper”. At the time, government officials had suggested that as much as one-third of India’s outstanding currency would be purged from the economy – as the wealthy abandoned or destroyed it, rather than admit to their hoardings – reducing central bank liabilities and creating a windfall for India’s government. Meanwhile, ordinary Indians would opt to keep more of their money in electronic deposits at their bank, helping to shore up the country’s financial system.

In his new book, ‘I Do What I Do: On Reforms Rhetoric and Resolve’, an advance copy of which was obtained by the TOI, Rajan says that he first gave his opinion on demonetization orally in February 2016 and, subsequently, RBI submitted a note to the government outlining the steps that would be needed, and the time required, if the government went ahead with it.  

“’The RBI flagged what would happen if preparation was inadequate,’ wrote Rajan, who returned to University of Chicago Booth School of Business as faculty after his term as governor ended.”

Rajan also clarified to the TOI that although RBI was consulted about the policy, at no point during his term, which ended in September, was it asked to weigh in on a decision.

He added that the intent behind the move was good, though it came at a substantial cost to the public. “Certainly at this point, one cannot in anyway say it has been an economic success,” he pointed out.

The Indian government has continued to defend the policy, arguing that several other benefits have accrued, from expanding the tax base to an increase in digital transactions.

However, since Modi abruptly implemented his plan in November, India’s GDP growth has slowed dramatically. Following a collapse in its Composite PMI, India’s Q2 GDP growth slowed to 5.7% during the second quarter, according to data released last week – its weakest since Q2 2014.

In what looks like confirmation of the demonetization’s failure, the RBI’s annual report on Wednesday suggested that most holders of the old currency managed to dispose of it, estimating that banned notes worth Rs15.28tn ($239bn) were returned to the bank. That amounts to 99 per cent of the Rs15.44tn of the old high-value notes that were in circulation when Mr Modi made his announcement, according to the finance ministry.

The government’s critics seized on the RBI’s announcement as evidence of the policy’s failure.

“99 per cent notes legally exchanged! Was demonetisation a scheme designed to convert black money into white?” former finance minister P Chidambaram tweeted.

Rahul Gandhi, de facto leader of the opposition Congress party, tweeted: “A colossal failure which cost innocent lives and ruined the economy. Will the PM own up?”

Many lower income Indians supported the ban because they believed the rich would suffer the worst of its privation. Instead, they became victims of the government’s “good intentions.”
 

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Oil Takes Center Stage In Norway’s Election

September 4, 2017 Tsvetana Paraskova 0

Western Europe’s biggest oil and gas producer, Norway, is holding a general election next week—the outcome of which will be largely determined by the oil policies and oil-related economic issues that are taking the center stage in the debates and in voters’ minds ahead of an election that’s too close to call. The Conservative Party currently in power in a coalition government and the opposition Labor Party—the two biggest parties—are neck-and-neck in polls. Whoever wins would probably need the support of smaller…

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South Korea Proposes Full Oil, Currency Blockade Of North; China Says No

September 4, 2017 Tyler Durden 0

Unable to make de-escalation progress using conventional diplomatic means at the United Nations, on Monday South Korean President Moon Jae-in proposed that the U.N. Security Council hold serious discussions about imposing an energy and capital blockade on North Korea, by cutting off oil supplies to Kim’s regime coupled with a block of North Korean sources of foreign currency, the South Korean president’s office said. Moon discussed the idea with his Russian counterpart, Vladimir Putin, during a phone call, according to South Korea’s Blue House.

It’s time for the U.N. Security Council to seriously consider ways to block North Korea’s sources of foreign currency, including a halt to oil supplies to the North and a ban on its exportation of laborers,” the office quoted Moon as saying in the wake of the 6th North Korean nuclear test.

According to Yonhap, the South Korean leader also said Sunday’s nuclear test “was different from past experiments in size and character, and expressed his heightened concern over North Korea’s claim that it was an H-bomb that can fit atop an intercontinental ballistic missile.”

Putin, who is attending a BRICS emerging economies summit in China, sided with his South Korean peer and said that North Korea’s nuclear and ballistic missile programs destroy the international nonproliferation regime and pose a “real threat” to regional peace and stability. He also noted that the leaders at the summit adopted a statement condemning the latest test. Moon underscored his commitment to resolving the North Korean nuclear issue diplomatically and peacefully. Putin, in turn, said the leaders at the summit agreed there is only a diplomatic solution to the problem.

“In order to do that, North Korea must refrain from additional provocations,” Moon was quoted as saying during the 20-minute talks. The leaders agreed to hold further discussions at their summit in Vladivostok, Russia, later this week.

Meanwhile, in its populist tabloid Global Times, China’s ruling communist party similarly slammed Kim’s decision to demonstrably escalate tensions, writing that “the test marks another wrong choice that Pyongyang has made in violation of UN Security Council resolutions and against the will of the international community. This test will result in a new round of escalating tensions on the Korean Peninsula and heighten the risk of the situation spiraling out of control due to possible miscalculations by all sides.”

The article’s condemnation continued: “The latest nuclear test and its recent launches of intermediate- and long-range ballistic missiles prove that Pyongyang is determined to obtain a nuclear strike capability and will not yield to external international pressures. The North Korean nuclear issue has now reached deadlock” and added that in the face of such a complicated situation, “China needs a sober mind and must minimize the risks Chinese society has to bear. The security of China’s northeastern regions is a priority.”

