By Sean O'Grady, Economics Editor, in Davos
Friday, 30 January 2009
A "fair price" for oil is between $60 and $80 a barrel, the secretary general of Opec, Abdullah al-Badri, told participants at the World Economic Forum yesterday, up to twice as high as the current price in the market.
Mr Badri warned he believed that the current price of oil, around the $40 mark, was insufficient to provide an acceptable income for Opec member states, or high enough to fund the investment needed to raise capacity in time for the next economic upswing.
The price of a barrel of oil has fallen from a peak of almost $150 last summer to below $40 in recent weeks as demand for oil has fallen sharply in line with the global economic downturn. The oil producers' group, said Mr Badri, was prepared to act to reduce supply further if necessary; having decided to cut output in September and October, Opec oil production will be 4.2 million barrels a day lower by the end of this month, and further cuts in supply would act as an inflationary pressure on the market price.
The cartel, which accounts for roughly 35 per cent of world oil production and two-thirds of proven reserves, is next due to meet formally in March in Vienna, Austria. Mr Badri said that if Opec was still suffering from what he described as a "destruction of demand" in March, then members of the group "will not hesitate to take oil out of the market".
He said he was "not very happy" with oil at $40 "or even $50" per barrel. "Even with $50 we cannot have a decent income for our members," Mr Badri added.
However, while Opec member states have been warning for some months that the current market conditions cannot continue indefinitely, higher oil prices would be a blow to much of the world. As the global economy enters what the International Monetary Fund said on Wednesday would be the worst recession since the Second World War, cheaper oil is one of the few bright spots. Any push by Opec for higher prices through restricting supply will suck even more spending power out of the advanced and emerging economies, and may hit developing nations especially hard.
Nevertheless, the Opec secretary general's declaration of a "reasonable price range" was endorsed yesterday by BP's chief executive, Tony Hayward, who estimated that a price of between $60 to $80 a barrel was needed to ensure adequate investment to meet growing oil demand by Opec countries. Mr Hayward also said that only this level of price would meet the cost of producing the marginal 3 million to 5 million barrels a day of world supply from sources such as ultra-deep water wells, Angola, Brazil and Canada's oil sands.
The BP boss said, however, that price levels higher than $100 tended to adversely affect consumer behaviour.
Pierre Gadonneix, chairman and chief executive of Electricité de France (EDF), also agreed that $60 to $80 would be compatible with a competitive nuclear power sector, which he favoured.
Indeed the "spirit of Davos" seemed to overwhelm all the energy session panel members in their rush to agree with the $60 to $80 proposal: other panel members, including Mukesh Ambani, chairman of the Indian giant Reliance Industries, which has interests in natural gas, and the President of oil-producing Azerbaijan, Ilham Aliyev, were also happy to back the Opec line.
Mr Badri repeated the Opec claim that the spike in the price of oil to an all-time high of $147 last year was artificially created by speculative traders rather than genuinely reflecting demand and supply. He also hinted at the idea that the world's major oil producers and consumers should agree the oil price and make oil a much less traded commodity.
Friday, January 30, 2009
Thursday, January 29, 2009
Dr. Doom: Roubini Predicts More Global Gloom
Jan. 30 (Bloomberg) -- At the World Economic Forum two years ago, Nouriel Roubini warned that record profits and bonuses were obscuring a “hard landing” to come. “I really disagree,” countered Jacob Frenkel, the American International Group Inc. vice chairman and former Israeli central banker.
No more. “Roubini was intellectually courageous, and he called the shots correctly,” says Frenkel, whose AIG survives only on the basis of more than $100 billion of government loans. “He gained credibility, and he deserves it.”
This week, New York University’s Roubini returned to the WEF and the Swiss ski resort of Davos as the prophet of the worst economic and financial crisis since the Great Depression - - joining the ranks of previous “Dr. Dooms” who made their names through contrarian calls that proved correct.
Even as he wins plaudits for his prescience, Roubini, 50, says worse lies ahead. Banks face bigger credit losses than they realize, more financial companies will require state takeovers and the world economy will keep shrinking throughout 2009, he says.
“The consensus is catching up with me, but it’s still behind,” Roubini said in an interview in Davos. “I don’t know what some people are smoking.”
‘Catastrophic’
As long ago as February 2007, Roubini was writing on his blog that “the party will soon be over,” and warning of “painful consequences for the U.S. and the global economy.” By last February, his tone had become apocalyptic, raising the specter of a “catastrophic” meltdown that central banks would fail to prevent, triggering the bankruptcy of large banks with mortgage holdings and a “sharp drop” in equities.
The next month, Bear Stearns Cos. failed, to be taken over by JPMorgan Chase & Co. in a government-backed deal. Then, in September, Lehman Brothers Holdings Inc. went bankrupt, prompting banks to hoard cash and depriving businesses and households of access to capital. The U.S. took over AIG, Fannie Mae and Freddie Mac, and the Standard & Poor’s 500 Index suffered its worst year since 1937.
“I was intellectually vindicated,” Roubini says. “But I was vindicated by having an economic disaster which has political and social consequences.”
Predecessors
Roubini’s predecessors in the role of economic nay-sayer include some well-known names: Joseph Granville, publisher of the Granville Market Letter, who forecast the stock-market declines of 1976 and 2000; Henry Kaufman, who as a managing director at Salomon Brothers projected rising interest rates that led to a U.S. recession in the early 1980s; Marc Faber, publisher of the Gloom, Boom & Doom Report, who predicted the 1987 stock crash; and Yale University’s Robert Shiller, a former colleague of Roubini’s, who forecast the end of the dot-com bubble in his 2000 book “Irrational Exuberance.”
Granville, 85, says the key to being an outlier is not to doubt your analysis.
“I don’t have anything to do with emotion,” says Granville, who’s based in Kansas City. “Keep your head, follow the numbers and ignore the rest.”
Roubini was born in Istanbul, the son of an importer- exporter of carpets, and spent his childhood in Israel, Iran and Italy. It was while living in Milan from 1962 to 1982, he says, that he became attracted to economics: “Economics had the tools to understand the world, and not just understand it but also change it for the better.”
International Economics
After a year at the Hebrew University of Jerusalem, he earned an economics degree at Milan’s Universita’ L. Bocconi and then his Ph.D. at Harvard University in 1988, where he specialized in international economics.
Jeffrey Sachs, he says, became his “role model” at Harvard by demonstrating that economists could shape public policy -- as Sachs did by lobbying for poor countries to have their debts relieved by richer governments. Sachs is now a professor at Columbia University.
“You sensed there was something beyond academia, that you have to figure out the big issues of the global economy,” says Roubini. “You have to be engaged, and can’t just be in an ivory tower.”
For much of the 1990s, Roubini combined academic research and policy-making by teaching at Yale and then in New York, while also spending time at the International Monetary Fund, the Federal Reserve, World Bank and Bank of Israel.
Joining Clinton
By 1998 he had attracted the attention of President Bill Clinton’s administration, joining it first as a senior economist in the White House Council of Economic Advisers and then moving to the Treasury department as a senior adviser to Timothy Geithner, then the undersecretary for international affairs and now Treasury secretary in the Obama administration.
Roubini returned to the IMF in 2001 as a visiting scholar while it battled a financial meltdown in Argentina. He co-wrote a book on saving bankrupt economies entitled “Bailouts or Bail- ins?” and opened his own global consulting firm, which now employs two dozen economists and publishes a popular Web site and blog.
“Nouriel has a rare combination of economics and the real world, and so has great insight because of that,” says Shiller. “He looks into the details and rolls up his sleeves.”
Roubini says working on emerging-market blowouts in Asia and Latin America allowed him to spot the looming disaster in the U.S. “I’ve been studying emerging markets for 20 years, and saw the same signs in the U.S. that I saw in them, which was that we were in a massive credit bubble,” he says.
Still a Pessimist
With that bubble now popped, Roubini remains more pessimistic than economists elsewhere. The IMF forecasts global growth of 0.5 percent this year and bank losses from toxic U.S.- originated assets of $2.2 trillion. By contrast, Roubini sees the global economy shrinking this year, and banks writing down at least $3.6 trillion -- compared to the $1.1 trillion disclosed so far.
While the U.S. government is resisting nationalizing its biggest banks, Roubini says it will have no choice because they are now “effectively insolvent.” And the outcome may be even worse than even he anticipates if governments fail to take aggressive steps to recapitalize banks and revive their economies, he says: “The risk of a near-depression shouldn’t be underestimated.”
Roubini, who’s now working on a book about the crisis, says he takes no particular pleasure in his role as Dr. Doom or the attention it brings him.
“I’m not a permanent bear,” he says. “I’ll be the first to call a recovery, but I just don’t see it yet, and it’s getting uglier.”
Barrick Chairman Mr. Munk said Gold likely to hit new highs
The gold price is likely to hit record highs in dollar terms as fears grow about the stability of the US currency, the chairman of Barrick Gold said today at the World Economic Forum (WEF) in Davos.
The founder of the world’s largest goldmining company said that there was even a possibility that central banks, including China’s, might start to switch from dollar holdings to gold, which could cause the price of the metal to treble.
“Gold is at record levels in every currency except dollars," Peter Munk told Reuters at the WEF meeting.
"Even within dollar terms it is within a few percentage points of an all-time high, at a time when all the other major commodities are falling.”
