Thursday, January 29, 2015
Tuesday, January 27, 2015
Monday, January 26, 2015
Barack Obama’s nuclear gift to India looks like a shrewd investment. By agreeing to a workaround that protects power station builders from civil liabilities in the event of a meltdown, the U.S. president has effectively unblocked New Delhi’s reactor programme. The bigger bet is on ending India’s energy crisis.
The agreement, struck on the first day of Obama’s visit to Indian Prime Minister Narendra Modi, could bring new orders for equipment makers like GE-Hitachi, Toshiba’s Westinghouse and France’s Areva. About 4 gigawatts (GW) of new nuclear power capacity is under construction in India; another 40GW is planned over the next 10 years. Even if only half of it gets built, that’s worth $35 billion in contracts.
But a more potent opportunity for U.S. businesses may be the jolt to Prime Minister Narendra Modi’s “Make in India” campaign. Lack of power is the single biggest obstacle to making India a manufacturing force. Electricity supply in northern parts of the country, which are poor and bursting with surplus labour, fell 6 percent short of demand in December.
Mining more coal will remain Modi’s first priority. But nuclear power will play an important supporting role. Currently it accounts for just 3 percent of India’s total electricity consumption; a legacy of the country’s pariah status in the global market for fissionable materials. That ended in 2008 with a civilian nuclear agreement with the United States. But the reactors that were conceived got stuck after India passed a law in 2010 making global equipment makers liable for accidents.
Obama has cut Modi some slack by agreeing to a compromise whereby state-run Indian insurers share the liability. Though it’s unclear how much they will charge for that insurance, this looks like a transfer of risk from manufacturers to Indian taxpayers. The President also dropped the U.S. demand that it retain the right to inspect Indian facilities that are under international safeguards.
Doubling India’s 5GW of nuclear power capacity could make low-cost manufacturing in India a viable option before Modi is due for re-election in 2019. By backing a man who until last year wasn’t welcome in the United States, Obama is betting big on the India opportunity.
India and the United States reached an agreement on Jan. 25 to unblock a civilian nuclear power deal as President Barack Obama visited the country.
The deal has stumbled since New Delhi passed a law in 2010 making nuclear equipment suppliers like GE-Hitachi and Westinghouse liable for any accidents. The financial risk will now be borne by Indian state-owned insurers.
According to Indian newspaper reports, Obama also used his executive authority to drop the demand that U.S. authorities be allowed to inspect Indian nuclear plants that are already under safeguards enforced by the International Atomic Energy Agency.
India wants to more than double the share of nuclear power in electricity production to 6.4 percent by 2032, from about 3 percent at present.
Power supply in India fell 3.2 percent short of demand in December. The deficit was as high as 6.4 percent and 16 percent in the country’s north and northeast, respectively, according to the Central Electricity Authority in New Delhi.
Sunday, January 25, 2015
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Friday, January 23, 2015
Steve Keen: Australian housing bubble to continue growing this year; Slowdown in China doesn’t have to mean a slowdown in demand for Australian real estate
Wednesday, January 21, 2015
Tuesday, January 20, 2015
Goldman Sachs reported fourth-quarter net income of $2.17 billion on Jan. 16. On a call with analysts and investors, finance chief Harvey Schwartz was asked about the fallout in the currency markets from the Swiss National Bank’s decision on Jan. 15 to stop pegging the franc to the U.S. dollar.
He responded, “I haven’t confirmed any of these stats, but just going through with some of the folks, the single largest move in a day of any developed country. I think it was something like a 20-plus standard deviation move. And I think it was after three-plus years of 2 percent volatility. So, you’re right to call it extraordinary, but again, no issues here.”
His words echoed those of his predecessor, David Viniar, who in 2007 said of the financial crisis, “We were seeing things that were 25 standard deviation events, several days in a row.”
Goldman Sachs is deviating back to a bad old standard. On Jan. 16 Finance Chief Harvey Schwartz described the Swiss currency mess as “something like a 20-plus standard deviation move.” That’s a daft assessment devoid of any practical use. He’s not the first Wall Street executive to trip up on such a statement. In fact, his own predecessor, David Viniar, was similarly soft-headed when describing the storm in the markets in 2007.
Viniar talked of “25 standard deviation events, several days in a row.” Let’s put that in context. A seven standard deviation event is only supposed to occur once every 3.1 billion years, according to the 2008 research paper “How Unlucky is 25-Sigma?” written by several British and Irish academics.
