Syrian capital blacked out after blasts – Middle East – Al Jazeera English
Syrian capital blacked out after blasts – Middle East – Al Jazeera English. (source)
|The Syrian capital Damascus was hit by a power cut late on Wednesday, shortly after an explosion near the international airport, residents said.
“The whole city just went dark,” said a resident who lives in the centre of the city and asked to remain anonymous.
An AFP journalist in Damascus said he could see from a distance a huge fire blazing near Damascus International Airport, which is located near the affected power station.
A Damascus resident told Al Jazeera on Thursday morning that power had been restored in most of the capital.
State news agency SANA quoted Electricity Minister Imad Khamis as saying that electricity in “all provinces” had been cut off due to “a terrorist attack on the gas pipeline feeding the electricity generating stations in the southern region.”
“A terrorist attack on a gas pipeline that feeds a power station in the south has led to a power outage in the provinces, and work to repair it is in progress,” Emad Khamis said on Wednesday.
The Syrian Observatory for Human Rights, a UK-based group that reports on abuses and battlefield developments using sources from both sides of Syria’s civil war, said the explosion was caused by rebel artillery that hit a gas pipeline near the airport.
The Observatory said the rebel shelling was aimed at the town of Ghasula, a few kilometres from the airport. Rebels have been trying to push into the capital, a stronghold of President Bashar al-Assad, whose family has ruled Syria for four decades.
“It is likely this was a large-scale operation planned well in advance,” said Observatory director Rami Abdel Rahman.
In September, a similar outage was caused after a high-voltage power line was sabotaged.
- Blast at gas pipeline near Damascus causes southern Syria blackout..Israel or rebels? (seeker401.wordpress.com)
- Damascus in the Dark After Rebels Hit Gas Pipeline (israelnationalnews.com)
- Syria says terrorist attack causes country-wide blackout (altahrir.wordpress.com)
- Rebels Blast Gas Pipeline Near Damascus Causing Southern Syria Blackout (eurasiareview.com)
The Growing Rift With Saudi Arabia Threatens To Severely Damage The Petrodollar
The Growing Rift With Saudi Arabia Threatens To Severely Damage The Petrodollar. (source)
The number one American export is U.S. dollars. It is paper currency that is backed up by absolutely nothing, but the rest of the world has been using it to trade with one another and so there is tremendous global demand for our dollars. The linchpin of this system is the petrodollar. For decades, if you have wanted to buy oil virtually anywhere in the world you have had to do so with U.S. dollars. But if one of the biggest oil exporters on the planet, such as Saudi Arabia, decided to start accepting other currencies as payment for oil, the petrodollar monopoly would disintegrate very rapidly. For years, everyone assumed that nothing like that would happen any time soon, but now Saudi officials are warning of a “major shift” in relations with the United States. In fact, the Saudis are so upset at the Obama administration that “all options” are reportedly “on the table”. If it gets to the point where the Saudis decide to make a major move away from the petrodollar monopoly, it will be absolutely catastrophic for the U.S. economy.
The biggest reason why having good relations with Saudi Arabia is so important to the United States is because the petrodollar monopoly will not work without them. For decades, Washington D.C. has gone to extraordinary lengths to keep the Saudis happy. But now the Saudis are becoming increasingly frustrated that the U.S. military is not being usedto fight their wars for them. The following is from a recent Daily Mail report…
Upset at President Barack Obama’s policies on Iran and Syria, members of Saudi Arabia’s ruling family are threatening a rift with the United States that could take the alliance between Washington and the kingdom to its lowest point in years.
Saudi Arabia’s intelligence chief is vowing that the kingdom will make a ‘major shift’ in relations with the United States to protest perceived American inaction over Syria’s civil war as well as recent U.S. overtures to Iran, a source close to Saudi policy said on Tuesday.
Prince Bandar bin Sultan told European diplomats that the United States had failed to act effectively against Syrian President Bashar al-Assad and the Israeli-Palestinian conflict, was growing closer to Tehran, and had failed to back Saudi support for Bahrain when it crushed an anti-government revolt in 2011, the source said.
Saudi Arabia desperately wants the U.S. military to intervene in the Syrian civil war on the side of the “rebels”. This has not happened yet, and the Saudis are very upset about that.
Of course the Saudis could always go and fight their own war, but that is not the way that the Saudis do things.