Mr Munk said: “Whether it’s the currency effect or a reaction to a feeling of uncertainty, gold, in my opinion, is more likely to go up than down.”
The gold price was up today, trading at about $890 at 1500GM. At present the record high is $1,030.80 an ounce, achieved in March last year.
Mr Munk emphasised that he was merely weighing the odds.
“It would be stupid to assume commodities prices can only go one way,” he said, adding that physical demand for gold jewellery was not high during the economic downturn.
Gold has been one of the best-performing assets of recent months, rising in value by nearly 17 per cent since late October even as the price of other commodities, such as oil and copper, has dropped sharply.
Investors have bought heavily into physical bullion in the form of coins and bars, and physically backed assets, such as exchange-traded funds, as a safe store of value at a time of increased volatility in other asset prices.
Mr Munk said that downward pressure on the dollar, partly due to massive US spending and printing money to stimulate the economy, would increase gold’s attractions as an investment even further.
Gold usually moves in the opposite direction to the dollar, as it is often bought as a hedge against weakness in the US currency.
“My personal feeling is that with the rescue packages calling for trillions, not billions ... the value of the [US] currency has to go down,” Mr Munk said.
He said that there was a possibility that central banks, including that of China, a major dollar asset holder, might start buying gold.
“If they decide to diversify, we assume into gold, then we start to talk about a trebling or quadrupling of the gold price," he said. "It could be followed by Russia or Kuwait.
“I don’t think it’s likely, but it’s more likely. I would not have said it two years ago — I’m not a gold bug — but it’s more likely than it was two years ago.”
He added that his company did not now hedge its output — meaning use derivatives to insure against a fall in price — and relied on the price climbing.
In the past its successful hedging allowed it to make key acquisitions.
“It would be dumb to hedge,” Mr Munk said
The founder of the world’s largest goldmining company said that there was even a possibility that central banks, including China’s, might start to switch from dollar holdings to gold, which could cause the price of the metal to treble.
“Gold is at record levels in every currency except dollars," Peter Munk told Reuters at the WEF meeting.
"Even within dollar terms it is within a few percentage points of an all-time high, at a time when all the other major commodities are falling.”
Mr Munk said: “Whether it’s the currency effect or a reaction to a feeling of uncertainty, gold, in my opinion, is more likely to go up than down.”
The gold price was up today, trading at about $890 at 1500GM. At present the record high is $1,030.80 an ounce, achieved in March last year.
Mr Munk emphasised that he was merely weighing the odds.
“It would be stupid to assume commodities prices can only go one way,” he said, adding that physical demand for gold jewellery was not high during the economic downturn.
Gold has been one of the best-performing assets of recent months, rising in value by nearly 17 per cent since late October even as the price of other commodities, such as oil and copper, has dropped sharply.
Investors have bought heavily into physical bullion in the form of coins and bars, and physically backed assets, such as exchange-traded funds, as a safe store of value at a time of increased volatility in other asset prices.
Mr Munk said that downward pressure on the dollar, partly due to massive US spending and printing money to stimulate the economy, would increase gold’s attractions as an investment even further.
Gold usually moves in the opposite direction to the dollar, as it is often bought as a hedge against weakness in the US currency.
“My personal feeling is that with the rescue packages calling for trillions, not billions ... the value of the [US] currency has to go down,” Mr Munk said.
He said that there was a possibility that central banks, including that of China, a major dollar asset holder, might start buying gold.
“If they decide to diversify, we assume into gold, then we start to talk about a trebling or quadrupling of the gold price," he said. "It could be followed by Russia or Kuwait.
“I don’t think it’s likely, but it’s more likely. I would not have said it two years ago — I’m not a gold bug — but it’s more likely than it was two years ago.”
He added that his company did not now hedge its output — meaning use derivatives to insure against a fall in price — and relied on the price climbing.
In the past its successful hedging allowed it to make key acquisitions.
“It would be dumb to hedge,” Mr Munk said
Robert Rubin Says Mark-to-Market has Done ‘Damage’
Jan. 28 (Bloomberg) -- Robert Rubin, who quit his post as senior counselor at Citigroup Inc. this month, said an accounting rule forcing companies to mark down assets every quarter to reflect market value has “done a great deal of damage.”
“I spent my whole life at Goldman Sachs believing in mark- to-market accounting, and having said that, if you look at the experience from the last two years, I think mark-to-market accounting has led to terrible vicious cycles in asset prices,” Rubin, the former U.S. Treasury secretary, said during a discussion at the 92nd Street Y late yesterday.
Companies including Citigroup and American International Group Inc. say mark-to-market, also known as fair-value accounting, doesn’t work when few buyers are willing to trade assets like subprime mortgages. Proponents such as the U.S. Financial Accounting Standards Board say the rule adds to transparency and gives investors information about companies.
Rubin joined Citigroup in 1999. Earlier this month, he announced he won’t stand for re-election to the board. Rubin, 70, proposed that a “reserve” accounting standard be adopted, which drew applause from the audience.
Citigroup received a $45 billion bailout from the U.S. government after reporting more than $85 billion of credit losses and writedowns from investments tainted by the subprime-mortgage crisis.
‘Controversial’
“Mark-to-market accounting has done a great deal of damage,” Rubin said. “For a lot of financial institutions we should move to something that is more similar to reserve accounting. That will be a very controversial matter.”
Under reserve accounting, assets like loans are carried at cost, offset by reserves for potential losses. Rubin was criticized by investors for collecting more than $150 million in pay in a decade while failing to steer Citigroup away from subprime mortgages.
Goldman Sachs Group Inc., where Rubin was co-chairman in the early 1990s and where he spent 26 years, is an advocate of fair- value accounting. Rubin left Goldman Sachs to become a top economic adviser to President Bill Clinton in 1993. In 1994, he succeeded Lloyd Bentsen as Treasury secretary, presiding over five years of economic growth.
“For us, fair value is the oxygen of the firm,” Matthew Schroeder, managing director for accounting policy at Goldman Sachs, said at a U.S. Securities and Exchange Commission public meeting in July. “It’s part of our fabric. We follow a daily discipline of marking to market at our firm. It can be done.”
The SEC said the rule should be improved rather than suspended in a study released Dec. 30.
“I spent my whole life at Goldman Sachs believing in mark- to-market accounting, and having said that, if you look at the experience from the last two years, I think mark-to-market accounting has led to terrible vicious cycles in asset prices,” Rubin, the former U.S. Treasury secretary, said during a discussion at the 92nd Street Y late yesterday.
Companies including Citigroup and American International Group Inc. say mark-to-market, also known as fair-value accounting, doesn’t work when few buyers are willing to trade assets like subprime mortgages. Proponents such as the U.S. Financial Accounting Standards Board say the rule adds to transparency and gives investors information about companies.
Rubin joined Citigroup in 1999. Earlier this month, he announced he won’t stand for re-election to the board. Rubin, 70, proposed that a “reserve” accounting standard be adopted, which drew applause from the audience.
Citigroup received a $45 billion bailout from the U.S. government after reporting more than $85 billion of credit losses and writedowns from investments tainted by the subprime-mortgage crisis.
‘Controversial’
“Mark-to-market accounting has done a great deal of damage,” Rubin said. “For a lot of financial institutions we should move to something that is more similar to reserve accounting. That will be a very controversial matter.”
Under reserve accounting, assets like loans are carried at cost, offset by reserves for potential losses. Rubin was criticized by investors for collecting more than $150 million in pay in a decade while failing to steer Citigroup away from subprime mortgages.
Goldman Sachs Group Inc., where Rubin was co-chairman in the early 1990s and where he spent 26 years, is an advocate of fair- value accounting. Rubin left Goldman Sachs to become a top economic adviser to President Bill Clinton in 1993. In 1994, he succeeded Lloyd Bentsen as Treasury secretary, presiding over five years of economic growth.
“For us, fair value is the oxygen of the firm,” Matthew Schroeder, managing director for accounting policy at Goldman Sachs, said at a U.S. Securities and Exchange Commission public meeting in July. “It’s part of our fabric. We follow a daily discipline of marking to market at our firm. It can be done.”
The SEC said the rule should be improved rather than suspended in a study released Dec. 30.
Monday, January 26, 2009
Chinese Ministry Denies Geithner's Currency Claims
The Wall Street Journal
JANUARY 25, 2009, 10:37 P.M. ET
BEIJING -- A Chinese ministry Saturday strongly denied Obama administration claims that China "manipulates" its currency, as the first contact between the new administration and China takes a markedly sour tone.
On Thursday, President Obama's nominee for Treasury secretary, Timothy Geithner, told U.S. lawmakers that President Barack Obama, "backed by the conclusions of a broad range of economists -- believes that China is manipulating its currency." No Chinese official of Mr. Geithner's standing has fired back -- a move analysts say shows that China doesn't want to overreact to the statement -- but Saturday morning an official from China's Ministry of Commerce said "we never have used currency manipulation or exchange-rate manipulation as a mains to gain an advantage in international trade." The statement, provided by an official from the ministry's news department, also said China would not "rely on devaluations" of its currency, the yuan, to promote exports.
Meanwhile, a top official in China's central bank said the charge that Beijing manipulates its currency was inaccurate and implied there were bigger issues to address in the global financial crisis.
