FINSUM

FINSUM

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Thursday, 05 June 2014 00:00

Dutch Gas Field Threatens EU Supply

(Amsterdam)

The Groningen field, in northeast Holland, is the largest active natural gas supply in Europe, providing 35% of the EU’s total output. The field has been active since 1959, but recently it has grown unstable, as its geology has changed, its pressure has dropped, and it is experiencing multiple earthquakes. Residents in the area have grown angry over the small, but damaging earthquakes and now the government has order Shell and Exxon Mobil, who run the field, to cut production by 20% for the time being. According to analysts, these problems and the supply cuts are very important because it will lower Europe’s domestic gas supply considerably, causing a very tight market which could lead to wide-scale disruptions next winter. Europe is currently undergoing a large political and social push for more energy independence from Russia, so a cut to domestic energy supplies will likely have strong political and legislative ramifications.


 

FINSUM: So just at the time when Europe is wanting more domestic energy production, a major source of gas is proving faulty. This development will likely give the continent the pressure needed to follow Germany’s lead and allow fracking.

Thursday, 05 June 2014 00:00

A Study in Failed Democracy: Thailand

(Bangkok)

After thirteen years of democratic rule, Thailand has abruptly fallen back under control of an unelected military dictatorship that is arresting people for reading books and rounding up scores of academics and protesters for baseless “questioning”. This article, published by the Financial Times, delves deeply into the underlying conflicts in democracy, and explains why the “elite” there are so pleased with their new dictatorship. The “elite”—defined as monarchists, the military, and the bureaucracy—view the past several years of elected rule as a “democratic dictatorship” managed by thugs who ran the country for their own ends. However, the vast electorate has grown to love democracy and their leaders, the Shinawatra family, so the conflict inevitably continues as the masses seek to restore democracy over what they see as elite-imposed repression.


 

FINSUM:  This is a truly informative story and brings the struggles in Thailand into clear view. Unfortunately, it seems the situation cannot be resolved quickly or easily and the people and economy will continue to suffer.

Wednesday, 04 June 2014 00:00

Upscale Food Market Booms in India

(Delhi)

As hundreds of millions of Indians attain middle class status, their ability to afford more luxurious products is growing, and this impact is starting be felt in the upscale foods market. The dairy market, in particular, is seeing strong growth and a movement towards direct “farm to table” companies. This New York Times piece chronicles this movement and shows how a backlash against low-quality, mass produced milk has lead to a boom in local milk producers offering high quality products taken from pampered cows. At present, the new organic milk movement only accounts for 1% of India’s total dairy market share, but it is expected to grow 20% year on year. Dairy is the principal source of animal protein for the bulk of Indians, so the industry has a particularly strong significance throughout the country. However, the boom in organic products is not just limited to dairy, as new high-end grocery stores have opened across major metropolitan areas which offer loads of imported and high quality foods.


 

FINSUM: This is a sign of how prosperous India’s middle class is becoming and it is interesting to see that the “local and organic” movement so prevalent in the West is starting to take off in the developing world.

Wednesday, 04 June 2014 00:00

US to Raise Tariffs on Chinese Solar

(Washington)

In a move that has infuriated China, the US government has decided to extend and raise tariffs on Chinese solar equipment, with some rates reaching as high as 35.2%. The government raised the tariffs after receiving a complaint from a domestic manufacturer that Chinese makers were finding ways to skirt the current import regime through complex offshore manufacturing arrangements which circumvented the rules through a technicality. However, the new tariffs will be more comprehensive, and are being seen as a move to protect the US’ domestic solar industry. China has reacted strongly, saying the US move smacks of protectionism, and that the tariff “would not solve the development problems of the US solar industry”. Domestic manufacturers have called the tariffs “a strong win for the US solar industry”, but even some in the US say it will hurt the sector, as the raised costs come at a time when solar was just starting to compete with fossil fuels in price.


 

FINSUM: The cold war of trade is heating up between the US and China, as the two countries battle each other economically on many fronts. The move will certainly protect US manufacturing, but it is a legitimate concern that it may hurt growth in the solar market by raising costs versus other energy alternatives.

Wednesday, 04 June 2014 00:00

Too Many Highly Skilled Graduates

(London)

A new report by left-leaning research group, the Institute for Public Policy Research, has concluded that the UK is producing too many university graduates for its economic needs, and that more young people should go through vocational training. The report is obviously economically important, but it also undermines recent government proposals to increase university attendance by removing barriers. The report showed that supply of “highly skilled” university graduates was already grossly outstripping employers’ demand for them. It also concluded that more jobs over the next decade would be created in trade industries and the care sector. The report also has large implications for students themselves, as it indicates that hundreds of thousands of students may be unable to repay their large student debt burdens after graduation because of a dearth of employment prospects.


 

FINSUM: While this report fails to consider the perspective that education can be meaningful for its own sake, it raises an excellent point that not everyone needs a university education to run a successful economy.

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