We need to make clear to Pyongyang through various channels that its nuclear tests can never contaminate China’s northeastern provinces. China’s strategic security and environmental safety is the bottom line for China in showing restraint. If North Korea crosses this line, the current framework for Sino-North Korean ties will break down.”

And yet, despite the far more somber take on its wayward neighbor, the Global Times said that “despite the anger of the Chinese public toward North Korea’s new nuclear test, we should avoid resorting to rash and extreme means by imposing a full embargo on North Korea.” Why not a full embargo?

If China completely cuts off the supply of oil to North Korea or even closes the China-North Korea border, it is uncertain whether we can deter Pyongyang from conducting further nuclear tests and missile launches. However, confrontation between the two is likely to occur. If so, the conflict between China and North Korea will transcend any conflict between the US and North Korea, and take center stage on the Korean Peninsula.

And the punchline: “Then Washington and Seoul can boldly shift the responsibility of the North Korean nuclear issue to China, which does not fit China’s national interests.

Unless, of course, Washington and Seoul are right, and North Korea’s action and behavior has indeed been a “Chinese issue”, although as Bill Blain noted earlier today, “North Korea is no longer playing to the Chinese script.”

That said, there is certainly an industrial-strength element of truth to the Global Times conclusion:

If North Korea’s nuclear activities don’t contaminate China’s northeastern regions, China should avoid imposing overly aggressive sanctions on North Korea. The root cause of the North Korean nuclear issue is that the military pressure of the Washington-Seoul alliance generates a sense of insecurity for Pyongyang who then believes that owning a nuclear strike capability is its sole guarantee for survival of its regime.

Yet while spot on, this observation does not make the de-escalation of the N.Korea crisis any easier, since the likelihood of the US and/or S. Korea “retreating” in the face of North Korea is nil. Which is also why the Kim regime will continue poking the US with ever greater provocation until one it reaches the breaking point, at which point the military incursion will begin.

In the meantime, South Korea’s weapons just got more deadly, because also on Monday, President Moon and President Trump agreed to remove the limit on the payload of South Korean missiles under the allies’ missile guideline in a move to enhance South Korea’s own defense capabilities against North Korean provocations, Seoul’s presidential office Cheong Wa Dae said Tuesday. The agreement was reached in a telephone conversation between the two leaders held late Monday.

“President Moon held a telephone conversation with U.S. President Donald Trump between 10:45 p.m. and 11:25 p.m. (Seoul time) and discussed countermeasures against North Korea’s sixth nuclear test in-depth,” Cheong Wa Dae spokesman Park Soo-hyun said in a press release.  As an “effective” countermeasure, the two agreed to remove the limit on the payload of South Korean missiles under the Korea-U.S. missile guideline, he added.

The U.S. president agreed on the need for what his South Korean counterpart earlier called the most powerful and practical measures against the North that the communist state can feel keenly.

And then, there was this from Reuters:

  • TRUMP, S.KOREA’S MOON AGREE TO `MAXIMIZE PRESSURE’ ON N.KOREA; U.S., S. KOREA TO STRENGTHEN JOINT MILITARY CAPABILITIES: STMT
  • TRUMP PROVIDED “CONCEPTUAL APPROVAL” FOR SOUTH KOREA TO PURCHASE “MANY BILLIONS OF DOLLARS’ WORTH” OF WEAPONS FROM U.S. -WHITE HOUSE

Well, at least the US military-industrial complex is profiting from the latest nuclear-armed geopolitical crisis… as usual.

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The Next Step In Mexico’s Oil & Gas Privatization Push

September 4, 2017 OilPrice.com 0

Mexico’s Energy Regulatory Commission (CRE) released its first monthly price report on August 18, 2017. As part of its ongoing series of energy reforms that reduce government market controls, the Mexican government converted to a liberalized natural gas market on July 1, 2017. Along with releasing the price index report, Mexico’s pipeline system operator (CENAGAS) launched its natural gas capacity reservation system with electronic bulletin boards for posting natural gas flows. The price index system captures data on…

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Natural Gas Output In Kurdistan Set To Jump

September 4, 2017 Zainab Calcuttawala 0

Natural gas output in Iraqi Kurdistan is set to jump as the regional government settles a court case with a consortium of companies active in the area, according to Reuters’ conversation with Dana Gas. The Pearl Consortium – which consists of Dana, Crescent Petroleum, OMV, MOL and RWE – agreed to a $1 billion payout in exchange for violations of a 10-year-old deal to develop the Khor Mor and Chemchemal fields. Those areas are said to hold 17 trillion cubic feet in reserves, which could fulfill all of Europe’s gas needs for…

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How EIA Guestimates Keep Oil Prices Subdued

September 4, 2017 Tyler Durden 0

Authored by Nick Cuningham via OilPrice.com,
The EIA has once again undercut its previous estimates for U.S. oil production, offering further evidence that the U.S. shale industry is not producing as much as everyone thinks.
The monthly EIA oil product…

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How To Incentivize Purchasing Of Eco-Homes

September 4, 2017 OilPrice.com 0

Two seemingly perennial challenges concerning the UK are; the urgent need (and legal obligation) to reduce the country’s carbon emissions by 80 per cent by 2050; and the supply and affordability of homes. Part of the work we do at the British Research Establishment (BRE) is trying to come up with solutions and we think we may have found one that combats both issues at the same time. The underlying principle is simple – low energy homes have lower fuel bills. However, current mortgage affordability assessments have no way of predicting…

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