"In recent days persons in a Western country have said 'China is manipulating the yuan exchange rate,' " said People's Bank of China Vice Governor Su Ning, according to a report Saturday by the state-controlled Xinhua news agency. "These remarks are not only inconsistent with the facts, but they are misleading about the reasons for the financial crisis."
Some Chinese commentators say the verbal sparring is a sign of greater trade friction to come with Washington. They noted that both sides' comments were written, not spoken -- and therefore should be taken as a serious view of intent.
"This is the first communication by the new president's team to China and it is provocative," said Shen Dingli, professor of international relations at Fudan University in Shanghai. China's official Xinhua news agency also weighed in Friday evening, saying that Mr. Geithner's claim "fans Sino-U.S. trade fears," alluding to concern in Beijing over protectionism in the new administration.
Chinese officials are deeply concerned that the global economic downturn could spur protectionist moves in the U.S. and elsewhere that could further damage China's trade-dependent economy. Mr. Geithner's comments marked a significant escalation in U.S. criticism of China's exchange-rate system.
U.S. officials have long argued that China should let its currency, the yuan, strengthen, which could make Chinese exports relatively more expensive and reduce China's massive trade surplus with the U.S. But the just-ended Bush administration stopped short of calling Beijing a currency manipulator.
In recent years, China did let the yuan strengthen, but stopped last year as its economy weakened. Some analysts have expressed concern that Beijing might let the yuan weaken, although Chinese officials have ruled that out. Almost no one in Beijing, however, believes the government would let the currency strengthen in the current environment, or abandon its controls over the currency -- especially given the disastrous results of liberal financial rules on other economies.
[Chart]
Ba Shusong, expert from Financial Research Institute of Development Research Center of the State Council, China's cabinet, said "it is U.S. dollar that is the main currency being manipulated," in part because the U.S. is printing money to pay for its soaring budget deficit. He noted that China and other developing countries hold U.S. dollars as their foreign reserve on the premise that the dollar is being managed responsibly. But in recent years, the U.S. "didn't assume its responsibilities."
Some traders and economists argue that, given Mr. Obama's reputation for pragmatism, the accusation over currency manipulation could have been made to give the U.S. an advantage in the early stage of fresh dialogue with Beijing on foreign exchange and trade.
"I expect Beijing will keep the yuan largely stable this year," said Isaac Meng, an economist at BNP Paribas. "Traders needn't worry about Geithner's remark unduly."
Chinese financial market participants were sanguine about the statement. The benchmark Shanghai Composite Index, which tracks both A and B shares, ended down 0.7% at 1990.66. The Shanghai Stock Exchange government bond index ended flat at 120.71.
"Geithner's comment wasn't that unexpected because people had anticipated the new Obama administration would take a relatively protectionist and populist stance toward China," said a Guangzhou-based trader at a foreign bank.
While there is concern about protectionist rhetoric coming from Washington, China wasn't a major factor in last year's presidential election and both parties agree that China is a key partner in U.S. foreign policy.
In fact, Washington and Beijing could become partners in solving other world-wide problems like global warming, says Scott Kennedy, a professor at Indiana University. In doing so, Washington is likely to call on China to take a more active role. "With a changing of the guard in Washington, China has the opportunity -- and challenge -- of doing much more."
JANUARY 25, 2009, 10:37 P.M. ET
BEIJING -- A Chinese ministry Saturday strongly denied Obama administration claims that China "manipulates" its currency, as the first contact between the new administration and China takes a markedly sour tone.
On Thursday, President Obama's nominee for Treasury secretary, Timothy Geithner, told U.S. lawmakers that President Barack Obama, "backed by the conclusions of a broad range of economists -- believes that China is manipulating its currency." No Chinese official of Mr. Geithner's standing has fired back -- a move analysts say shows that China doesn't want to overreact to the statement -- but Saturday morning an official from China's Ministry of Commerce said "we never have used currency manipulation or exchange-rate manipulation as a mains to gain an advantage in international trade." The statement, provided by an official from the ministry's news department, also said China would not "rely on devaluations" of its currency, the yuan, to promote exports.
Meanwhile, a top official in China's central bank said the charge that Beijing manipulates its currency was inaccurate and implied there were bigger issues to address in the global financial crisis.
"In recent days persons in a Western country have said 'China is manipulating the yuan exchange rate,' " said People's Bank of China Vice Governor Su Ning, according to a report Saturday by the state-controlled Xinhua news agency. "These remarks are not only inconsistent with the facts, but they are misleading about the reasons for the financial crisis."
Some Chinese commentators say the verbal sparring is a sign of greater trade friction to come with Washington. They noted that both sides' comments were written, not spoken -- and therefore should be taken as a serious view of intent.
"This is the first communication by the new president's team to China and it is provocative," said Shen Dingli, professor of international relations at Fudan University in Shanghai. China's official Xinhua news agency also weighed in Friday evening, saying that Mr. Geithner's claim "fans Sino-U.S. trade fears," alluding to concern in Beijing over protectionism in the new administration.
Chinese officials are deeply concerned that the global economic downturn could spur protectionist moves in the U.S. and elsewhere that could further damage China's trade-dependent economy. Mr. Geithner's comments marked a significant escalation in U.S. criticism of China's exchange-rate system.
U.S. officials have long argued that China should let its currency, the yuan, strengthen, which could make Chinese exports relatively more expensive and reduce China's massive trade surplus with the U.S. But the just-ended Bush administration stopped short of calling Beijing a currency manipulator.
In recent years, China did let the yuan strengthen, but stopped last year as its economy weakened. Some analysts have expressed concern that Beijing might let the yuan weaken, although Chinese officials have ruled that out. Almost no one in Beijing, however, believes the government would let the currency strengthen in the current environment, or abandon its controls over the currency -- especially given the disastrous results of liberal financial rules on other economies.
[Chart]
Ba Shusong, expert from Financial Research Institute of Development Research Center of the State Council, China's cabinet, said "it is U.S. dollar that is the main currency being manipulated," in part because the U.S. is printing money to pay for its soaring budget deficit. He noted that China and other developing countries hold U.S. dollars as their foreign reserve on the premise that the dollar is being managed responsibly. But in recent years, the U.S. "didn't assume its responsibilities."
Some traders and economists argue that, given Mr. Obama's reputation for pragmatism, the accusation over currency manipulation could have been made to give the U.S. an advantage in the early stage of fresh dialogue with Beijing on foreign exchange and trade.
"I expect Beijing will keep the yuan largely stable this year," said Isaac Meng, an economist at BNP Paribas. "Traders needn't worry about Geithner's remark unduly."
Chinese financial market participants were sanguine about the statement. The benchmark Shanghai Composite Index, which tracks both A and B shares, ended down 0.7% at 1990.66. The Shanghai Stock Exchange government bond index ended flat at 120.71.
"Geithner's comment wasn't that unexpected because people had anticipated the new Obama administration would take a relatively protectionist and populist stance toward China," said a Guangzhou-based trader at a foreign bank.
While there is concern about protectionist rhetoric coming from Washington, China wasn't a major factor in last year's presidential election and both parties agree that China is a key partner in U.S. foreign policy.
In fact, Washington and Beijing could become partners in solving other world-wide problems like global warming, says Scott Kennedy, a professor at Indiana University. In doing so, Washington is likely to call on China to take a more active role. "With a changing of the guard in Washington, China has the opportunity -- and challenge -- of doing much more."
Geithner's answer to a question about the valuation of China's yuan:
"President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency. President Obama has pledged as President to use aggressively all the diplomatic avenues open to him to seek change in China's currency practices. More broadly, we look forward to a productive economic dialogue with the Chinese government on a number of short- and long-tem issues. The Yuan is certainly an important piece of that discussion, but given the crisis the immediate focus needs to be on the broader issue of stabilizing domestic demand in China and the US. The latest figures show that China's growth in 2008 was 9%, a full 4 percentage points lower than in the previous year. Because China accounts for such a large fraction of the world economy, a further slowdown in China would lead to a substantial fall in world growth (and demand for US exports) and delay recovery from the crisis. Therefore, the immediate goal should be for us to convince China to adopt a more aggressive stimulus package as we do our part to try to pass a stimulus package here at home."
Friday, January 23, 2009
Citigroup, Bank of America May Look ‘Nationalized’
Jan. 23 (Bloomberg) -- The U.S. government’s decision to pledge billions of additional dollars with strings attached to Citigroup Inc. and Bank of America Corp. may be nationalization by another name, according to former bankers and regulators.
Faced with pressure from lawmakers, banks have shaken up management, eliminated executive bonuses and staff and canceled conventions. They’ll be forced to do monthly reports on how they’ve boosted lending while slashing quarterly dividends to one cent a share for three years.
“When the Treasury tells a bank to pay a penny a share vs. its old dividend, you know who’s calling the shots,” said Jon Bruss, a 40-year industry veteran and founder of Hartland, Wisconsin-based Fortress Partners Capital Management Ltd., which invests in banks. “It may not be de jure nationalization but I think it’s de facto nationalization.”
While avoiding steps taken by the U.K., which this week acquired a 70 percent stake in Royal Bank of Scotland Plc, U.S. regulators are no longer passively injecting capital into the nation’s biggest banks. Investors have fled, sending Citigroup and Bank of America down by more than 50 percent this year, on concern that tougher U.S. oversight is coming after the government takeover last year of mortgage financers Fannie Mae and Freddie Mac, and insurer American International Group Inc.