A 20 standard deviation event, meanwhile, explain academics Kevin Dowd, John Cotter, Chris Humphrey and Margaret Woods, “corresponds to an expected occurrence period measured in years that is 10 times larger than the higher of the estimates of the number of particles in the Universe.” As for Viniar’s assertion, it would require that the “decimal point moved 52 places to the left!”
Using such terms to describe market movements might sound clever. But it actually exposes wrong-headed thinking on risk management. Schwartz, for example, was basing his 20-plus standard deviation estimate on the overall volatility of the Swiss franc being around 2 percent during the three-plus year life of the peg. Last Thursday’s 30 percent shift in the value of the franc against the euro may well fit that.
But the franc was far more volatile before the peg was introduced. Granted, the Swiss National Bank had called the peg a cornerstone of its policy days before ditching it. Risk managers, though, should be looking beyond three years of supine stats: the chance of the peg ending may have been low, but the pre-2011 numbers showed that the event risk was high.Supine: 1. Lying on the back or having the face upward. displaying no interest or animation; lethargic 2. Having the palm upward. Used of the hand. 3. Marked by or showing lethargy, passivity, or blameworthy indifference: "No other colony showed such supine, selfish helplessness in allowing her own border citizens to be mercilessly harried" (Theodore Roosevelt).
It’s a similar story with other measures like value-at-risk. This relies on data either from the past one, three or five years, depending on the whim of the firm. In any event, it means that the more stable the environment becomes over time, the less the model is going to expect a problem. That path can lead to taking excessive risks –an impression Schwartz and other executives would be wise to avoid giving.Germany's Schaeuble: Swiss franc move won't have lasting impact on euro Tue, Jan 20 05:58 AM EST NEW DELHI (Reuters) - German Finance Minister Wolfgang Schaeuble said on Tuesday that the Swiss National Bank's surprise decision last week to remove its cap on the Swiss franc was a "special case" that should not have a long-term effect on the single European currency. "Switzerland is a special case," he said during a visit to India. "It is not something that will have a long-term impact, especially on the euro. It shows that you cannot act against the markets in the long term." The removal of a three-year-old cap on the franc sent the Swiss currency soaring against the euro, which is under further pressure ahead of an expected move by the European Central Bank this week to buy government debt to boost the euro zone economy. (Reporting by Gernot Heller; Writing by Stephen Brown in Berlin; Editing by Madeline Chambers) BRIEF-EFG International comments on market developments relating to Swiss franc Tue, Jan 20 01:26 AM EST Jan 20 (Reuters) - EFG International AG : * Comments on market developments relating to the Swiss franc * Euro-Denominated assets under management (AUM) and revenues represent approximately 20 percent of total EFG International AUM and revenues Zurich, 20 January 2015. Following the market developments triggered by the SNB decision on 15 January 2015 to discontinue the minimum exchange rate of CHF 1.20 per euro, EFG International would like to clarify the following points: * Assuming that 2015 average exchange rate were to remain at current levels following the SNB decision, this would translate into a single digit percentage impact on EFG International's profit before tax Swiss franc-denominated AUM and revenues represent approximately 4% of total EFG International AUM and revenues, while Swiss franc-denominated operating expenses represent approximately 30% of the total cost base (down from over 40% in December 2011, as a result of the strategic and cost-efficiency measures undertaken as part of the Business Review, initiated in the second half of 2011). Swiss franc-denominated AUM and revenues represent approximately 4% of total EFG International AUM and revenues, while Swiss franc-denominated operating expenses represent approximately 30% of the total cost base (down from over 40% in December 2011, as a result of the strategic and cost-efficiency measures undertaken as part of the Business Review, initiated in the second half of 2011). * Impact due to the changes of the CHF/GBP exchange rate are not significant, as costs and revenues are broadly in balance. Source text - http://bit.ly/1Eke0HR Further company coverage: (Gdynia Newsroom) The impact on capital ratios is immaterial. EFG International will report its 2014 full-year results on 25th February 2015. Contacts – EFG International Media Relations Investor Relations +41 44 226 1217 +41 44 212 7377 firstname.lastname@example.org email@example.com About EFG International EFG International is a global private banking group offering private banking and asset management services, headquartered in Zurich. EFG International's group of private banking businesses operates in around 30 locations worldwide, with circa 2,000 employees. EFG International's registered shares (EFGN) are listed on the SIX Swiss Exchange. =========