Pull! Push!
Article: 'The Coming Energy Wars'
Snippets from the
article...
""Indeed, there's concern that as higher oil prices force many Asian economies to reduce or even cut their generous fuel subsidies, growth will slow sharply, and there could be social unrest as the world's poorest become more desperate. The political ramifications of this (which already include moves away from free trade), combined with the ever-rising costs of doing business as usual, could force a retrenchment from globalization. "It's a harbinger of the reversal of globalization," says Jeff Rubin, chief economist for CIBC World Markets. "At $200 a barrel, you'll see transport costs rise so much that they will effectively reverse the trade liberalization of the last 30 years." He predicts that world trade will realign itself regionally, so that while Japan may continue to ship in goods from China, the United States will increasingly import from Latin America. "If you look at the period from 1973 to 1979 [when oil spiked] you'll find the same thing happened," he notes. "The share of imports to the U.S. from Latin America and the Caribbean rose by 6 percentage points. That was all about freight costs."""This spring, America hit a historic point. With average gas prices per gallon edging toward $4, America's notoriously profligate ways started to change fast. Americans are driving less, using mass transit more, buying fewer gas guzzlers, indeed shopping less wantonly in general, and lowering their previously unshakable confidence as consumers. Suddenly, Americans are acting differently; if not exactly like Swedes, then not quite like themselves, either. It's a shift that could change the world.
And there are more changes to come. So far the price shock has triggered the most obvious consumer shifts in the United States. Europeans, already greener, are also are buffered by a stronger currency, and Asians are protected from the spiking price of oil by subsidies that control the impact on gas prices at the pump. But if oil prices continue to rise, and the subsidy dam breaks, as seems likely, the energy revolution now transforming America will spread. "We sailed through $80 a barrel," notes energy authority Daniel Yergin, author of "The Prize: The Epic Quest for Oil, Money and Power" and chairman of Cambridge Energy Research Associates. "But that doesn't mean we'll sail through $200 a barrel. That sort of price would have enormous global consequences.""Sources:The Coming Energy Wars (Newsweek.com)
Labels: China, India, life, money, oil, World
Coming soon to an airport near you: Williams Air(?)
(DISCLAIMER: IANAE, I Am Not An Economist)
(DISCLAIMER: IANAAIE, I Am Not An Airline Industry Expert)
(DISCLAIMER: IANAA, I Am Not An Accountant)
(DISCLAIMER: IANAP, I Am Not A Politician)
I'm going to go out on a wing here (a wing, get it? LOL) and make a bold prediction. I predict that within ten years (maybe less), the Williams brothers (Sir Charles O. Williams and Ralph 'Bizzy' Williams) will provide an airline service to Barbadians and eventually, Caribbean citizens as well.
What am I basing this prediction on? Have a look at today's Nation newspaper and you might see why (and possibly disagree with me). The front page headline, '
SIR CHARLES' WINGS,' gives details on the Williams' brothers plans to purchase their own plane to transport them and their employees across the region (for business meetings, etcetera).
The newspaper article starts off by landing a powerful blow square on LIAT's jaw. After all, when you have two of the region's most successful entrepreneurs identify and complain about the service and performance levels of your company, what do you expect to happen next?
Simple. They find a solution. In this case, they bought their own plane. Where some see problems, others, in particular the Williams' brothers, see opportunity. With their own plane, they and their staff should, in theory, be able to get around a lot more efficiently.
As for the costs, I'm sure they've done all of their homework. The plane, and associated expenses, will probably payback for itself within a few years in terms of the time and money saved in having to NOT depend on LIAT. Else, why bother purchasing a plane in the first place?
Savvy business people do not (usually) throw good money behind bad money, and if they do, it's only for a very short period of time. A airplane purchase is not a 'short time' kind of purchase. It's a major investment.
I'm also guessing that they will not treat the plane as a 'company vehicle,' so to speak. They'll setup a new, seperate company, let's call it Williams Air Inc., for the purpose of this article. This new company will charge the other Williams' companies for the use of the plane and related services.
For example, if Sir Charles wants to travel to St. Lucia, Williams Air will bill C. O. Williams Construction. Williams Air probably won't make a lot of profit (running a plane isn't cheap), if any at all, so it won't be paying a lot of taxes, but then again, remember, IANAA (I Am Not An Accountant).
Over time, WA (Williams Air) may not do as much travelling as it used to in its earlier days. Maybe the business interests of the Williams' brothers across the Caribbean may decline (doubtful). So, what to do with the airplane and all of the related bits? Ante up lots of cash, buy (or lease) another two planes and start a public airline.