So since the Saudis are not getting their way, they are threatening to punish the U.S. for their inaction. According to Reuters, the Saudis are saying that “all options are on the table now”…
Saudi Arabia, the world’s biggest oil exporter, ploughs much of its earnings back into U.S. assets. Most of the Saudi central bank’s net foreign assets of $690 billion are thought to be denominated in dollars, much of them in U.S. Treasury bonds.
“All options are on the table now, and for sure there will be some impact,” the Saudi source said.
Sadly, most Americans have absolutely no idea how important all of this is. If the Saudis break the petrodollar monopoly, it would severely damage the U.S. economy. For those that do not fully understand the importance of the petrodollar, the following is a good summary of how the petrodollar works from an article by Christopher Doran…
In a nutshell, any country that wants to purchase oil from an oil producing country has to do so in U.S. dollars. This is a long standing agreement within all oil exporting nations, aka OPEC, the Organization of Petroleum Exporting Countries. The UK for example, cannot simply buy oil from Saudi Arabia by exchanging British pounds. Instead, the UK must exchange its pounds for U.S. dollars. The major exception at present is, of course, Iran.
This means that every country in the world that imports oil—which is the vast majority of the world’s nations—has to have immense quantities of dollars in reserve. These dollars of course are not hidden under the proverbial national mattress. They are invested. And because they are U.S. dollars, they are invested in U.S. Treasury bills and other interest bearing securities that can be easily converted to purchase dollar-priced commodities like oil. This is what has allowed the U.S. to run up trillions of dollars of debt: the rest of the world simply buys up that debt in the form of U.S. interest bearing securities.
This arrangement works out very well for the United States because we can wildly print money and run up gigantic amounts of debt and the rest of the world gobbles it all up.
In 2012, the United States ran a trade deficit of about $540,000,000,000 with the rest of the planet. In other words, about half a trillion more dollars left the country than came into the country. These dollars represent the number one “product” that the U.S. exports. We make dollars and exchange them for the things that we need. Major exporting countries (such as Saudi Arabia) take many of those dollars and “invest” them in our debt at ultra-low interest rates. It is this system that makes our massively inflated standard of living possible.
When this system ends, the era of cheap imports and super low interest rates will be over and the “adjustment” to our standard of living will be excruciatingly painful.
And without a doubt, the day is rapidly approaching when the petrodollar monopoly will end.
Today, Russia is the number one exporter of oil in the world.
China is now the number one importer of oil in the world, and at this point they are actually importing more oil from Saudi Arabia than the United States is.
So why should Russia, China and virtually everyone else continue to be forced to use U.S. dollars to trade oil?
That is a very good question.
In fact, China has been making a whole lot of noise recently about the fact that it is time to start becoming less dependent on the U.S. dollar. The following comes from a recent CNBC article authored by Michael Pento…
Our addictions to debt and cheap money have finally caused our major international creditors to call for an end to dollar hegemony and to push for a “de-Americanized” world.
China, the largest U.S. creditor with $1.28 trillion in Treasury bonds, recently put out a commentary through the state-run Xinhua news agency stating that, “Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated.”
For much more on all of this, please see my previous article entitled “9 Signs That China Is Making A Move Against The U.S. Dollar“.
But you very rarely hear anything about this on the evening news, and most Americans do not understand these things at all. The fact that the U.S. produces the de facto reserve currency of the planet is an absolutely massive advantage for us. According to John Mauldin, this advantage allows us to consume far more wealth than we actually produce…
What that means in practical terms is that the United States can purchase more with its currency than it produces and sells. In theory those accounts should balance. But the world’s reserve currency, for all intent and purposes, becomes a product. The world needs dollars in order to conduct its trade. Today, if someone in Peru wants to buy something from Thailand, they first convert their local currency into US dollars and then purchase the product with those dollars. Those dollars eventually wind up at the Central Bank of Thailand, which includes them in its reserve balance. When someone in Thailand wants to purchase an imported product, their bank accesses those dollars, which may go anywhere in the world that will take the US dollar, which is to say pretty much anywhere.
