Economy Live

U.S., once called the superpower, has started sharing its seat with other countries. According to a new study by Goldman Sach, countries like Brazil, Russia, India and China, have overtaken U.S and are the new dominating global energy industry powers. These four economic new powers have been nicknamed BRIC’s.

Anthony Ling, MD of Goldman Sachs International, said the rising power of the four countries can already be seen in the metals and mining industries. Their power and increasing impact can also be felt in the consumer-related and insurance companies. The world as per him is now truly globalizing.

As per the study, at the end of the first Gulf War in 1991, out of the 20 largest companies in the energy sector, 55% were American and 45% were European. In 2007, 35% of them are from BRICs countries, 35% are European and only 30% are American.

Ling also said:

The U.S. is now lagging with the smallest percentage number of energy companies worldwide. If you think about the global resource industry typically being a leader in terms of global trends, we’re starting to see this replicated in the mining industry where 20 percent of the top 20 companies are now from BRICs countries. We believe this sort of pattern will be repeated industry by industry.

The BRICs are now expected to venture into the food and pharmaceutical industries. The Goldman Sachs study will be released on July 3rd. Ling spoke at a summit in Geneva focusing which basically outlines a set of foundation ethics for companies. The standard ethics include things like respect for human rights, fair wages, environmental ethics and also anti-corruption practices.

Also, Ling quoted the difference that previously the companies that ruled the sectors were not privatized, but now, most of them are private companies. The reason he accounted for this was change in technique of energy production. Now the bulk of the fuel doesn’t come from a few countries but the projects are scattered all over the globe. Another factor that Ling accounted was the declining number of petroleum engineers in the United States, as compared to the Middle East, India, China and Russia where jobs like petroleum engineer are still highly hunted. So, we definitely can expect a switch of power and supremacy in the near future.

Source: IHT

Image credit: Bricstars

U.S. officials have ordered Foreign Tire Sales Inc., to recall its 450,000 radial tires for pickup trucks, sport utility vehicles and vans as it doesn’t meet with the security measures.

Hangzhou Zhongce’s made tires are bursting and caused to fatal accidents. Recently company manufactured tire busted outside the Philadelphia that arose suspicion over Chinese made tires.

Foreign Tire Sales of Union is seeking U.S. government’s assistance to bear loses, as recall can bankrupt the company. But The National Highway Traffic Safety Administration isn’t interested to confer any relief to company.

Hangzhou Zhongce Rubber has rule out all charges as they alleged that defective tires are sold under company’s name. Company further said that they are exporting tires to US for long 10 years successfully.

This not first time when Chinese tires were under scrutiny, as in February 2006, Cooper Tire & Rubber recalled 288,000 passenger-car tires from the Chinese maker because they contained “unauthorized material” in the sidewalls. Cooper said that could have caused air leaks and, eventually, treads separation.

Thread separation is a growing problem with the Chinese manufactured tires. The National Highway Traffic Safety Administration wants to eradicate all defected tires from the road, but it’s obscure that how many were running on the highways. Hangzhou Zhongce deals with the at least six other importers or distributors in the United States.

Chinese manufactured items are constantly raising American and other importer countries apprehension as recently Chinese made pet food and toothpaste were alleged to contain dangerous substance in it that might caused to the grave consequences. Including America, Singapore, Peru and few other nations had banned its product to sell in country.

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French President Nicholas Sarkozy’s vow to reopen discussions about the Airbus restructuring plan has triggered concerns that UK might face further job cuts than those set out earlier this year under Airbus’ Power8 restructuring plan.

UK MP, Peter Luff, assert that Mr Sarkozy might attempt to reduce the thousands of job losses proposed by Airbus in France. As part of 10,000 job cuts across Europe due to rising technical costs on the A380 superjumbo aircraft, 1,500 are coming from Airbus’s 11,000-strong UK workforce.

Although there is no prior evidence of such type of development, but the committee advised UK’s government to be alert of the possibility, as BAE Systems has sold its 20 percent in Airbus last year, the UK is without influence on the EADS board. Airbus’ plants in Britain have secured 20 percent of work on the company’s new A350 aircraft and are now the centre of excellence for wing making.

U.K. lawmakers have raised their voice against it and advised Britain to fight against any effort by French President Nicolas Sarkozy to shift a greater share of Airbus jobs from U.K. to France.

It’s notable that airbus has lost its No. 1 place to its only rival Boeing Co., although it has done well in the Paris air show, but that’s not enough to emerge from the losses.

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Finally, Robert Zoellick is all set to take on the chair of World Bank President after getting full-fledged backing from the bank’s governing body.