In the past (if I remember correctly), Ralph 'Bizzy' Williams has spoken about an island-to-island ferry service. Why bother with a ferry service when you can offer an airline service? And with the Williams' brothers running the business as a PRIVATE concern (that is, no Government ownership) you can be quite sure that there will be no wastage, red tape and inefficiencies. It will be profit driven, as most private sector based enterprises usually are. It may even end up being a 'no frills' type airline, or one geared for executive travel only.
CSME (or the advent of it, as I'm not well versed on the subject) and the free movement of labour throughout the region may also be an incentive for a new, privately owned, airline. If, in theory, there is an increase in the flow of labour (and I mean skilled as well as unskilled) between the islands, then an efficient and affordable airline service will be an important requirement.
But then again, what do I know? I'm certain that there are dozens upon dozens of factors that I haven't even considered. As I stated at the begnning of this post: IANAE, IANAAIE, IANAA and IANAP.
:-)
Labels: Barbados, business, economics, life, money
Gimme! gimme! gimme! Are You a Shopaholic?
Then you should have a look at
this lengthy article on the "Get Rich Slowly" website.
In the "Coping with compulsive spending" section, the writer identifies and explains several ways with which to deal with this problem. Two of my favourites are:
1) Carrying cash. By relying exclusively on cash, you avoid the convenience and temptation of having a cheque book or credit/debit card which makes for easy purchases. Also, if and when you do run out of cash, you can't buy anything else since you don't have any plastic, or cheques on your person.
2) Tracking every penny you spend. At set intervals, you review how much you've spent, and where you've spent it. No doubt this will result in a surprise or two. The problem here is setting aside the time to record your spending. My humble suggestion? Store all your receipts in your wallet, purse or pockets, and at the end of the day (or at the start of the next day), pull them out, and key them into a simple spreadsheet. The longer you wait to do this, the quicker the paperwork will pile up, the more time you'll lose, the more frustrated you'll become and the quicker you will toss the whole tracking idea into the rubbish bin.
Labels: life, money
Parking Lots And Food And Drink Establishments
(DISCLAIMER: IANAE and/or IANAA, I Am Not An Economist and/or I Am Not An Accountant.)
Last Sunday, while on my way to Jumbies, I took the south coast road and drove past TGI Friday's, Bubba's and Cheffette. As I drove past these establishments, I stole a quick glance at each of their parking lots. Most of them were full. Big deal, right? Maybe, maybe not. If we assume (yes, I know what they say about the word 'assume' and about assumptions in general) that the cars parked in each of the establishments' respective parking spaces belonged to patrons of said establishment, then a casual observer may quickly conclude two things: 1) that people have money to spend, that is, they have
disposable income (better yet, discretionary income) and 2) that business is booming for these particular establishments.
The problem with both of these conclusions is that they may be somewhat misleading. Regarding the second conclusion, unless you had direct access to the sales figures of the establishment for a particular day, like Sunday, there would be no accurate way to tell if the establishment was making money (as in a profit). Even with these figures, it doesn't reveal much. The establishment may do ten thousand dollars in sales that night, however, this figure might only be representative of gross sales (the figure before overheads and expenses, etcetera, are deducted) and may not immediately show how much was pure profit (the figure after overheads and expenses, etecetra, have been deducted).
As for the first conclusion, just because people are spending money, it doesn't automatically mean that they can always afford to do so. Some people live beyond their means and, according to an old saying: "Have champagne tastes, but mauby pockets." Other people may have been invited to dinner by someone else and therefore do not have to pay for the food/drink they are consuming. It may also be a special occasion and people are celebrating by going out for dinner. It may even be a once-a-month kind of affair where a family, a couple or friends treat themselves to a night out on the town.
Thus, we can see that just because the parking lot of a food and drink establishment is full, it doesn't always mean that the business is making money (profit) and also, just because people appear to eat or drink out alot, it doesn't always mean that they can really afford to.
Labels: Barbados, economics, life, money
Brother, Can You Spare A Couple Of Billion Dollars?
After reading this article: "
Clive Thompson Explains Why We Can Count on Geeks to Rescue the Earth," I started thinking about how difficult it is for some of us to process large numbers and quantities.
Every other day we hear a "hundred thousand this," or "a million that," or even "a billion," this and "a trillion that." But can we really appreciate the true size of these numbers? In particular, can we appreciate and process large numbers like these when it comes to something that, as Barbadians, we should all be concerned about, like our national debt?
Maybe some of us can (like economists or those of you who are numerically inclined), but for the average man (or woman) on the street, how do we help him or her, process and appreciate how much money our country owes? Simple. We must try to use terms and figures that the average man or woman on the street can easily understand and appreciate.
