Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.
Petroleum giant abandons tar sands in favor of wind power(inhabitat) In a startling move, Norwegian state-owned oil and gas company Statoil recently pulled all its investments out of the Alberta tar sands after winning a contract to develop an offshore wind farm in U.S. waters. CleanTechnica reports the company began selling off its tar sands assets almost within hours of learning earlier this month it had won the right to build a wind farm off the coast of New York State.
Hedge Funds Bet Oil Rally to Extend Into 2017 as Output Cuts Hit (Bloomberg) Investors are showing no sign of turning their backs on oil heading into 2017. Money managers’ wagers on rising West Texas Intermediate crude prices are triple what they were at the end of 2015, and are the highest since the start of the crude market crash 2 1/2 years ago. Crude futures settled at the highest in almost 18 months on Dec. 28, with investors now eyeing the Organization of Petroleum Exporting Countries and other producers to see who complies with agreed output cuts.
Austerity on Trial as Flint Emergency Manager Slammed With Criminal Charges (Common Dreams) Putting austerity on trial, Michigan Attorney General Bill Schuette on Tuesday announced criminal charges against four high-level officials for their role in causing the Flint water crisis, including former city manager Darnell Earley, who made the budget-driven decision to switch the city's water supply to the dangerously corrosive Flint River. Earley, as well as another former emergency manager Gerald Ambrose - both appointees of Republican Governor Rick Snyder - are being charged with false pretense and conspiracy to commit false pretense, which each carry a 20-year sentence, as well as misconduct in office and willful neglect of duty. Attorney General Bill Schuette is also a Republican.
RBI’s Warning as Indian Banks’ Bad Loans Hit 14-Year High (Bloomberg) Bad debts at Indian lenders, especially those in the dominant state-run sector, have climbed to a 14-year high and could swell further, putting a strain on their capital buffers and profitability, a central bank study showed. The industry’s gross bad-loan ratio jumped to 9.1% in September, from 7.8% in March, according to the Reserve Bank of India’s Financial Stability Report released Thursday. That’s the highest since the year ended March 2002. Stressed assets, including soured debt and restructured loans, rose to 12.3% of outstanding lending from 11.5%, the report showed.
China to Abandon 6.5% Economic Growth Goal by 2018, SocGen Says (Bloomberg) China is poised to abandon its 6.5% growth target sometime in the next two years as leaders push to contain asset bubbles and financial leverage, according to Societe Generale SA. Signals pointing to acceptance of an expansion below the current objective are encouraging, though authorities haven’t yet confronted the test of a deceleration, which will come in the second half of next year, Yao Wei, chief China economist at SocGen in Paris, said in a note.
China considering strong measures to contain Taiwan - sources (Reuters) China's military has become alarmed by what it sees as U.S. President-elect Donald Trump's support of Taiwan and is considering strong measures to prevent the island from moving toward independence, sources with ties to senior military officers said. Three sources said one possibility being considered was conducting war games near the self-ruled island that China considers as a breakaway province. Another was a series of economic measures to cripple Taiwan. It was not clear whether any decisions had been taken, but the sources, who spoke on condition of anonymity, said the Taiwan issue had become a hot topic within the upper echelons of China's People's Liberation Army (PLA) in recent weeks. Trump, due to take office on Jan 20, angered Beijing this month by speaking to Taiwan's president by telephone, breaking decades of precedent and casting doubt on his incoming administration's commitment to Beijing's "one China" policy. Beijing fears this could embolden supporters of independence in Taiwan.
Resurgence of State-Led Growth in China? (Peterson Institute for International Economics) A new report from the Chinese statistical authorities shows that for the first time in almost four years the growth of profits of state-controlled industrial firms has exceeded that of private registered industrial firms. An earlier post on China Economic Watch examined an apparent massive surge in the role of state firms in capital formation and a concomitant decline in the role of private firms in the first half of 2016. The conclusion was that the relative role of state firms had increased, but not nearly as much as official data suggested. According to the latest figures, state-owned firm profits rose 8.2% through November while profits of private enterprises climbed only 5.9%. Is this a harbinger of a return to state-led growth under President Xi Jinping? It may be a little early for that call - see second graph below.
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