And as Mauldin went on to explain in that same article, a significant amount of the money that we ship out to the rest of the globe ends up getting reinvested in U.S. government debt…
That privilege allows US citizens to purchase goods and services at prices somewhat lower than those people in the rest of the world must pay. We can produce electronic fiat dollars, and the rest of the world accepts them because they need them to in order to trade with each other. And they do so because they trust the dollar more than they do any other currency that is readily available. You can take those dollars and come to the United States and purchase all manner of goods, including real estate and stocks. Just this week a Chinese company spent $600 million to buy a building in New York City. Such transactions happen all the time.
And there is one other item those dollars are used to pay for: US Treasury bonds. We buy oil and all manner of goods with our electronic dollars, and those dollars typically end up on the reserve balance sheets of other central banks, which buy our government bonds. It’s hard to quantify the exact amount, but these transactions significantly lower the cost of borrowing for the US government. On a $16 trillion debt, every basis point (1/10 of 1%) means a saving of $16 billion annually. So 5 basis points would be $80 billion a year. There are credible estimates that the savings are well in excess of $100 billion a year. Thus, as the debt grows, the savings also grow! That also means the total debt compounds at a lower rate.
Unfortunately, this system only works if the rest of the planet has faith in it, and right now the United States is systematically destroying the faith that the rest of the world has in our financial system.
One way that this is being done is by our reckless accumulation of debt. The U.S. national debt is now 37 times larger than it was 40 years ago, and we are on pace to accumulate more new debt under the 8 years of the Obama administration than we did under all of the other presidents in U.S. history combined. The rest of the world is watching this and they are beginning to wonder if we are going to be able to pay them back the money that we owe them.
Quantitative easing is another factor that is severely damaging worldwide faith in the U.S. financial system. The rest of the globe is watching as the Federal Reserve wildly prints up money and monetizes our debt. They are beginning to wonder why they should continue to loan us gobs of money at super low interest rates when we are beginning to resemble the Weimar Republic.
The long-term damage that we are doing to the “U.S. brand” far, far outweighs any short-term benefits of quantitative easing.
And as Richard Koo has brilliantly demonstrated, quantitative easing is going to cause long-term interest rates to eventually rise much higher than they normally should have.
What all of this means is that the U.S. government and the Federal Reserve are systematically destroying the financial system that has enabled us to enjoy such a high standard of living for the past several decades.
Yes, the U.S. economy is not doing well at the moment, but we haven’t seen anything yet. When the monopoly of the petrodollar is broken, it is going to be absolutely devastating.
And as I wrote about the other day, when the next great economic crisis strikes it is going to pull back the curtain and reveal the rot and decay that have been eating away at the social fabric of America for a very long time.
Just check out what happened in Detroit recently. The new police chief was almost carjacked while he was sitting in a clearly marked police vehicle…
Just four months on the job, Detroit’s new police chief got an early taste of the city’s hardscrabble streets.
While in his patrol car at an intersection on Jefferson two weeks ago, Police Chief James Craig was nearly carjacked, police spokeswoman Kelly Miner confirmed today.
Craig said he was in a marked police car with mounted lights when a man quickly tried to approach the side of his car. Craig, who became police chief in June, retold the story Monday during a program designed to crack down on carjackings.
Isn’t that crazy?
These days, the criminals are not even afraid to go after the police while they are sitting in their own vehicles.
And this is just the beginning. Things are going to get much, much worse than this.
So let us hope that this period of relative stability that we are enjoying right now will last for as long as possible.
The times ahead are going to be extremely challenging, and I hope that you are getting ready for them.
- Jerry Robinson: Keep Your Eyes on Saudi Arabia (ftmdaily.com)
- Six reasons the U.S. and Saudi Arabia are moving apart (washingtonpost.com)
- Kerry holds urgent talks as US-Saudi rift deepens over Middle East policy (theguardian.com)
- Saudi Arabia Warns of Shift Away From U.S. Over Syria, Iran! (socioecohistory.wordpress.com)
Guest Post: Peak Oil, Fact or Fraud? Climbing Mt. Hubbert : SRSrocco Report
Guest Post: Peak Oil, Fact or Fraud? Climbing Mt. Hubbert : SRSrocco Report. (source)
This post is written for those who hold the view, understandably, that peak-oil may be a hoax. I sometimes forget that skepticism of corporate power distorted by bubble-vision makes the study of peak-oil seem like the quest of a knave.
But if it’s not a ruse, the ramifications are vast. And it’s my contention that most people view technology, energy, and its related solutions with an irrational, often theocratic belief. I want to skip the numbers, if possible, and simply suggest that the issue called peak-oil deserves serious reflection.