But before we do that, remember IANAE (
I Am Not An Economist). Next, let's make sure we understand each other: If I borrow five dollars from you, I am a debtor and sooner or later, I have to pay you back (maybe with interest). From your perspective, you are a creditor. You have extended credit to me and you hope to collect your five dollars (the debt) sooner or later with interest (if you were smart). Now look at the big picture. Governments borrowing and lending, IMFs, World Banks, central banks, commercial banks, so on and so forth.
Okay, so what exactly is our current national debt? I haven't a clue. However, I did find a web-based article from
The Nation newspaper, dated August 19, 2006. In it, the writer mentions that the national debt was almost $5bil ($5,000,000,000) at the end of December (2005 presumably). I also posted a comment on BFP asking if anyone knew what the current national debt was, or at least, a figure that a lay person could use, I recalled $4bil as a figure from somewhere and a "Jerome Hinds"
seems to be in agreement with my guess. I also asked another source, and he/she told me, that as of March 2007, our national debt (internal + external) was OVER $5bil.
(Let's temporarily forget 'hard' and 'soft' debts and concentrate on the fact that a debt is still a debt no matter how hard or soft it is. Let's also put aside party politics for the time being.)
So, back to putting things into perspective for the benefit of the average man or woman on the street (and for whoever else is interested):
What Can You Get For Five Billion (BDS) Dollars? I'll tell you (hopefully my figures are reasonably accurate):1) At $2.00 each for a plastic bottle of Coca-Cola (the price I pay at the canteen at my office), you could buy 2.5 billion bottles of the stuff. Divide that by the population of Barbados (
280,946 July 2007 est.) and that's about 8,898 bottles of Coke PER PERSON.
2) The same canteen at work charges $1.50 BDS for a Pine Hill Dairy "box juice." So, with $5b, I could buy around 3.3 billion of these box juices. Again, using the population of Barbados, that's about 11,864 box juices PER PERSON.
3) At $2.25 each for a cheese cutter (a Barbadian classic and readily available), I could buy 2.2 billion cheese cutters! (CHEESE ON BREAD, MAN!) That works out to about 7,909 cheese cutters for every man, woman and child in Barbados.
4) At $4.00 each for a flying-fish cutter, I could buy around 1.2 billion cutters. That works out to about 4,449 flying fish cutters for every man, woman and child in Barbados (by then, T&T and BDS would've hopefully sorted out all of their fishing issues, although, there may not be enough fish to go around!)
5) At $2.00 each for a "bread-and-two" (two fish cakes in a salt fish bun), I could buy 2.5 billion bread-and-two's. That works out to about 8,898 for every man, woman and child in Barbados.
6) Tonight, I had a beer (Heineken) at
Jumbie's in St. Lawrence Gap. With $5 billion, I could buy 714,285 beers, or (using the population of Bim) about 2,542 beers PER PERSON.
7) How about a new motor vehicle? No problem. Let's say a pick-up (I like pick-ups), a Mitsubish L200 costs around $90,000 BDS. (DISCLAIMER: I don't work for the local agents, this is just a rough figure). With $5 billion, I could buy 55,555 of them.
8) Better yet, how about a nice house and land deal? Nothing west coast-ish, something comfortable with at least 3 bedrooms and 2 bathrooms and a nice yard for the kiddies to run around in. Let's say it costs around $450,000 (DISCLAIMER: I Am Not A Real Estate Agent). With $5 billion, I could buy about 11,000+ of these.
9) What if the entire population of Barbados had to pay off $5 billion in national debt? It means that every man, woman and child would have to pay $17,797.
Why does any of this matter? After all, the debt collector isn't going to go knocking on your door asking you to pay up (don't forget those interest payments!) The debt has to be paid by the Government (be it BLP, DLP or XYZ). Where will Government get this money from? Simple, YOU. Your children. Possibly your children's children. How? (Remember IANAE) Probably via taxes, duties, etcetera.
What does the Government do with all this money? I don't work for the Government, so I don't have specific details. However, the Government has to provide and pay for education, police/fire, roads, infrastructure, transport, health care, water utilities, subsidies and host of the other services. These services cost money. So, can you spare a couple of billion dollars?
Labels: Barbados, economics, life, money, politics
The World Bank Meets Wall Street
(DISCLAIMER: IANAE, I Am Not An Economist.)
They say that imitation is the sincerest form of flattery. So it should come as no suprise then that
Robert Zoellick, the new World Bank president, would like the bank to
behave more like a Wall Street investment firm. After all, Mr. Zoellick was once vice chairman of
Goldman Sachs.
Most of us, if not everyone, have heard of the World Bank and quite possibly, the IMF (
International Monetary Fund). Especially those of you living in developing countries. Both entities are sometimes referred to as the
Bretton Woods Institutions.
