The Scottish Currency and Putin Economics

The week beginning was marked with Russia forcing aid into rebel held eastern Ukraine and the Second debate on Scottish independence from the United Kingdom.

Alex Salmond a bachelor of Economics and History, that went on to be leader of the Scottish National Party went against former Chancellor of the Exchequer Alistair Darling in a Televised debate on Monday night.

The debate, was a battle of words, with no answers for many on analysing and interpreting the outcome of Scotland's economy. The major being the currency. Alex Salmond fended off the question, though to many researchers and analysts the answer is a separate diluted currency. With this answer assumed as the most logical for an independent Scottish economy to function, let a alone work, the creation of a currency is inevitable.

The major issue en-laced within the UK government's need is that all UK debt is embedded in valuations of assets, such as assets in Scotland. This would in turn affect the borrowing capabilities and pricing for the remainder of the UK. Though the same would be for Scotland, the Scottish economy would have undertake its share of the debt produced from toxic assets incurred within the financial crisis. This in itself will cause capital flight to likely occur.

How to get the debt from Scotland is more of a major issue that the UK has to figure out, and will markets react to an unsound Scottish balance of payments book? With the quick decision making of the financial markets, and how to justify the information, the risk is acute.


Russia's economy is set for a strong downturn with the economic sanctions taking a deep toll on the balance of payments. Vladimir's game strategy back in march, was very successful as the economic sanctions over Russian influence on Crimea would have lifted and Russian territory would have expanded. It was a great strategic move as the markets saw their financial power see no change in the political strategy of the Kremlin. Though we are nearing September, and long term sanctions are not favourable. Even for a low rouble.

Though with low economic growth for Russia, will it be likely that Putin, takes a more aggressive stance in the Ukraine Crisis? After heightening the tensions with Kiev after sending a large convoy of "Aid" supplies into the rebel stronghold, Russian provocation of the west is becoming less forward strategy.Though a lot of moves made by the Russian premier in March were new out of the rule book.

Looking at the soft and hard currency position. Many companies from and working within Russia,are finding it next to impossible for day to day transactions to be conducted in the Russian Rouble. The oil and gas sector is heavily dependant on outside technology and skills, a major area the economic sanctions are effecting. Companies such as BP who own a major majority of Rosneft(Russian national oil company), are left being unable to transfer income to the UK subsidiaries or supply their projects.

From an investing point of view for game strategy, the likelihood of an escalation occurring even more is inapt. Conciliation of Russia and Ukraine, in order for the easing of economic sanctions is greater probability. However with multiple fields of major medical, civil and political unrest around the continental plate, there is greater chance of the less probable decision occurring, as with widespread risk, there is a greater prospect to get away with more.

Stormy seas ahead G.E.

February Gothic Viewpoint

The far outcries of a weary Britain’s Triple – A downgrade, and the far reaching wails of a Banshee that stay echoing with a once dominant oil giant could be the marks of February 2013, which Economics nerds remember.

Apart from that the dear lust I have in returning to the desolate sector which I call short-term trading. Research and hunger for a weakened Sterling drives me into vast array that this is 2013 and yes people need to be proactive in objects other than chess, in order to survive the Darwinian rules of life.

Iran goes Keynesian

For me, yes I will remember it for these two things, plus Iran’s new adventurous plans for 20 new uranium rich reactors.

Iran’s strategy of its announcement on the new nuclear reactor plans, may pay off in the long term. The strong decisions that Iran will not back down, regardless of international pressure on its nuclear programme as a known Islamic radical state, could pave the wave for new balance of payments to enter the country. Looking at in terms of the size of Iran, one could easily assume that Iran will have a power production surplus in cheap electricity, which could be provided to an oil dependent power consuming gulf.

As much as its nuclear programme is seen as a major threat to Israel and other nations, it could bring forth a new frontier of gulf power. Iran could enrich nuclear weapons, but instead it is taking positive approach in order to combat economic sanction bestowed upon them.

Wireless momentum

At the moment there are two groups pushing forward for one next big thing in world electronic devices. The ability to charge battery powered devices wirelessly from the handheld mp3s and smartphones, to the 12V battery in your car. The ‘Wireless power consortium’ and ‘Power matters’ alliances are the two big groups pushing this forward and competing. A future billion € industry that will maybe see the combination is well with wireless signals in order to keep the spectrum of signals generic and together, as the invisible spectrum gets more and more stuck together.

Only Fools and horses – The Long view

Well apart from the horse meat scandal. Some other people have silver lined their pockets in an array of marvelous moves within the economy.

As the currency attacks become far greater on central banks, deemed by hedge & Pension fund managers as being the new innocent flesh to be cleaned from bones, a sudden eye takes a glimpse where does it go from here?

Well with dilution in the power of central banks, the multiplier effect of virtual power transfers over to the hedge funds at a smiling rate, as they know after the submission of Bank of England to the new round of QE, they will easily take bets on world recession part II.

The Gothic Viewpoint

The central bank may take an extreme monetarism approach to curb the economy as economic collapse may look inevitable, pressing the political side of the coin in to reduce tax receipts in the short-term, in order to reduce the downturn in a rise in central bank interest rates. The proposal seems more to create a wave of laughing amongst some readers. But think of Europe in particular, what options are left before part II is not prophecy anymore?

