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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (159285)	3/18/2005 1:18:10 PM
From: GST	Read Replies (2) \| Respond to of 281500

One of the most insightful economic commentators -- I always appreciate you for posting such valuable insights.

To: stockman_scott who wrote (159285)	3/18/2005 4:40:57 PM
From: Sam Citron	Respond to of 281500

Interesting to compare Detroit's desperation with the optimism of Kolin in Czech Republic, where Toyota is in a 50/50 JV with Peugeot to produce economical Citroen C1, Peugeot 107 and Toyota Aygo autos. The venture's president, Masatake Enomoto, has even changed his middle name to Kolin. Can you imagine changing your name to Detroit? Now I notice that BP and Shell appear to be much further along than their American counterparts in the transition to the post oil world. Look at the website of nearly every non-American company and you will see a section entitled "sustainability". Americans look it and wonder what it's all about. Sam

To: stockman_scott who wrote (159285)	3/19/2005 8:19:10 AM
From: sylvester80	Read Replies (1) \| Respond to of 281500

NEWS: Secret US plans for Iraq's oil By Greg Palast Reporting for Newsnight Published: 2005/03/17 15:41:31 GMT Story from BBC NEWS: news.bbc.co.uk The Bush administration made plans for war and for Iraq's oil before the 9/11 attacks, sparking a policy battle between neo-cons and Big Oil, BBC's Newsnight has revealed. Two years ago today - when President George Bush announced US, British and Allied forces would begin to bomb Baghdad - protesters claimed the US had a secret plan for Iraq's oil once Saddam had been conquered. In fact there were two conflicting plans, setting off a hidden policy war between neo-conservatives at the Pentagon, on one side, versus a combination of "Big Oil" executives and US State Department "pragmatists". "Big Oil" appears to have won. The latest plan, obtained by Newsnight from the US State Department was, we learned, drafted with the help of American oil industry consultants. Insiders told Newsnight that planning began "within weeks" of Bush's first taking office in 2001, long before the September 11th attack on the US. We saw an increase in the bombing of oil facilities and pipelines [in Iraq] built on the premise that privatisation is coming Mr Falah Aljibury An Iraqi-born oil industry consultant, Falah Aljibury, says he took part in the secret meetings in California, Washington and the Middle East. He described a State Department plan for a forced coup d'etat. Mr Aljibury himself told Newsnight that he interviewed potential successors to Saddam Hussein on behalf of the Bush administration. Secret sell-off plan The industry-favoured plan was pushed aside by a secret plan, drafted just before the invasion in 2003, which called for the sell-off of all of Iraq's oil fields. The new plan was crafted by neo-conservatives intent on using Iraq's oil to destroy the Opec cartel through massive increases in production above Opec quotas. The sell-off was given the green light in a secret meeting in London headed by Ahmed Chalabi shortly after the US entered Baghdad, according to Robert Ebel. Mr Ebel, a former Energy and CIA oil analyst, now a fellow at the Center for Strategic and International Studies in Washington, told Newsnight he flew to the London meeting at the request of the State Department. Mr Aljibury, once Ronald Reagan's "back-channel" to Saddam, claims that plans to sell off Iraq's oil, pushed by the US-installed Governing Council in 2003, helped instigate the insurgency and attacks on US and British occupying forces. "Insurgents used this, saying, 'Look, you're losing your country, you're losing your resources to a bunch of wealthy billionaires who want to take you over and make your life miserable,'" said Mr Aljibury from his home near San Francisco. "We saw an increase in the bombing of oil facilities, pipelines, built on the premise that privatisation is coming." Privatisation blocked by industry Philip Carroll, the former CEO of Shell Oil USA who took control of Iraq's oil production for the US Government a month after the invasion, stalled the sell-off scheme. Mr Carroll told us he made it clear to Paul Bremer, the US occupation chief who arrived in Iraq in May 2003, that: "There was to be no privatisation of Iraqi oil resources or facilities while I was involved." Ariel Cohen, of the neo-conservative Heritage Foundation, told Newsnight that an opportunity had been missed to privatise Iraq's oil fields. He advocated the plan as a means to help the US defeat Opec, and said America should have gone ahead with what he called a "no-brainer" decision. Mr Carroll hit back, telling Newsnight, "I would agree with that statement. To privatize would be a no-brainer. It would only be thought about by someone with no brain." New plans, obtained from the State Department by Newsnight and Harper's Magazine under the US Freedom of Information Act, called for creation of a state-owned oil company favoured by the US oil industry. It was completed in January 2004 under the guidance of Amy Jaffe of the James Baker Institute in Texas. Formerly US Secretary of State, Baker is now an attorney representing Exxon-Mobil and the Saudi Arabian government. View segments of Iraq oil plans at www.GregPalast.com Questioned by Newsnight, Ms Jaffe said the oil industry prefers state control of Iraq's oil over a sell-off because it fears a repeat of Russia's energy privatisation. In the wake of the collapse of the Soviet Union, US oil companies were barred from bidding for the reserves. Ms Jaffe says US oil companies are not warm to any plan that would undermine Opec and the current high oil price: "I'm not sure that if I'm the chair of an American company, and you put me on a lie detector test, I would say high oil prices are bad for me or my company." The former Shell oil boss agrees. In Houston, he told Newsnight: "Many neo conservatives are people who have certain ideological beliefs about markets, about democracy, about this, that and the other. International oil companies, without exception, are very pragmatic commercial organizations. They don't have a theology." A State Department spokesman told Newsnight they intended "to provide all possibilities to the Oil Ministry of Iraq and advocate none". Greg Palast's film - the result of a joint investigation by Newsnight and Harper's Magazine - will be broadcast on Thursday, 17 March, 2005. Newsnight is broadcast every weekday at 10.30pm on BBC Two in the UK.