Some things just stick in your mind… I remember finishing Matthew Simmons’ Twilight in the Desert before the book was actually released in Great Briton. Apparently, I considered it thatimportant. It was the most difficult book I’d ever read. Well written for the subject matter, but it was a mountain of data and dry as hell. I’d already digested other peak-oil related books; Kunstler’sThe Long Emergency was the most enjoyable. But I needed to scrutinize Simmons to eliminate possible misinterpretations. His extensive and conservative background, as a high powered energy investment banker, was essential for balance. I’ve also read a few books regarding economic collapse and, in my view, the two are hopelessly interconnected.
First, the definition. Peak refers to the top of a standard bell curve, of production, formed on a chart. It goes up, rolls over, and then goes down. Oil refers to crude, coming out of the ground. It does not represent coal, tar-sand, corn, or solar cells. Peak-oil refers to the irrefutable fact that oil-wells are discovered, tapped, drained, then abandoned. And if something like “abiotic” oil is mysteriously refilling them, it’s painfully slow. Once you acknowledge a limit, the question on peak-oil becomes when – not if.
US oil production peaked around 1970, and it did this because America was first to explore and exploit crude-oil in a big way. This massive historical trend is essentially unaffected by environmentalists and regulation. US/Peak-oil/Historical fact; short & simple, but also understand that peak-production follows peak-discovery.
There’s no getting around it, the same fate awaits the rest of the world; as the planet wide drop in discoveries and aging production begin to confirm. But it’s the resurgence of nuclear and coal, plus the recent assumed cost effectiveness tar-sand and other solutions that sound the alarm. Regardless, the fact remains; no alternative exists to replace any reasonable fraction of 80+ million barrels of crude oil per day, every day.
It’s a bit early to check the rear-view-mirror, but… “Energy Information Administration data showed world supply of crude oil has declined to 83.98 million barrels per day in the second quarter after hitting 84.35 million bpd in the fourth quarter of 2005.” When the drop off occurs and continues, the affects cascade.
Obscuring this unfolding reality is a less-than-obvious industrial complex that renders copper, suburbia, wind turbines, and modern food production as products of a fossil fuel infrastructure.The list is long, the interconnections incomprehensible; because much of technology itself is a byproduct of energy derived from oil. Adding insult to injury, unrealistic expectations are propagated by failures to discern false alternatives. Case in point, tropical sugar cane biofuel for a country with a few cars vs. temperate corn biofuel for a country with a lot of cars.
Our civilization doesn’t just run on oil; it was built on, maintained with, and continues to function as a result of cheap-oil; and lots of it. Picking the low hanging fruit doesn’t mean you’re out, it means continued harvesting requires more work for the same yield. Regarding crude, once you’ve harvested half the deposit, energy input increases as petroleum output decreases. Energy Returned over Energy Invested.
We’ve been pulling oil from the earth for over a hundred years, and the current rate of over eighty million barrels per day is more than any period in history. Clearly the opposite of running out; butrunning-out isn’t the problem, at this time. It’s producing less that can be catastrophic. Remember, peak-oil refers to crude-oil max production; not tar-sands or coal. In some respects, it’s even a distraction to think of the down-slope as costing more money; as in money to produceoil-energy. More importantly, it costs more energy to produce energy. ERoEI
Notice also that the concepts of energy and technology are often used interchangeably. They go hand in hand, but they’re not synonymous. And how much clean natural gas are we willing to squander fabricating usable liquid fuels from tar sands? As I recently read, this may be akin to using “caviar to make fake crab-meat.” The upside of Hubbert Peak grew human population to levels never-before possible. On the downside we deal with it; a commodities bullfight.
History provides myriad examples of market bubbles. At the end of 2006 we consider the housing bubble. A larger bubble yet is the bubble economy itself, and an argument could be made for the largest bubble of all time. Spending half the earth’s endowment of ancient sunlight, in synergistic combination with an international, century long expansion-of-credit, produced the jet-powered Keynesian misallocation of resources – that is, the Bubble of Civilization.