Citigroup, based in New York, tumbled 56 cents, or 15 percent, to $3.11 yesterday on the New York Stock Exchange. Bank of America plunged 97 cents, or 15 percent, to $5.71. The 24- company KBW Bank Index has dropped 38 percent in 2009, following last year’s 50 percent decline.
Government Decides
“Some of these traditional management decisions are being made by the government,” said Donald Powell, 67, who was chairman of the Federal Deposit Insurance Corp. from 2001 to 2005, and now lives in Amarillo, Texas. “Shareholders don’t have a voice in some of these things that are occurring.”
After the Treasury’s initial investments in October failed to adequately shield Citigroup and Bank of America from mortgage- related losses, the companies returned for more capital along with protection from hundreds of billions of dollars in potential defaults.
Citigroup needed $20 billion in November on top of an earlier $25 billion injection, which still wasn’t enough to keep the company from splitting apart after posting a record deficit on Jan. 15. The same day, Bank of America received $20 billion to cover losses tied to Merrill Lynch & Co. after the two companies received a combined $25 billion in October.
Executives Depart
Citigroup replaced Win Bischoff as chairman yesterday, naming former Time Warner Inc. Chief Executive Officer Richard Parsons to the post. Two weeks ago, former Treasury Secretary Robert Rubin, who had been a top Citigroup executive and board member, announced plans to step down. Merrill Lynch head John Thain was ousted yesterday, less than a month after he negotiated the sale of his company to Bank of America.
William K. Black, former lawyer at the Federal Home Loan Bank of San Francisco and Office of Thrift Supervision, says the Treasury could do better by assuming control of the companies and removing existing management altogether. By trying to avoid nationalizing the institutions, the government is wasting money, he said.
“It’s insane to leave it in the control of the people who have every incentive to cover up the scale of the losses,” said Black, professor at the University of Missouri-Kansas City School of Law. “You’re deliberately negotiating a bad deal for the American people by not getting an appropriate return for the risk you’re taking.”
Dividends, Conferences
Investors are getting smaller returns because the banks have to cut their dividends as part of the bailout agreements. And the companies are being told how to spend their money --especially when it comes to conferences and other business trips.
SunTrust Banks Inc., an Atlanta-based lender that sold $4.9 billion in preferred shares to the U.S., eliminated a sales conference to hold down travel expenses and reduced compensation for 4,000 managers. AIG, which received a $150 billion bailout package and is now majority-owned by the government, drew fire from lawmakers last year for conferences, bonuses and perks.
Bank of America dropped 12 cents, or 2.1 percent, to $5.59 at 11:03 a.m. in New York Stock Exchange composite trading today. Citigroup added 19 cents, or 6.1 percent, to $3.30.
In the U.K., Barclays Plc is trading at a price that indicates investors give it a 70 percent chance of nationalization, according to a note today from Sanford C. Bernstein analyst Bruno Paulson in London. The stock, down as much as 20 percent today, has lost about two-thirds of its value since Jan. 12.
‘Partial Nationalization’
Citigroup and Bank of America aren’t necessarily headed toward nationalization, according to Powell, who said President Barack Obama’s administration is tasked with developing an “exit strategy” to avoid ending up with financial control. That may mean converting preferred shares into common equity and then selling them, he said.
As Obama’s economic advisers plan for how the government will dole out the remaining $350 billion in the Troubled Asset Relief Fund, they’ll make sure the money doesn’t go to “bonuses or remodeling” offices, White House press secretary Robert Gibbs said today. Merrill Lynch’s Thain spent $1.2 million redecorating his downtown Manhattan office last year as the company was firing employees, a person familiar with the project said yesterday.
‘Weird’ Policy
Another former bank regulator, Kevin Jacques, says a nationalization policy may be preferable to the current strategy of handling every case differently.
In 2008, Bear Stearns Cos. was bought by JPMorgan Chase & Co. in a deal arranged by the government, Lehman Brothers Holdings Inc. went bankrupt, Washington Mutual Inc. was seized and AIG was taken over. That hurts confidence in the financial system and keeps investors guessing, Jacques said.
“If you took a nationalization policy, you would at least create some degree of certainty because now you know the government is going to stand behind these institutions,” said Jacques, 49, who was an economist with the Treasury Department for 14 years before becoming a finance professor at Baldwin- Wallace College in Berea, Ohio.
Now, “it’s almost like some kind of weird partial nationalization,” he said.
Faced with pressure from lawmakers, banks have shaken up management, eliminated executive bonuses and staff and canceled conventions. They’ll be forced to do monthly reports on how they’ve boosted lending while slashing quarterly dividends to one cent a share for three years.
“When the Treasury tells a bank to pay a penny a share vs. its old dividend, you know who’s calling the shots,” said Jon Bruss, a 40-year industry veteran and founder of Hartland, Wisconsin-based Fortress Partners Capital Management Ltd., which invests in banks. “It may not be de jure nationalization but I think it’s de facto nationalization.”
While avoiding steps taken by the U.K., which this week acquired a 70 percent stake in Royal Bank of Scotland Plc, U.S. regulators are no longer passively injecting capital into the nation’s biggest banks. Investors have fled, sending Citigroup and Bank of America down by more than 50 percent this year, on concern that tougher U.S. oversight is coming after the government takeover last year of mortgage financers Fannie Mae and Freddie Mac, and insurer American International Group Inc.
Citigroup, based in New York, tumbled 56 cents, or 15 percent, to $3.11 yesterday on the New York Stock Exchange. Bank of America plunged 97 cents, or 15 percent, to $5.71. The 24- company KBW Bank Index has dropped 38 percent in 2009, following last year’s 50 percent decline.
Government Decides
“Some of these traditional management decisions are being made by the government,” said Donald Powell, 67, who was chairman of the Federal Deposit Insurance Corp. from 2001 to 2005, and now lives in Amarillo, Texas. “Shareholders don’t have a voice in some of these things that are occurring.”
After the Treasury’s initial investments in October failed to adequately shield Citigroup and Bank of America from mortgage- related losses, the companies returned for more capital along with protection from hundreds of billions of dollars in potential defaults.
Citigroup needed $20 billion in November on top of an earlier $25 billion injection, which still wasn’t enough to keep the company from splitting apart after posting a record deficit on Jan. 15. The same day, Bank of America received $20 billion to cover losses tied to Merrill Lynch & Co. after the two companies received a combined $25 billion in October.
Executives Depart
Citigroup replaced Win Bischoff as chairman yesterday, naming former Time Warner Inc. Chief Executive Officer Richard Parsons to the post. Two weeks ago, former Treasury Secretary Robert Rubin, who had been a top Citigroup executive and board member, announced plans to step down. Merrill Lynch head John Thain was ousted yesterday, less than a month after he negotiated the sale of his company to Bank of America.
William K. Black, former lawyer at the Federal Home Loan Bank of San Francisco and Office of Thrift Supervision, says the Treasury could do better by assuming control of the companies and removing existing management altogether. By trying to avoid nationalizing the institutions, the government is wasting money, he said.
“It’s insane to leave it in the control of the people who have every incentive to cover up the scale of the losses,” said Black, professor at the University of Missouri-Kansas City School of Law. “You’re deliberately negotiating a bad deal for the American people by not getting an appropriate return for the risk you’re taking.”
Dividends, Conferences
Investors are getting smaller returns because the banks have to cut their dividends as part of the bailout agreements. And the companies are being told how to spend their money --especially when it comes to conferences and other business trips.
SunTrust Banks Inc., an Atlanta-based lender that sold $4.9 billion in preferred shares to the U.S., eliminated a sales conference to hold down travel expenses and reduced compensation for 4,000 managers. AIG, which received a $150 billion bailout package and is now majority-owned by the government, drew fire from lawmakers last year for conferences, bonuses and perks.
Bank of America dropped 12 cents, or 2.1 percent, to $5.59 at 11:03 a.m. in New York Stock Exchange composite trading today. Citigroup added 19 cents, or 6.1 percent, to $3.30.
In the U.K., Barclays Plc is trading at a price that indicates investors give it a 70 percent chance of nationalization, according to a note today from Sanford C. Bernstein analyst Bruno Paulson in London. The stock, down as much as 20 percent today, has lost about two-thirds of its value since Jan. 12.
‘Partial Nationalization’
Citigroup and Bank of America aren’t necessarily headed toward nationalization, according to Powell, who said President Barack Obama’s administration is tasked with developing an “exit strategy” to avoid ending up with financial control. That may mean converting preferred shares into common equity and then selling them, he said.
As Obama’s economic advisers plan for how the government will dole out the remaining $350 billion in the Troubled Asset Relief Fund, they’ll make sure the money doesn’t go to “bonuses or remodeling” offices, White House press secretary Robert Gibbs said today. Merrill Lynch’s Thain spent $1.2 million redecorating his downtown Manhattan office last year as the company was firing employees, a person familiar with the project said yesterday.
‘Weird’ Policy
Another former bank regulator, Kevin Jacques, says a nationalization policy may be preferable to the current strategy of handling every case differently.