So the Banshee has not given up yet haunting the tickers at the world indices and another wave of gothic worthy financial depression I may get to rant about. But one thing is for certain, that humans do become innovative, and are able to find ways to adapt to constraints. Well that’s the nice way to put it… now to listen to Rome!

Tata

Gothic Economist

The tale of two Islands in Asia

We are a week into the glimpse of China's new management board, upon the stage for China, seven suits encased with red ties stood before the world.

Mr Xi Jinping is now leader of an >80m Chinese communist party with his six new team members at the helm also, however attending the congressional announcement was former president Jiang Zemin. He was there for one reason only, to reassure the world, that as much pressure china's political system is under to become democratic, it will not cease. Mr Jiang actually got more attention due to this, compared with the new president at the congressional announcement, as Mr Xi is seen to be more open in a rational sense to changes within the political system.

This would be honey to the ears of Japan, as it announces it largest trade deficit with China, and this is not due to organic economic slowdown, it is down to a bunch of islands that Japan purchased. This has now led to negative growth in nearly two quarters, ergo Japan will be declaring a recession. Though even with a slightly easier going president, that's not to say members of the old school are not present in the other six.

Going to Behavioural and Strategic impact. The US has taken a very notoriously cunning step and in some ways it will overall benefit China. The US shifted the fire-power of 40,000 troops to conduct exercises   in the area, in a mutual indication to China, that it would standby Japan to defend it's territory, as Japan and the US have a treaty on defence of each other.
However at the same time, the US will now be overtaking Japan as largest export partner to China. So throwing a few 40,000 troops in an area to keep Japan happy for a while, whilst you take over their trading position is quite a good deal.
But it is just not the US that are conducting strategic positioning  China is producing bilateral trade agreements with South Korea, so to anyone's guess, economic pressure is fully being exerted onto the sword of the samurai. In return Japan is attempting trade agreements with the EU and Australia, regardless it will loose out.
Though it's not all sunshine and butterflies for the red flowers.
China's investor arms are going into the emerging markets, as western traders start getting bullish with their Chinese weighted portfolios. They seek non domestic protection, and as much as China racks on more tax incentives and lifts investment barriers, non of this is being seen to make a world of good; only behavioural investment sense of desperation, just making traders increase their bet values against China.

So China is plotting the downfall or economic suicide of Japan with its sustainable deficit of +200% of GDP.
Though it could be worse... You could be Greece, having to deal with your politicians not agreeing with the death dealers aka IMF and the EU, which just entered negative growth also. http://www.ft.com/intl/cms/s/2/0a35504a-0615-11e1-a079-00144feabdc0.html#axzz2CnY7xTPX

Whilst you then have to watch energy companies pay fines, of larger sums that what your country so desperately needs.
http://www.ft.com/intl/cms/s/0/555fa13c-2f46-11e2-8e4b-00144feabdc0.html#axzz2CnY7xTPX

Positive economics combined with the church of monetarism and Hayek. It lacks so much irrational emotion in these scaring areas, its hard to believe this is how economies work the best!!

Tata for now... GE

The Arctic, Russia and the West

The Arctic, the final frontier and one of the most unexplored regions for oil; it has stayed very unexplored for a reason. Shell this week announced their suspension of their drilling, this included France's Total. Combined spending of these two companies within the region is estimated at approximately $7-9Bn. This has occurred due to countless safety problems and the high guarantee of not being able to contain a spill if occurred. ENI and Exxon Mobil though still have their hands hooked into the exploration of the Russian Arctic, but progress has yet to be made, or is it really Russia's Arctic?

Countless disputes between Norway and Russia over the northern territory have continued, leading more secondary companies to conduct their northern drilling explorations from Greenland, yet progress is still yet to be made, one of the suffers of $1Bn yet to make a comeback is Cairn Energy. Russia may though, as well as BP be drawing a quick line under their exploration problems, if the long battle zone of TNK-BP joint venture can be settled.Therefore rebidding of Rosneft (Russia's state oil company) can start again, bringing BP back into the Strategic oil club, and more importantly growing in size since it's asset sale to cover it's remaining Gulf of Mexico disaster repayments.

If the deal with Rosneft is completed soon, BP could quickly become the largest licensed drilling holder within the Arctic. The company is known to be at the front of hard drilling conditions, but also for their failure to operate safely. If BP through the help of Rosneft throws $12Bn give or take, with their newest Arctic technology, they could become successful in domineering the one fifth of the worlds, untapped oil resources.
The company is now finalising the selling of two refineries in the US, leaving it desperate to grow more. Taking a more primary/tertiary model of growth, will be beneficial for the company, though refining oil is turning into a more profitable area of the oil sector. Many new companies are entering this market such as Marathon Petroleum and buying refineries of the likes of BP.

If success is seen in Russia, the strategic energy chart will be weighed more heavily towards the old bears, as the unrest within North Africa and the Middle East continues. Though the slowdown in economic growth has, allowed for the demand price of oil to drop to lows of $108.00 bbl, showing that as much as oil production risk may have increased, the demand has dropped. Though I think it is safe to assume that OPEC will drop supply if it decreases "too much".

Another attack from Europe is occurring. Just before this winter the EU began a probe into GazProm (Russia's state gas company) for it's price fixing to Europe, but more on that in the next entry.
Tata GE