The
About Us page of The World Bank has the following to say:
"The World Bank is a vital source of financial and technical assistance to developing countries around the world. We are not a bank in the common sense. We are made up of two unique development institutions owned by 185 member countries—the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA).
Each institution plays a different but supportive role in our mission of global poverty reduction and the improvement of living standards. The IBRD focuses on middle income and creditworthy poor countries, while IDA focuses on the poorest countries in the world. Together we provide low-interest loans, interest-free credit and grants to developing countries for education, health, infrastructure, communications and many other purposes."
Thus, after taking Mr. Zoellick's comments into consideration, it should be interesting to see if he will still be able to accomplish what the bank has stated on their About Us page and still make itself more Wall Street-ish.
If I may risk making a connection (and an extremely poor one at that) it appears to me (remember IANAE), that we may be seeing the beginning of a
subprime type problem/situation with regards to his new vision.
From what little I know, subprime lending was the type of lending geared towards borrowers who had poor credit histories and found themselves in murky financial situations (sounds a bit like developing nations to me). Despite these factors, lending still occurred. This was good for the borrowers and good for the lenders. However, it appears that this fell apart around
July 2007, during the subprime mortgage financial crisis where (among other things) home owners failed to meet their financial commitments and foreclosures ran rampant.
Enter Mr. Zoellick and his vision to make the World Bank more like Wall Street. In particular, offering developing nations and/or countries with poor credit profiles, financial products that they cannot get in the private market. So, what happens if and when these countries default?
However, Mr. Zoellick appears, at least on the surface, to have something interesting to offer to some Caribbean countries. He cites an example relating to hurricane insurance whereby several Caribbean nations formed a group, pooled risk and cut their premiums by 40 percent . That's not bad, is it?
As I said earlier, I Am Not An Economist (IANAE). My post focused on only a small part of the
IHT article. Do your own research, draw your own conclusions and form your own opinions.
[
World Bank mimics Wall Street as it looks for a new role via
International Herald Tribune]
Labels: Barbados, Caribbean, economics, life, money, politics
Peak Oil, Did You Miss It?
In case you did,
click here to see view my short post on Peak Oil. If you're concerned about the future of oil, this may be worth reading. You should also spend some time going through some of the links in the post.
Labels: life, money, oil
Peak Oil. What It Is And Why You Should Be Worried
Peak Oil. Ever heard of it? No? Then you need to hear about it. Sooner or later, it will affect you and everything around you.
Is Peak Oil Real?"As first expressed in Hubbert peak theory, Peak Oil is the point or timeframe at which the maximum global petroleum production rate is reached. After this timeframe, the rate of production will by definition enter terminal decline. According to the Hubbert model, production will follow a roughly symmetrical bell-shaped curve."[via Wikipedia,
Peak oil]
"Peak Oil is the simplest label for the problem of energy resource depletion, or more specifically, the peak in global oil production. Oil is a finite, non-renewable resource, one that has powered phenomenal economic and population growth over the last century and a half. The rate of oil 'production,' meaning extraction and refining (currently about 84 million barrels/day), has grown in most years over the last century, but once we go through the halfway point of all reserves, production becomes ever more likely to decline, hence 'peak'. Peak Oil means not 'running out of oil', but 'running out of cheap oil'. For societies leveraged on ever increasing amounts of cheap oil, the consequences may be dire. Without significant successful cultural reform, economic and social decline seems inevitable." [via
Energy Bulletin]
Top 3 World Oil Producers and Consumers (2006)(Thousand barrels per day)
Top 3 World Oil Producers1. Saudi Arabia 10,719
2. Russia 9,668
3. United States 8,367
Top 3 World Oil Consumers1. United States 20,588
2. China 7,274
3. Japan 5,222
[via
Energy Information Administration, Official Energy Statistics from the U.S. Government]
Is Peak Oil A Myth?"Peak oil is a scam designed to create artificial scarcity and jack up prices while giving the state an excuse to invade our lives and order us to sacrifice our hard-earned living standards.""Earlier this year Saudi Arabia reportedly increased its crude reserves by around 200 billion barrels. Saudi oil Is secure and plentiful, say officials.
Is this the normal course of behavior if we are currently at the peak for oil production? The answer is no, it's the normal course of action for increasing production.
There have also been reports that Russia has vastly increased its reserves even beyond those of Saudi Arabia. Why would they do this if they believed there would be no more oil to get hold of? It seems clear that Russia is ready for unlimited future production of oil.
There is a clear contradiction between the peak oil theory and the continual increase in oil reserves and production."[via Prison Planet.com,
The Myth Of Peak Oil]
Oil, Oil, Everywhere...[via WSJ Article, Manhattan Institute]
Only time will tell if Peak Oil is real, or if it's a myth.
Labels: life, money, oil