In 2008, Bear Stearns Cos. was bought by JPMorgan Chase & Co. in a deal arranged by the government, Lehman Brothers Holdings Inc. went bankrupt, Washington Mutual Inc. was seized and AIG was taken over. That hurts confidence in the financial system and keeps investors guessing, Jacques said.
“If you took a nationalization policy, you would at least create some degree of certainty because now you know the government is going to stand behind these institutions,” said Jacques, 49, who was an economist with the Treasury Department for 14 years before becoming a finance professor at Baldwin- Wallace College in Berea, Ohio.
Now, “it’s almost like some kind of weird partial nationalization,” he said.
Jim Rogers warns against Obama's economic team
BBC News
Thursday, January 22, 2009
A well-known investor has attacked the record of President Obama's nominee for Treasury Secretary, Timothy Geithner.
Jim Rogers, a former partner of George Soros, told the BBC that the new administration was "run by people who caused the latest financial problems".
He said Mr Geithner and Larry Summers, due to head the National Economic Council, have been wrong for 15 years.
"These people don't know what they're doing," he said. Mr Rogers is seen as influential in financial markets.
Investors haven't always made money from his forecasts. He advised them to back Zimbabwe in the mid-1990s. Since then the country's economy has virtually collapsed.
But his prediction that commodity prices would soar over the past ten years did prove to be correct.
He made comments on Monday advising investors to sell the pound and sterling has since weakened sharply.
Mr Rogers assured the BBC that he has no position in sterling, so did not benefit from talking the pound down.
Mr Rogers also attacked the British prime minister for selling a large portion of Britain's gold reserves when gold was at a very low price.
"Gordon Brown sold UK gold at $250 an ounce," he said. "And this is a man who knows what he's doing? " he mused.
He said Britain no longer has anything to sell without North Sea oil and with the City of London "a pale shadow of its former self."
Eastern promise
Mr Rogers believes that Asia represents the future for investors.
"China is going to have horrible setbacks, but the 21st century will be the century of Asia," he said.
He revealed that his children have bank accounts in Swiss Francs as he does not want their assets in dollars.
"There will probably be exchange controls in the US in their lifetime. I have given up on the US dollar and sterling," he said.
He added that the current actions of governments to restart economies are likely to lead eventually to inflation, and that the only way to protect wealth under those conditions is to hold real assets.
He recommended Chinese shares, the Japanese yen, gold and other real assets.
"The era of paper shufflers is over - farmers are going to inherit the earth again," he said.
"Bankers should learn how to drive tractors".
Thursday, January 22, 2009
A well-known investor has attacked the record of President Obama's nominee for Treasury Secretary, Timothy Geithner.
Jim Rogers, a former partner of George Soros, told the BBC that the new administration was "run by people who caused the latest financial problems".
He said Mr Geithner and Larry Summers, due to head the National Economic Council, have been wrong for 15 years.
"These people don't know what they're doing," he said. Mr Rogers is seen as influential in financial markets.
Investors haven't always made money from his forecasts. He advised them to back Zimbabwe in the mid-1990s. Since then the country's economy has virtually collapsed.
But his prediction that commodity prices would soar over the past ten years did prove to be correct.
He made comments on Monday advising investors to sell the pound and sterling has since weakened sharply.
Mr Rogers assured the BBC that he has no position in sterling, so did not benefit from talking the pound down.
Mr Rogers also attacked the British prime minister for selling a large portion of Britain's gold reserves when gold was at a very low price.
"Gordon Brown sold UK gold at $250 an ounce," he said. "And this is a man who knows what he's doing? " he mused.
He said Britain no longer has anything to sell without North Sea oil and with the City of London "a pale shadow of its former self."
Eastern promise
Mr Rogers believes that Asia represents the future for investors.
"China is going to have horrible setbacks, but the 21st century will be the century of Asia," he said.
He revealed that his children have bank accounts in Swiss Francs as he does not want their assets in dollars.
"There will probably be exchange controls in the US in their lifetime. I have given up on the US dollar and sterling," he said.
He added that the current actions of governments to restart economies are likely to lead eventually to inflation, and that the only way to protect wealth under those conditions is to hold real assets.
He recommended Chinese shares, the Japanese yen, gold and other real assets.
"The era of paper shufflers is over - farmers are going to inherit the earth again," he said.
"Bankers should learn how to drive tractors".
Thursday, January 22, 2009
Microsoft CEO Ballmer's e-mail
From: Steve Ballmer
Sent: Thursday, January 22, 2009 6:07 AM
To: Microsoft - All Employees (QBDG)
Subject: Realigning Resources and Reducing Costs
In response to the realities of a deteriorating economy, we're taking important steps to realign Microsoft's business. I want to tell you about what we're doing and why.
Today we announced second quarter revenue of $16.6 billion. This number is an increase of just 2 percent compared with the second quarter of last year and it is approximately $900 million below our earlier expectations.
The fact that we are growing at all during the worst recession in two generations reflects our strong business fundamentals and is a testament to your hard work. Our products provide great value to our customers. Our financial position is solid. We have made long-term investments that continue to pay off.
But it is also clear that we are not immune to the effects of the economy. Consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures.
Our response to this environment must combine a commitment to long-term investments in innovation with prompt action to reduce our costs.
During the second quarter we started down the right path. As the economy deteriorated, we acted quickly. As a result, we reduced operating expenses during the quarter by $600 million. I appreciate the agility you have shown in enabling us to achieve this result.
Now we need to do more. We must make adjustments to ensure that our investments are tightly aligned with current and future revenue opportunities. The current environment requires that we continue to increase our efficiency.
As part of the process of adjustments, we will eliminate up to 5,000 positions in R&D, marketing, sales, finance, LCA, HR, and IT over the next 18 months, of which 1,400 will occur today. We'll also open new positions to support key investment areas during this same period of time. Our net headcount in these functions will decline by 2,000 to 3,000 over the next 18 months. In addition, our workforce in support, consulting, operations, billing, manufacturing, and data center operations will continue to change in direct response to customer needs.
Our leaders all have specific goals to manage costs prudently and thoughtfully. They have the flexibility to adjust the size of their teams so they are appropriately matched to revenue potential, to add headcount where they need to increase investments in order to ensure future success, and to drive efficiency.
To increase efficiency, we're taking a series of aggressive steps. We'll cut travel expenditures 20 percent and make significant reductions in spending on vendors and contingent staff. We've scaled back Puget Sound campus expansion and reduced marketing budgets. We'll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year.
Each of these steps will be difficult. Our priority remains doing right by our customers and our employees. For employees who are directly affected, I know this will be a difficult time for you and I want to assure you that we will provide help and support during this transition. We have established an outplacement center in the Puget Sound region and we'll provide outplacement services in many other locations to help you find new jobs. Some of you may find jobs internally. For those who don't, we will also offer severance pay and other benefits.
The decision to eliminate jobs is a very difficult one. Our people are the foundation of everything we have achieved and we place the highest value on the commitment and hard work that you have dedicated to building this company. But we believe these job eliminations are crucial to our ability to adjust the company's cost structure so that we have the resources to drive future profitable growth. I encourage you to attend tomorrow's Town Hall at 9am PST in Café 34 or watch the webcast.
While this is the most challenging economic climate we have ever faced, I want to reiterate my confidence in the strength of our competitive position and soundness of our approach.
With these changes in place, I feel confident that we will have the resources we need to continue to invest in long-term computing trends that offer the greatest opportunity to deliver value to our customers and shareholders, benefit to society, and growth for Microsoft.
With our approach to investing for the long term and managing our expenses, I know Microsoft will emerge an even stronger industry leader than it is today.
Thank you for your continued commitment and hard work.
Steve
Sent: Thursday, January 22, 2009 6:07 AM
To: Microsoft - All Employees (QBDG)
Subject: Realigning Resources and Reducing Costs
In response to the realities of a deteriorating economy, we're taking important steps to realign Microsoft's business. I want to tell you about what we're doing and why.
Today we announced second quarter revenue of $16.6 billion. This number is an increase of just 2 percent compared with the second quarter of last year and it is approximately $900 million below our earlier expectations.
The fact that we are growing at all during the worst recession in two generations reflects our strong business fundamentals and is a testament to your hard work. Our products provide great value to our customers. Our financial position is solid. We have made long-term investments that continue to pay off.
But it is also clear that we are not immune to the effects of the economy. Consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures.
Our response to this environment must combine a commitment to long-term investments in innovation with prompt action to reduce our costs.
During the second quarter we started down the right path. As the economy deteriorated, we acted quickly. As a result, we reduced operating expenses during the quarter by $600 million. I appreciate the agility you have shown in enabling us to achieve this result.
Now we need to do more. We must make adjustments to ensure that our investments are tightly aligned with current and future revenue opportunities. The current environment requires that we continue to increase our efficiency.
As part of the process of adjustments, we will eliminate up to 5,000 positions in R&D, marketing, sales, finance, LCA, HR, and IT over the next 18 months, of which 1,400 will occur today. We'll also open new positions to support key investment areas during this same period of time. Our net headcount in these functions will decline by 2,000 to 3,000 over the next 18 months. In addition, our workforce in support, consulting, operations, billing, manufacturing, and data center operations will continue to change in direct response to customer needs.