- Peak Oil Was A Lie (peakoil.com)
- No need to panic about ‘peak oil’ (peakoil.com)
- Researchers address economic dangers of “peak oil” (rdmag.com)
- Tragedy of the Commons- Peak Oil (greenznthingz.wordpress.com)
Mystery of the ‘Missing’ Global Warming – Bloomberg
Mystery of the ‘Missing’ Global Warming – Bloomberg. (source)
Have you heard the one about how global warming stopped in 1998? It’s been called a “pause,” a “hiatus,” a “slowdown” and a “siesta.” Above all, it’s a red herring, and it isn’t difficult to find where some of the ‘missing’ heat has gone.
First, in case you haven’t been paying attention: 97 percent of climate scientists agree about global warming and its man-made causes, now with 95 percent certainty, according to a report this month by the IPCC, the world’s most authoritative body of climate scientists. Greenhouse gases trap heat, which melts ice, raises seas and floods cities; this fundamental equation is not in doubt.
What has raised a few eyebrows recently is that temperatures on the surface of Earth have increased at a slower rate since 1998 than in previous decades. Scientists have largely chalked this up to the short-term variability of climate. However, climate skeptics have taken the surface-temp slowdown acknowledged by the IPCC to mean that global warming itself has stopped — that somehow the physics has changed.
“The planet is warming,” said Kevin Trenberth, a senior scientist at the National Center for Atmospheric Research and a reviewer for the IPCC report. “The warmth just isn’t being manifested at the surface.”
The chart below, from the U.S. National Oceanic and Atmospheric Administration (NOAA), shows what’s going on beneath the surface. The red line shows a half-century of temperatures for the first 700 meters of ocean water below the surface; the black line shows temperatures of waters to a depth of 2000.
The warming at the ocean’s surface layer may have slowed a bit, but ocean temperatures in aggregate have continued to rise unchecked during the so-called hiatus, according to the IPCC. That’s important because while the atmosphere accounts for just 1 percent of planetary heat, the oceans carry 93% of the stored energy from climate change (melting ice and warming continents make up the rest).
In fact, there is mounting evidence that deeper regions of the ocean, down to 2000 meters, are absorbing heat faster than ever, Trenberth said in a phone call. His research shows the oceans began taking on significantly more heat at around the same time the surface warming began to slow in 1998. His widely cited work was published just after the cutoff to be included in the IPCC report.
The irony, says Trenberth, is that when the surface of the planet is unusually sweltering, the Earth actually radiates more heat into the atmosphere, in effect slowing the long-term warming of the planet. And in “hiatus” years, when the surface is cooler, the Earth absorbs more of the sun’s heat deep the oceans, slowly cooking the planet. What you see isn’t always what you get.
Ocean temperatures are just one of many independent lines of evidence showing that climate change continues to speed ahead on an alarming course. Need more? Look to the seas that are rising faster than previously anticipated, the imbalance of energy measured entering and exiting the upper atmosphere, and the melting glaciers and permafrost. I could go on.
But the next time you’re at a barbecue and someone tries to tell you global warming stopped in 1998, just throw some cold (ocean) water on the debate. And don’t sell your getaway ark just yet.
Read the full IPCC report here. Warning: It’s 2,200 pages and not for the scientifically faint of heart. The more digestible 30-page summary for policy makers is available here.
More by Tom Randall:
Can’t Make Enough Food? Make Fewer People – Bloomberg
Can’t Make Enough Food? Make Fewer People – Bloomberg. (source)
Solve the world’s future food needs? That’s easy. Make more food or make fewer people. Pick one.
Lester Brown, founder of the Earth Policy Institute and author of a new memoir, Breaking New Ground, suggests we think about fewer people.
Water resources from Asia to the U.S. Great Plains are being depleted. Rising affluence in developing counties is creating demand for grain-fed meat. Plant yields themselves are approaching the limits of what photosynthesis can bear, Brown said on a press call yesterday. In China, which eats half of the world’s pork, people who now eat about 120 pounds of meat a year are adopting diets more like that of Americans, where consumption is over 200 pounds annually. As the nation’s middle class grows to nearly a billion people by mid-century, the food system will become severely strained, he said.
“This tightening food situation is affecting the world’s poor in a way that is not reassuring at all,” he said.
The key to feeding people, Brown suggests, is by trying to manage population growth. Leaders need to ensure the planet’s capabilities aren’t overwhelmed, he said.
“The population issue hasn’t been on the table, but it needs to be,” he said. “We need to be dealing with basic social questions.”