Zoellick, former deputy US secretary of state and trade representative, was choose unanimously for the job and will overlap for a week with Wolfowitz before he officially takes the reins of the poverty-fighting institution on July 1.

The World Bank’s governing board said:

In coming to their decision, the executive directors considered that Mr Zoellick brings to the bank presidency strong leadership and managerial qualities as well as a proven track record in international affairs and the drive required to enhance the credibility and effectiveness of the bank

Robert Zoellick’s succession will fade the humiliating era of Paul Wolfowitz, who was forced to resign over a promotion scandal involving his companion. Although Mr. Wolfowitz denied all allegations, but his resignation came after weeks of pressure and an internal bank investigation that concluded that he had sought to conceal the pay deal from other bank officials.

The pavement of Zoellick will not be easy as it seems, first, he has to improve the image of the World Bank and also needs to meet the growing uncertainty over the increasing gap between the rich and poor nations. Zoellick has already announced to concentrate on poverty in the African continent and his two year term will focus on its development.

To make world business more competitive, institutions like World Bank have to come forth and need to take preventive measure to support budding economies. International development agencies appealed to Mr Zoellick to concentrate on tackling poverty and address the effects of climate change on the world’s poor.

The executive director of Oxfam International Jeremy Hobbs, said:

Zoellick must begin a series of reforms in his first 100 days to create a new deal between the bank and the world’s poor. We can’t continue with business as usual

As World Bank chief, Robert Zoellick has to do lots of homework. He’ll need to regain trust, rebuild credibility and mend frayed relations inside the institution as well as with its member countries worldwide. He’ll also need to persuade countries to contribute nearly $30 billion over the next few years to fund a centerpiece bank program that provides interest-free loans to the world’s poorest countries.

The Bank’s governing board is confident that Zoellick will be able to address the challenges facing the bank, but his real test will count when he will confront the growing challenges from countries like Iraq, Iran and N Korea.

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Via: Washingtonpost

According to Lundberg Survey, the national average price of gasoline has dropped from $3, however, just a fraction of cent. The current price is $2.9961 per gallon. The prices decreased for the first time since April. The survey was conducted by a California oil market research firm. Over the last two weeks the company has recorded an eleven cent per gallon drop. But the company rules out any further significant drop in the prices. Crude oil saw its highest price on Friday at $69.14 per barrel. Even after the increase in the gasoline supply, eleven weeks are still to go before the peak time where the alleviated demand makes the prices go high too.

As per the survey, Jackson, Mich., recorded the lowest average regular gas prices with just $2.75 per gallon and Chicago recorded the highest at $3.39 a gallon. Some other cities recorded prices as:

Los Angeles: $3.10
Detroit: $3.09
Denver: $3.09
Las Vegas: $3.05
Portland, Ore. $3.00
Boston: $2.96
Baltimore: $2.92
Atlanta: $2.92
Houston: $2.87

Source: CNN

Image credit: Tribuneindia

War shattered Iraq has revived the contract with China to develop an Iraqi oil field, which was signed by late Saddam Hussein.

To develop the al-Ahdab oil field, Iraq has signed a contract with China National Petroleum Corporation in 1997. The total value of the deal was about $1.2billion with the capacity of 90,000 barrels a day.

Under U.S domination, Iraq has shown there reluctance to regularize the contracts issued by Saddam, but the growing military attack and bloodshed is thwarting new investment in the country. Amid the fear of galloping security concern, the tone of Iraqi government toward Saddam-era contracts has dramatically changed as country’s oil minister Mr al-Shahristani shows his keenness to revise the pending contracts.

Mr al-Shahristani said:

The contract with the previous administration is still valid - it was signed and we will honor it, we have been talking since I visited China eight months ago and the Chinese have just submitted a revised proposal to meet the new technical requirements for oil field development laid out by the Iraqi government

To accelerate the pace of investment in the country, nation’s oil minister welcomed Chinese oil company to bid for other contracts too.

The breakthrough on the deal was made during the visit of Iraqi president Jalal Talabani to China last month. The field is one of the first to be offered to foreign investors since the 2003 US-led invasion; however, US diplomats in Beijing have shown their ignorance about the deal.

Image: Chinadaily

Via: Financial Times

After a decline in the real estate market dissolves the U.S. economic activity is expected to pick its pace back till the starting of 2008. But IMF is also concerned about the fact that in spite of factors like increasing unemployment and soaring interest rates, the growth can also cause recessions.