Our leaders all have specific goals to manage costs prudently and thoughtfully. They have the flexibility to adjust the size of their teams so they are appropriately matched to revenue potential, to add headcount where they need to increase investments in order to ensure future success, and to drive efficiency.
To increase efficiency, we're taking a series of aggressive steps. We'll cut travel expenditures 20 percent and make significant reductions in spending on vendors and contingent staff. We've scaled back Puget Sound campus expansion and reduced marketing budgets. We'll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year.
Each of these steps will be difficult. Our priority remains doing right by our customers and our employees. For employees who are directly affected, I know this will be a difficult time for you and I want to assure you that we will provide help and support during this transition. We have established an outplacement center in the Puget Sound region and we'll provide outplacement services in many other locations to help you find new jobs. Some of you may find jobs internally. For those who don't, we will also offer severance pay and other benefits.
The decision to eliminate jobs is a very difficult one. Our people are the foundation of everything we have achieved and we place the highest value on the commitment and hard work that you have dedicated to building this company. But we believe these job eliminations are crucial to our ability to adjust the company's cost structure so that we have the resources to drive future profitable growth. I encourage you to attend tomorrow's Town Hall at 9am PST in Café 34 or watch the webcast.
While this is the most challenging economic climate we have ever faced, I want to reiterate my confidence in the strength of our competitive position and soundness of our approach.
With these changes in place, I feel confident that we will have the resources we need to continue to invest in long-term computing trends that offer the greatest opportunity to deliver value to our customers and shareholders, benefit to society, and growth for Microsoft.
With our approach to investing for the long term and managing our expenses, I know Microsoft will emerge an even stronger industry leader than it is today.
Thank you for your continued commitment and hard work.
Steve
Bank of Canada sees return to economic growth later in 2009
The Bank of Canada is projecting a sharp recession that will see three quarters of economic contraction before growth returns in the second half of 2009.
In its update to its Monetary Policy Report, the central bank said it anticipates quarter-over-quarter contractions of 2.3 per cent in the fourth quarter of 2008, followed by a deeper drop of 4.8 per cent for the first three months of 2009 and a drop of one per cent in second quarter of this year.
However, the bank sees a rebound to positive activity by the third quarter of the year, when it forecasts two per cent growth and 3.5 per cent expansion in the last three months of the year.
The bank said the return of normal financial conditions, coupled with the stimulus coming from monetary and fiscal policies, should boost the growth of consumer spending in 2010, leading to growth for the year of 3.8 per cent. The recent depreciation in the Canadian dollar will also lend support to a recovery, it added.
"Excess supply will be gradually reduced, with the economy projected to return to balance by mid-2011," the bank said. "The projected return to balance of the Canadian economy is faster than either of the recoveries following the 1981-82 and 1990-92 recessions."
Bank of Canada governor Mark Carney said the recovery projected by the bank is milder than from an average recession due to "muted" recoveries expected in other economies around the world.
"We are comfortable with our forecast," he told reporters at a news conference in Ottawa.
The latest outlook offered by the central bank marked a significant downgrade from the forecast it presented in October, when the bank projected growth of 0.6 per cent in 2009, and 3.4 per cent in 2010.
Two days earlier, the bank cut a key lending rate by half a percentage point to one per cent as it sought to boost the economy. Since it began its latest round of monetary policy easing in December 2007, the Bank of Canada has cut 3.5 percentage points from the key lending rate.
In its update to its Monetary Policy Report, the central bank said it anticipates quarter-over-quarter contractions of 2.3 per cent in the fourth quarter of 2008, followed by a deeper drop of 4.8 per cent for the first three months of 2009 and a drop of one per cent in second quarter of this year.
However, the bank sees a rebound to positive activity by the third quarter of the year, when it forecasts two per cent growth and 3.5 per cent expansion in the last three months of the year.
The bank said the return of normal financial conditions, coupled with the stimulus coming from monetary and fiscal policies, should boost the growth of consumer spending in 2010, leading to growth for the year of 3.8 per cent. The recent depreciation in the Canadian dollar will also lend support to a recovery, it added.
"Excess supply will be gradually reduced, with the economy projected to return to balance by mid-2011," the bank said. "The projected return to balance of the Canadian economy is faster than either of the recoveries following the 1981-82 and 1990-92 recessions."
Bank of Canada governor Mark Carney said the recovery projected by the bank is milder than from an average recession due to "muted" recoveries expected in other economies around the world.
"We are comfortable with our forecast," he told reporters at a news conference in Ottawa.
The latest outlook offered by the central bank marked a significant downgrade from the forecast it presented in October, when the bank projected growth of 0.6 per cent in 2009, and 3.4 per cent in 2010.
Two days earlier, the bank cut a key lending rate by half a percentage point to one per cent as it sought to boost the economy. Since it began its latest round of monetary policy easing in December 2007, the Bank of Canada has cut 3.5 percentage points from the key lending rate.
Fertilizer stocks in for rough 2009??
Consensus is building on the Street in Canada and the U.S., calling for a rough 2009 in the fertilizer sector, followed by a 2010 turnaround.
Citigroup Global Markets analyst P.J Juvekar assumed coverage on Potash Corp. of Saskatchewan Inc., Agrium Inc, and Mosaic Co. with short term caution, based on a forecast of a 10 to 20% year-over-year decline in phosphate and potash volumes in 2009.
"We expect many farmers in North America to go on a 'fertilizer holiday' as they 'mine' their soil for fertilizer," he said. "But the nutrient depletion may set the stage for a robust recovery in 2010 that could cause us to revisit our stance."
The analyst has "hold" ratings for Potash Corp. and Mosaic with price targets of US$81 and US$39, respectively. As for Agrium, he rates the stock a "sell" with a US$27 price target.
"We have a sell on Agrium given its potential for retail margin compression and write-downs, amid falling fertilizer prices, and large Nitrogen exposure.
At CIBC World Markets, analyst Jacob Bout also told clients that fertilizer demand and pricing will remain weak at least through the first half of this year, with recovery expected next year. However, he remains more bullish on both Agrium and PotashCorp's long term prospects than his Citigroup peer.
"While [nitrogen] and [phosphate] prices have collapsed, [potash] prices are still buoyed by producer discipline," he said. "We expect reduced plantings in South America and Russia to have an impact on pricing, supporting stronger plantings (and fertilizer demand) in '10."
On a relative basis, he likes Agrium Inc. because of its exposure to the retail fertilizer market, saying retail demand should "hold in well on a year-over-year basis." That should offset weak wholesale results in H1 for phosphate and potash, the analyst said, continuiing to rate these shares "sector outperformer" with a US$60 price target.
Mr. Bout also rates Potash Corp. of Saskatchewan Inc. "sector outperformer" with a US$125 price target. He said potash demand will be on hold until there is a 2009 Chinese potash contract, but once a contract is settled, Mr. Bout believes potash demand will reach 2 to 3% per annum, creating tight market conditions.
From National Post
Citigroup Global Markets analyst P.J Juvekar assumed coverage on Potash Corp. of Saskatchewan Inc., Agrium Inc, and Mosaic Co. with short term caution, based on a forecast of a 10 to 20% year-over-year decline in phosphate and potash volumes in 2009.
"We expect many farmers in North America to go on a 'fertilizer holiday' as they 'mine' their soil for fertilizer," he said. "But the nutrient depletion may set the stage for a robust recovery in 2010 that could cause us to revisit our stance."
The analyst has "hold" ratings for Potash Corp. and Mosaic with price targets of US$81 and US$39, respectively. As for Agrium, he rates the stock a "sell" with a US$27 price target.
"We have a sell on Agrium given its potential for retail margin compression and write-downs, amid falling fertilizer prices, and large Nitrogen exposure.
At CIBC World Markets, analyst Jacob Bout also told clients that fertilizer demand and pricing will remain weak at least through the first half of this year, with recovery expected next year. However, he remains more bullish on both Agrium and PotashCorp's long term prospects than his Citigroup peer.
"While [nitrogen] and [phosphate] prices have collapsed, [potash] prices are still buoyed by producer discipline," he said. "We expect reduced plantings in South America and Russia to have an impact on pricing, supporting stronger plantings (and fertilizer demand) in '10."
On a relative basis, he likes Agrium Inc. because of its exposure to the retail fertilizer market, saying retail demand should "hold in well on a year-over-year basis." That should offset weak wholesale results in H1 for phosphate and potash, the analyst said, continuiing to rate these shares "sector outperformer" with a US$60 price target.
Mr. Bout also rates Potash Corp. of Saskatchewan Inc. "sector outperformer" with a US$125 price target. He said potash demand will be on hold until there is a 2009 Chinese potash contract, but once a contract is settled, Mr. Bout believes potash demand will reach 2 to 3% per annum, creating tight market conditions.
From National Post
Wednesday, January 21, 2009
Jim Rogers sees Renminbi replacing US Dollar as world reserve currency
BusinessIntelligence
Tuesday, January 20, 2009
Legendary global investor Jim Rogers said the Renminbi may possibly replace the US dollar as the international reserve currency 15 years from now.
Addressing the Asian Financial Forum in Hong Kong, an event that brought together about a thousand participants from around the globe, Rogers said he found Asia to be the place where "the world is changing" as he toured the world in 1990 through 1992.
"This is going to be the new centre of the world, not just the financial but the political world," he said.