The world may struggle to grow and trade itself out of its hunger problem, so population management better get started, Brown said: About 842 million people experienced chronic hunger over the past three years.
Large agricultural companies bet growth and trade will move along reliably enough to feed the world. Gathered in Des Moines for the annual World Food Prize, representatives from Monsanto, DuPont, Deere and others say that shipping food from regions where technology is creating a surplus to areas where productivity is struggling to keep up can keep the world fed as the global population zooms past 9 billion by 2050.
A study released today sponsored by the Global Harvest Initiative, a consortium of businesses and nonprofits, says uneven growth in global crop production will make export flows more crucial. Production in Brazil, already the world’s biggest grower and shipper of soybeans, will increasingly be used to feed China. By 2030 the Asian giant will be able to meet only 72 percent of its own food needs.
Brazil, which has invested heavily in agricultural research and development, will grow twice as much food as it needs by then, according to the Global Harvest Initiative. Sub-Saharan Africa, the world’s most famine-prone region, will struggle the most with feeding an expanding population. Latin and South America will become an even more important breadbasket, the group said.
Key to meeting global food needs are technology and trade, according to the initiative, including genetically modified organisms.
“Removing barriers to regional and global trade is going to be imperative,” said Erica Seitzer, a Dupont Co. employee on loan to the initiative, highlighting better crop technology and improved land and water management as a way to grow more food on finite land.
Judging by the aggregate needs — we’ll need 60 percent more calories in 2050 than today, according to the World Resources Institute — both options are on the kitchen table.
Analysis and commentary on The Grid are the views of the author and don’t necessarily reflect the views of Bloomberg News.
- The Population Control Agenda Is Being Relentlessly Pushed In American Schools (forum.prisonplanet.com)
- Control the food and oil …. (hrexach.wordpress.com)
- How Many People Should There Be? (bigthink.com)
- Is population growth out of control? (bbc.co.uk)
- There is no population explosion on this planet | Robert Newman | Comment is free | The Guardian (theguardian.com)
Obama May Or May Not Have Tapped Angela Merkel’s Cell Phone | Zero Hedge
Obama May Or May Not Have Tapped Angela Merkel’s Cell Phone | Zero Hedge. (source)
In a stunning claim, Germany’s Der Speigel reports that theUS targeted Angela Merkel’s private mobile phone for years…
- *MERKEL TOLD OBAMA TAPPING WOULD BE UNACCEPTABLE, SEIBERT SAYS
- *MERKEL COMPLAINED TO OBAMA ABOUT PHONE SURVEILLANCE: SPIEGEL
- *MERKEL DEMANDS FULL EXPLANATION FROM OBAMA, SPIEGEL SAYS
So Obama promptly complied:
- *OBAMA TOLD MERKEL U.S. NOT TAPPING HER PHONE, SPIEGEL SAYS
We await Snowden and Greenwald’s clarification…
Carney is now denying it all in the WH press conference:
- *CARNEY SAYS OBAMA, MERKEL SPOKE ABOUT NSA ALLEGATIONS TODAY
- *CARNEY SAYS OBAMA ASSURED MERKEL HER PHONE NOT MONITORED
- *CARNEY SAYS MERKEL, OBAMA AGREED TO INTENSIFY COOPERATION
- *CARNEY: NOT MONITORING, WILL NOT MONITOR MERKEL COMMUNICATIONS
- Germany: We Think The NSA May Have Tapped Chancellor Angela Merkel’s Cell Phone For Years (businessinsider.com)
- Angela Merkel concerned at ‘US phone spying’ on HER cell phone! (aconservativeedge.wordpress.com)
- Ooops! They did it again!! (homegrownmedia.info)
- Merkel concern at ‘US phone spying’ (arunbabyveranakunnel.wordpress.com)
Bank of Canada slashes economic growth forecast – Business – CBC News
Bank of Canada slashes economic growth forecast – Business – CBC News. (source)
The Bank of Canada has held its key interest rate at one per cent and cut its outlook for economic growth to 1.6 per cent this year, 2.3 per cent in 2014 and 2.6 per cent in 2015, a sizable downgrade from its July outlook.
In its monetary policy report released today by governor Stephen Poloz, the bank says it sees the economy returning to full capacity by the end of 2015.