To: stockman_scott who wrote (159285)	3/19/2005 8:53:59 AM
From: sylvester80	Respond to of 281500

NEWS: Retirement accounts questioned; Paper challenges expected benefits By Jonathan Weisman The Washington Post Updated: 11:16 p.m. ET March 18, 2005 URL: msnbc.msn.com Nearly three-quarters of workers who opt for Social Security personal accounts under President Bush's "default" investment option are likely to earn less in benefits than those who stay with the traditional Social Security system, a prominent finance economist has concluded. A new paper by Yale University economist Robert J. Shiller found that under Bush's default "life-cycle accounts," which shift assets from stocks to bonds over a worker's lifetime, nearly a third of workers would bring in less in benefits than if they remained in the traditional system. That analysis is based on historical rates of return in the United States. Using global rates of return, which Shiller says more closely track future conditions, life-cycle portfolios could be expected to fall short of the traditional system's returns 71 percent of the time. Both the White House and the Social Security Administration have relied on historical returns in estimating the earnings of proposed personal investment accounts. Shiller used 91 computer simulations to analyze the past performance of stocks and bonds in a variety of portfolios. He measured the returns in 44-year increments, beginning in 1871, to approximate a worker's lifetime contributions to personal accounts. 'Disappointing outlook' The results "showed a disappointing outlook for investors in the personal accounts relative to the rhetoric of their promoters," concluded Shiller, a leading researcher in stock market volatility who gained fame in the late 1990s for his warnings of a stock market bubble. Shiller's paper -- to be posted on his Web site, IrrationalExuberance.com -- is adding to research that suggests the White House has been overly optimistic in its assumptions about personal investment accounts. A recent paper by Goldman Sachs economists said the White House's anticipated 4.6 percent rate of return above inflation could be nearly 2 percentage points too high. Even some supporters of the accounts say Bush has to change his proposal if investors are to turn a profit. Under the Bush proposal, workers would be better off choosing private accounts only if those accounts earned annual returns that exceed inflation by 3 percent. "I'm one of these people who maintain the 3 percent rate is too high a trade-off," said Jeremy J. Siegel, a finance professor at the University of Pennsylvania's Wharton School and a longtime advocate of stock investing. "You can't get 3 percent in the market anymore." White House spokesman Trent Duffy said the administration is not contemplating changes to the proposal at this point. "We're confident returns on the market will be well in excess of what we need to make the program work well for seniors," he said. Conservative investment dangers Life-cycle accounts were a response to critics who charged that stock market investments would be too risky for Social Security. But according to Shiller's analysis, that conservative investment strategy appears to carry a risk of its own: a paltry rate of return. Shiller is "documenting what's well known, that bond returns have just been terrible," said Kevin A. Hassett, director of economic policy studies at the American Enterprise Institute and a supporter of personal accounts. "If we are excessively conservative, we will really be hurting workers." Under the Bush plan, workers ultimately would be able to invest 4 percent of their income subject to Social Security taxes in their choice of stock and bond funds. At age 47, workers who had chosen private accounts would automatically be shifted to a life-cycle portfolio, unless they and their spouse specifically opt out with a waiver acknowledging awareness of higher risk. When workers with private accounts retire, the Bush system would subtract from their traditional Social Security benefit all of the money deposited in the private account, plus 3 percent interest above inflation. That "offset" or "claw-back" equals the amount the White House assumes those deposits would have earned in Treasury bonds had they gone into the Social Security system. But the 3 percent hurdle appears too high for many to clear, Shiller found, especially with the conservative strategy the administration has embraced. According to U.S. historical rates of return, the life-cycle portfolio fell short of the 3 percent threshold 32 percent of the time, meaning nearly a third of personal account holders would have been better off sticking with the traditional Social Security system. 'Hardly a windfall' The median rate of return was 3.4 percent, barely better than the traditional system. Upon retirement, accounts would yield an annuity payment of about $1,000 a year, "hardly a windfall," Shiller said. But he also adjusted for what he expects to be lower future rates of investment return by using historic rates of return from international stock and bond markets. Those returns "correspond more closely to projections of financial economists and should be emphasized more as the appropriate evaluation of the accounts going forward," Shiller wrote. The results were not encouraging: The life-cycle portfolio under these adjusted returns lost money compared with the traditional system 71 percent of the time, with a median rate of return of just 2.6 percent, $2,000 less in annual benefits than those of workers who stick with the traditional system. "To say that there is a money machine in the stock market, that it can be tapped to yield great wealth without significant risk if one uses life-cycle investment methods, is a big mistake," Shiller concluded. David C. John, a Social Security analyst at the conservative Heritage Foundation and a supporter of the Bush proposal, said Shiller's downward adjustment for lower future earnings is not supported by other studies, which find little correlation between economic growth and stock market returns. Using international markets as a benchmark for future returns is not fair, he added. "He's bringing the U.S. [financial] market, essentially the most vibrant in the world, down to the level of stock markets in South America, Asia and various parts of Europe," John said. "I frankly find this study to be a stacked deck." But Hassett, another supporter of private accounts, called the paper "a very thorough and interesting piece." The White House's response should not be to dismiss the paper's conclusions but to rethink the life-cycle portfolios or lower the 3 percent threshold, Hassett said. The latter is an action administration economists are already considering, he added.