John Lipsky, IMF’s leading deputy director said,

We, like the U.S. authorities, expect a favorable outcome for U.S growth. We expect to see a gradual reacceleration towards a sustained pace of around 3 percent by 2008.

The U.S. economy is expected to grow 2% this year and 2.75 % the next year. However, the good news is that due to the slow down of U.S., continents like Europe and Asia have been witnessing growth. The economy has been facing some issues like low domestic savings and the difficulties caused due to the pension and elderly health care plan under the government.

IMF also praised the decision made by Federal Reserve to halt any further reduction in interest rates. With the current rate of interest being 5.25 percent, IMF doesn’t have any plans to change the figures.

Source: MSNbc

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After receiving a cold shoulder from the global trade meeting, U.S. is looking at China for making road to end the half decade long impasse of Doha round.

The four members of the World Trade Organization, US, EU, India and Brazil met in Germany to make trade organization more subtle and negotiable for all kind of economies, but talk ended in frustration as G4 could not reached to the consensus.
In Germany, again farm subsidies became the bone of contention for the failure of the talk, whereas U.S and EU impeached India for its adamant behavior.

As it’s considering that America and other developed countries will get bigger pie out of the consensus, America seems to pamper China to support the proposed trade. U.S. Trade Representative Susan Schwab said,

China is a member of the WTO that has a great deal to gain from a successful Doha round, and a great deal to lose from the failure of the Doha round

America always asserts that with the free trade deal, where all nations will participate with equal preference, will add billions of dollars to world trade and helping poorer countries develop their economies through new trade flows. The lay stone of American-led benevolent initiation were put forth in 2001 at Qatar.

China, which was not part of the meeting in Potsdam, Germany, didn’t disclose its intention, but it’s expecting that China will firm on its previous stand.

It is also speculating that, in the coming trade, which is initially targeting to making a road for the Doha round of talk, could be heated up with the growing Chinese cheap import, which could hurt even the American domestic market.

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Via: IHT

Nominated by President George Bush, Robert Zoellick has successfully secured the support of the World Bank’s board of directors. The nomination was filed for the post of President of the World Bank. As per the custom, the President is elected by U.S. However, the decision of Bush to choose Paul is now being strongly condemned by everyone.

Robert, 53, who is a former senior trade representative and deputy secretary of state, is currently an executive at Goldman Sachs. He held a meeting with the 24-member board this Wednesday; the board will be making a formal regarding Zoellick on Monday. After the stormy and accused two-year tenure of Paul Wolfowitz, who resigned in May, Robert said that he will make every effort to soothe the conditions.

A senior bank official said, “The board found Zoellick to be somebody who understands the issues and the needs of the bank. It was a very positive meeting from the board’s point of view.” Several European officials want to change the rules for the election of the President now. The tenure of Wolfowitz will end on June 30 and Robert is expected to take on after that.

Source: IHT

The data and documents prove the fact that Australians are living under debts. As a result of the debts, Australians on an average spend almost 12 per cent of their income on repaying interests. The situation can be accredited to credit cards partially as the credit card debt is a record breaking $39.6 billion. Even the data of the Reserve Bank shows that from the last three months, the income spent on servicing debt alone saw an increase from 11.6% to 11.9%. The mortgage interest repayments increased from 9.3% to 9.5%. Australia’s Prime minister, Mr. John Howard said that “fairness in Australia is at a 32-year high” as the wages are good and unemployment rate very low. He even emphasized on the point that most of the people who took debts are well enough to pay them back easily.

On the contrary, Labor treasury spokesman Wayne Swan regarding the situation said,

“The reality is that Mr. Howard’s eight rate rises (since 2002), together with soaring petrol and child-care costs, are putting many Australian families under serious financial strain.”

The data from Insolvency and Trustee Service Australia gives a new direction to the topic. Personal bankruptcies, debt agreements and personal insolvency agreements have increased almost 40% since the last seven years. Australians might be able to pay back but as per the experts debt leaves people vulnerable, which can be bad.

HSBC chief economist John Edwards said that higher debt rates can be concerning if unemployment too increases but there is nothing to worry about as Australia has been witnessing increase in employment and wages. As per Nicole Rich, director policy and campaigns with the Consumer Action Law Centre, said that the problem didn’t lie with increasing number of people under debts but with “dodgy” non-bank lenders.

Steve Keen, associate professor with the University of Western Sydney, said, “They’ve risen because you have borrowed money and leveraged up the price. What really matters is the debt-to-income ratio and it’s huge. Ultimately, we can’t keep on doing it (taking on debt). A recession has to happen at some point.”

Source: Theage