The only currency that could replace the US dollar "this year" would be the euro, while the only conceivable currency that can replace the dollar as the reserve currency "15 years from now" is renminbi.
Rogers said he believed China will rise despite possible setbacks.
The United States also experienced setbacks and had various problems back in the 19th century, which, nevertheless, did not stop it from becoming the greatest success of the 20th century, he said.
The US dollar, on the other hand, is falling, he said, citing the fact that China is now the largest creditor nation while the United States is largest debtor nation.
"The Renminbi is big enough. It's liquid enough," he said, adding that the question was only academic in the sense that the renminbi is still a blocked currency.
He accused US authorities of consciously trying to devalue the US dollar by flooding the market with liquidity -- or in his words, "turning on the printing presses" -- and said anyone chasing the rally in government bonds is making a "terrible mistake."
"The idea that you can fix a period of excess borrowing and excess consumption by more borrowing and more consumption to me is just ludicrous," he said.
The projected plan to bail out the US economy by printing more money and boosting consumption could lead to even bigger problem. "The idea that you can solve a period of excessive borrowing and consumption with more borrowing and more consumption and destroying more balance sheets, to me, is ludicrous on its face," Rogers said.
Rogers said protectionism, one of the key pillars of U.S. President-elect Barrack Obama's presidential campaign platform, could push the U.S. economy into big trouble, citing the historical anecdote that the US congress passed a protectionist bill after the 1929 stock market crash to send the US economy into a long depression.
Underscoring his convictions, Rogers began his speech by showing pictures of his two young children, both of whom he said have Swiss bank accounts and speak Mandarin.
Rogers said his elder daughter, who is five years old, is in school in Asia and speaks fluent mandarin thanks to a governess who can speak fluent Chinese.
The other younger daughter was also learning mandarin.
"The single most important advice I can give you is teaching your child mandarin," he said, urging investors to sell US dollars when it peaks in the near term.
Rogers has spent a career being one step ahead of mainstream investment thinking. Amongst his many accomplishments, Rogers was co-founder with George Soros of Quantum Fund. During his ten years with the fund, the portfolio gained more than 4,000%, while the S&P rose less than 50%. The Quantum Fund shot to fame after making more than US$1 billion betting against the British pound in early 1990s.
The Asian Financial Forum was hosted by the Hong Kong Special Administrative Region government and Hong Kong Trade Development Council. Prominent speakers discussed the challenges and opportunities facing Asian economies.
Tuesday, January 20, 2009
Legendary global investor Jim Rogers said the Renminbi may possibly replace the US dollar as the international reserve currency 15 years from now.
Addressing the Asian Financial Forum in Hong Kong, an event that brought together about a thousand participants from around the globe, Rogers said he found Asia to be the place where "the world is changing" as he toured the world in 1990 through 1992.
"This is going to be the new centre of the world, not just the financial but the political world," he said.
The only currency that could replace the US dollar "this year" would be the euro, while the only conceivable currency that can replace the dollar as the reserve currency "15 years from now" is renminbi.
Rogers said he believed China will rise despite possible setbacks.
The United States also experienced setbacks and had various problems back in the 19th century, which, nevertheless, did not stop it from becoming the greatest success of the 20th century, he said.
The US dollar, on the other hand, is falling, he said, citing the fact that China is now the largest creditor nation while the United States is largest debtor nation.
"The Renminbi is big enough. It's liquid enough," he said, adding that the question was only academic in the sense that the renminbi is still a blocked currency.
He accused US authorities of consciously trying to devalue the US dollar by flooding the market with liquidity -- or in his words, "turning on the printing presses" -- and said anyone chasing the rally in government bonds is making a "terrible mistake."
"The idea that you can fix a period of excess borrowing and excess consumption by more borrowing and more consumption to me is just ludicrous," he said.
The projected plan to bail out the US economy by printing more money and boosting consumption could lead to even bigger problem. "The idea that you can solve a period of excessive borrowing and consumption with more borrowing and more consumption and destroying more balance sheets, to me, is ludicrous on its face," Rogers said.
Rogers said protectionism, one of the key pillars of U.S. President-elect Barrack Obama's presidential campaign platform, could push the U.S. economy into big trouble, citing the historical anecdote that the US congress passed a protectionist bill after the 1929 stock market crash to send the US economy into a long depression.
Underscoring his convictions, Rogers began his speech by showing pictures of his two young children, both of whom he said have Swiss bank accounts and speak Mandarin.
Rogers said his elder daughter, who is five years old, is in school in Asia and speaks fluent mandarin thanks to a governess who can speak fluent Chinese.
The other younger daughter was also learning mandarin.
"The single most important advice I can give you is teaching your child mandarin," he said, urging investors to sell US dollars when it peaks in the near term.
Rogers has spent a career being one step ahead of mainstream investment thinking. Amongst his many accomplishments, Rogers was co-founder with George Soros of Quantum Fund. During his ten years with the fund, the portfolio gained more than 4,000%, while the S&P rose less than 50%. The Quantum Fund shot to fame after making more than US$1 billion betting against the British pound in early 1990s.
The Asian Financial Forum was hosted by the Hong Kong Special Administrative Region government and Hong Kong Trade Development Council. Prominent speakers discussed the challenges and opportunities facing Asian economies.
Tuesday, January 20, 2009
Rick Warren's Inaugural Invocation
Let us pray.
Almighty God, our Father, everything we see and everything we can’t see exists because of you alone. It all comes from you. It all belongs to you. It all exists for your glory.
History is your story. The Scripture tells us, “Hear O Israel, the Lord is our God. The Lord is One.” And you are the compassionate and merciful one. And you are loving to everyone you have made.
Now, today, we rejoice not only in America’s peaceful transfer of power for the 44th time. We celebrate a hingepoint of history with the inauguration of our first African American president of the United States. We are so grateful to live in this land, a land of unequaled possibility, where the son of an African immigrant can rise to the highest level of our leadership. And we know today that Dr. King and a great cloud of witnesses are shouting in heaven.
Give to our new President, Barack Obama, the wisdom to lead us with humility, the courage to lead us with integrity, the compassion to lead us with generosity. Bless and protect him, his family, Vice President Biden, the cabinet, and every one of our freely elected leaders.
Help us, O God, to remember that we are Americans, united not by race, or religion, or blood, but to our commitment to freedom and justice for all. When we focus on ourselves, when we fight each other, when we forget you, forgive us. When we presume that our greatness and our prosperity is ours alone, forgive us. When we fail to treat our fellow human beings and all the earth with the respect that they deserve, forgive us. And as we face these difficult days ahead, may we have a new birth of clarity in our aims, responsibility in our actions, humility in our approaches, and civility in our attitudes, even when we differ.
Help us to share, to serve and to seek the common good of all. May all people of goodwill today join together to work for a more just, a more healthy and a more prosperous nation and a peaceful planet. And may we never forget that one day all nations and all people will stand accountable before you. We now commit our new president and his wife, Michelle and his daughters, Malia and Sasha, into your loving care.
I humbly ask this in the name of the one who changed my life, Yeshua, Isa, Jesus [Spanish pronunciation], Jesus, who taught us to pray:
“Our Father, who art in heaven, hallowed be thy name. Thy kingdom come. Thy will be done on earth as it is in heaven. Give us this day our daily bread and forgive us our trespasses as we forgive those who trespass against us. And lead us not into temptation, but deliver us from evil. For thine is the kingdom and the power and the glory forever. Amen."
President Barack Obama 2009 Inauguration and Address
SPEAKER: PRESIDENT BARACK OBAMA
[*] OBAMA: Thank you. Thank you.
CROWD: Obama! Obama! Obama! Obama!
My fellow citizens: I stand here today humbled by the task before us, grateful for the trust you have bestowed, mindful of the sacrifices borne by our ancestors.
I thank President Bush for his service to our nation...
(APPLAUSE)
... as well as the generosity and cooperation he has shown throughout this transition.
Forty-four Americans have now taken the presidential oath.
OBAMA: The words have been spoken during rising tides of prosperity and the still waters of peace. Yet, every so often the oath is taken amidst gathering clouds and raging storms. At these moments, America has carried on not simply because of the skill or vision of those in high office, but because We the People have remained faithful to the ideals of our forbearers, and true to our founding documents.
OBAMA: So it has been. So it must be with this generation of Americans.
That we are in the midst of crisis is now well understood. Our nation is at war against a far-reaching network of violence and hatred. Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some but also our collective failure to make hard choices and prepare the nation for a new age.
Homes have been lost, jobs shed, businesses shuttered. Our health care is too costly, our schools fail too many, and each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet.
OBAMA: These are the indicators of crisis, subject to data and statistics. Less measurable, but no less profound, is a sapping of confidence across our land; a nagging fear that America's decline is inevitable, that the next generation must lower its sights.
Today I say to you that the challenges we face are real, they are serious and they are many. They will not be met easily or in a short span of time. But know this America: They will be met.
(APPLAUSE)
On this day, we gather because we have chosen hope over fear, unity of purpose over conflict and discord.
OBAMA: On this day, we come to proclaim an end to the petty grievances and false promises, the recriminations and worn-out dogmas that for far too long have strangled our politics.
We remain a young nation, but in the words of Scripture, the time has come to set aside childish things. The time has come to reaffirm our enduring spirit; to choose our better history; to carry forward that precious gift, that noble idea, passed on from generation to generation: the God-given promise that all are equal, all are free, and all deserve a chance to pursue their full measure of happiness.