The statement also removes the bank’s warning that a rate hike is inevitable, a “major turn in guidance,” according to Andrew Pyle, senior wealth adviser and portfolio manager at Scotia McLeod.
“There is clearly not enough confidence in the U.S. or global economy to push export growth and the Bank is also more concerned about a potential correction in the housing sector because of the continued ramp-up in prices,” Pyle said in a note to investors.
The Bank of Canada says softer-than-expected U.S. growth pushed the full recovery of the economy later, but that it expects “a better balance between domestic and foreign demand will be achieved over time and that economic growth will become more self-sustaining”.
In its July report, the bank had predicted the Canadian economy would grow 1.8 per cent this year, followed by 2.7 per cent in 2014 and 2015, returning to full capacity in mid-2015.
The report sent the Canadian dollar plummeting, down 0.93 cents against the U.S. dollar to to 96.27 cents US in mid-morning trading.
That won’t be the end, according to Pyle, who says he sees the Canadian dollar falling to 92 cents US within a month, and that he believes Poloz is attempting to push the dollar down to boost exports.
The lower economic outlook and stubbornly low inflation mean the Bank of Canada is likely to hold interest rates for at least another two years, Pyle says.
TD Bank says it now believes rates will stay unchanged until 2015, according to commentary by economist Diana Petramala.
“Interest rate hikes will be gradual and dependent on economic performance and financial conditions going forward, with the bank keeping a close eye on the evolution of domestic risks,” Petramala says.
- Bank of Canada rate unchanged (globalnews.ca)
- BoC downgrades economy for next three years, keeps interest rates unchanged (canadianbusiness.com)
- The Bank of Canada is keeping its trendsetting overnight interest rate at one per cent. (newscanadanetwork.wordpress.com)
- Bank of Canada Drops Bias to Lift 1% Policy Rate (bloomberg.com)
The Surprising Answer For How To Handle The Next Recession | Zero Hedge
The Surprising Answer For How To Handle The Next Recession | Zero Hedge. (source/link)
“Who in his right mind would suggest, ‘do nothing’?”… hhmm…
- Friedman, Hayek, and Keynes. (ritascosta.wordpress.com)
- On Depressions, the Structure of Production & Fiscal Policy (azizonomics.com)
Troika Wants To Strip Greece Of Defense, Auto Industries, Greece Balks: The Troika-Greece Can-Kicking Toxic Loop | Zero Hedge
Troika Wants To Strip Greece Of Defense, Auto Industries, Greece Balks: The Troika-Greece Can-Kicking Toxic Loop | Zero Hedge. (source)
The heads of the troika mission in Greece are due to return to Athens at the beginning of November, it was revealed on Tuesday as sources in Brussels insisted that the country’s lenders would not back down over their demands for further fiscal measures and the closure of Hellenic Defense Systems (EAS) and the Hellenic Vehicle Industry (ELVO).
The Greek government has balked at suggestions it may have to find as much as 2 billion euros more than it has planned in savings next year. However, EU sources told Kathimerini that the troika does not consider the draft 2014 budget reliable. Greece’s creditors believe the plan overestimates tax revenues and underestimates social spending.
As a result, the troika wants to thrash out more measures with the Greek government, ensuring that the deficit target for 2014 will be met. The European Commission, European Central Bank and International Monetary Fund agree with Athens’s positions that any extra savings should not come from “horizontal” cuts to wages and pensions.
The precise amount needed to cover Greece’s fiscal gap next year will not be assessed fully until the current troika review is completed. This requires Greece to meet the milestones agreed with its lenders, such as rounding off the first phase of a public sector mobility scheme. EU sources noted that Greece could survive without receiving its next loan tranche until spring, thereby underlining that the troika is not in a rush to complete the review.
With regard to EAS and ELVO, Greece’s lenders do not believe it is possible to save the two state firms as they are a drain on public finances, in contrast to other European countries, where companies in the defense industry are profitable.
Athens has been in contact with the European Commission over the past few days to respond to queries about its plans to keep the firms afloat. The government believes that it could turn EAS into a profitable company with two years. EU sources said Brussels had heard similar pledges from Greek governments over the past 20 years.
The last snarky sentence was from Kathimerini, not us.
And of course, all of the above would be dramatic if it wasn’t quite clear apriori that this is merely the latest iteration of the kick-the-can closed loop, best summarized by the schematic below.