(APPLAUSE)
In reaffirming the greatness of our nation, we understand that greatness is never a given. It must be earned. Our journey has never been one of shortcuts or settling for less.
OBAMA: It has not been the path for the faint-hearted, for those who prefer leisure over work, or seek only the pleasures of riches and fame.
Rather, it has been the risk-takers, the doers, the makers of things -- some celebrated, but more often men and women obscure in their labor -- who have carried us up the long, rugged path towards prosperity and freedom.
For us, they packed up their few worldly possessions and traveled across oceans in search of a new life. For us, they toiled in sweatshops and settled the West, endured the lash of the whip and plowed the hard earth.
OBAMA: For us, they fought and died in places Concord and Gettysburg; Normandy and Khe Sahn.
Time and again these men and women struggled and sacrificed and worked till their hands were raw so that we might live a better life. They saw America as bigger than the sum of our individual ambitions; greater than all the differences of birth or wealth or faction.
This is the journey we continue today. We remain the most prosperous, powerful nation on Earth. Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished. But our time of standing pat, of protecting narrow interests and putting off unpleasant decisions -- that time has surely passed.
OBAMA: Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.
(APPLAUSE)
For everywhere we look, there is work to be done.
The state of our economy calls for action: bold and swift. And we will act not only to create new jobs but to lay a new foundation for growth.
We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.
We will restore science to its rightful place and wield technology's wonders to raise health care's quality...
(APPLAUSE)
... and lower its costs.
OBAMA: We will harness the sun and the winds and the soil to fuel our cars and run our factories. And we will transform our schools and colleges and universities to meet the demands of a new age.
All this we can do. All this we will do.
Now, there are some who question the scale of our ambitions, who suggest that our system cannot tolerate too many big plans. Their memories are short, for they have forgotten what this country has already done, what free men and women can achieve when imagination is joined to common purpose and necessity to courage.
What the cynics fail to understand is that the ground has shifted beneath them, that the stale political arguments that have consumed us for so long, no longer apply.
OBAMA: The question we ask today is not whether our government is too big or too small, but whether it works, whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified.
Where the answer is yes, we intend to move forward. Where the answer is no, programs will end.
And those of us who manage the public's knowledge will be held to account, to spend wisely, reform bad habits, and do our business in the light of day, because only then can we restore the vital trust between a people and their government.
Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched.
OBAMA: But this crisis has reminded us that without a watchful eye, the market can spin out of control. The nation cannot prosper long when it favors only the prosperous.
The success of our economy has always depended not just on the size of our gross domestic product, but on the reach of our prosperity; on the ability to extend opportunity to every willing heart -- not out of charity, but because it is the surest route to our common good.
(APPLAUSE)
As for our common defense, we reject as false the choice between our safety and our ideals.
Our founding fathers faced with perils that we can scarcely imagine, drafted a charter to assure the rule of law and the rights of man, a charter expanded by the blood of generations.
OBAMA: Those ideals still light the world, and we will not give them up for expedience's sake.
And so, to all other peoples and governments who are watching today, from the grandest capitals to the small village where my father was born: know that America is a friend of each nation and every man, woman and child who seeks a future of peace and dignity, and we are ready to lead once more.
(APPLAUSE)
Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with the sturdy alliances and enduring convictions.
OBAMA: They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use. Our security emanates from the justness of our cause; the force of our example; the tempering qualities of humility and restraint.
We are the keepers of this legacy, guided by these principles once more, we can meet those new threats that demand even greater effort, even greater cooperation and understanding between nations. We'll begin to responsibly leave Iraq to its people and forge a hard- earned peace in Afghanistan.
OBAMA: With old friends and former foes, we'll work tirelessly to lessen the nuclear threat and roll back the specter of a warming planet.
We will not apologize for our way of life nor will we waver in its defense.
And for those who seek to advance their aims by inducing terror and slaughtering innocents, we say to you now that, "Our spirit is stronger and cannot be broken. You cannot outlast us, and we will defeat you."
(APPLAUSE)
For we know that our patchwork heritage is a strength, not a weakness.
We are a nation of Christians and Muslims, Jews and Hindus, and nonbelievers. We are shaped by every language and culture, drawn from every end of this Earth.
And because we have tasted the bitter swill of civil war and segregation and emerged from that dark chapter stronger and more united, we cannot help but believe that the old hatreds shall someday pass; that the lines of tribe shall soon dissolve; that as the world grows smaller, our common humanity shall reveal itself; and that America must play its role in ushering in a new era of peace.
OBAMA: To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect.
To those leaders around the globe who seek to sow conflict or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy.
To those...
(APPLAUSE)
To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history, but that we will extend a hand if you are willing to unclench your fist.
(APPLAUSE)
OBAMA: To the people of poor nations, we pledge to work alongside you to make your farms flourish and let clean waters flow; to nourish starved bodies and feed hungry minds.
And to those nations like ours that enjoy relative plenty, we say we can no longer afford indifference to the suffering outside our borders, nor can we consume the world's resources without regard to effect. For the world has changed, and we must change with it.
As we consider the road that unfolds before us, we remember with humble gratitude those brave Americans who, at this very hour, patrol far-off deserts and distant mountains. They have something to tell us, just as the fallen heroes who lie in Arlington whisper through the ages.
We honor them not only because they are guardians of our liberty, but because they embody the spirit of service: a willingness to find meaning in something greater than themselves.
OBAMA: And yet, at this moment, a moment that will define a generation, it is precisely this spirit that must inhabit us all.
For as much as government can do and must do, it is ultimately the faith and determination of the American people upon which this nation relies.
It is the kindness to take in a stranger when the levees break; the selflessness of workers who would rather cut their hours than see a friend lose their job which sees us through our darkest hours.
It is the firefighter's courage to storm a stairway filled with smoke, but also a parent's willingness to nurture a child, that finally decides our fate.
Our challenges may be new, the instruments with which we meet them may be new, but those values upon which our success depends, honesty and hard work, courage and fair play, tolerance and curiosity, loyalty and patriotism -- these things are old.
OBAMA: These things are true. They have been the quiet force of progress throughout our history.
What is demanded then is a return to these truths. What is required of us now is a new era of responsibility -- a recognition, on the part of every American, that we have duties to ourselves, our nation and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character than giving our all to a difficult task.
This is the price and the promise of citizenship.
OBAMA: This is the source of our confidence: the knowledge that God calls on us to shape an uncertain destiny.
This is the meaning of our liberty and our creed, why men and women and children of every race and every faith can join in celebration across this magnificent mall. And why a man whose father less than 60 years ago might not have been served at a local restaurant can now stand before you to take a most sacred oath.
(APPLAUSE)
So let us mark this day in remembrance of who we are and how far we have traveled.
In the year of America's birth, in the coldest of months, a small band of patriots huddled by nine campfires on the shores of an icy river.
OBAMA: The capital was abandoned. The enemy was advancing. The snow was stained with blood.
At a moment when the outcome of our revolution was most in doubt, the father of our nation ordered these words be read to the people:
"Let it be told to the future world that in the depth of winter, when nothing but hope and virtue could survive, that the city and the country, alarmed at one common danger, came forth to meet it."
America, in the face of our common dangers, in this winter of our hardship, let us remember these timeless words; with hope and virtue, let us brave once more the icy currents, and endure what storms may come; let it be said by our children's children that when we were tested we refused to let this journey end, that we did not turn back nor did we falter; and with eyes fixed on the horizon and God's grace upon us, we carried forth that great gift of freedom and delivered it safely to future generations.
Thank you. God bless you.
(APPLAUSE)
And God bless the United States of America.
(APPLAUSE)
ELD is one of the recommendation by Eric Sprott
During the interview with The Gold Report on January 9, 2009, Eric Sprott metioned a few names of larger gold producers amongst his fund holdings:
Kinross Gold Corporation (KGC),
Alamos Gold Inc. (AGIGF.PK),
Dynasty Metals & Mining (DMMIF.PK),
Kirkland Lake Gold Inc. (KGLIF.PK) ,
El Dorado Gold Corporation (EGO) and
Ramelius Resources [ASX:RMS] in Australia.
Kinross Gold Corporation (KGC),
Alamos Gold Inc. (AGIGF.PK),
Dynasty Metals & Mining (DMMIF.PK),
Kirkland Lake Gold Inc. (KGLIF.PK) ,
El Dorado Gold Corporation (EGO) and
Ramelius Resources [ASX:RMS] in Australia.
Monday, January 19, 2009
David Walker - U.S. Heading For Financial Trouble?
(CBS) This segment was originally broadcast on March 4, 2007. It was updated on July 8, 2007.
When the stock market soars or plunges, everyone pays attention. But short term results aren't that important to the man you're about to meet. David Walker thinks the biggest economic peril facing the nation is being ignored, and for nearly two years now he has been traveling the country like an Old Testament prophet, urging people to wake up before its too late. Who is David Walker and why should we care?
As correspondent Steve Kroft first reported earlier this year, he is the nation's top accountant, the comptroller general of the United States. He's totaled up our government's income, liabilities, and future obligations and concluded that our current standard of living is unsustainable unless some drastic action is taken. And he's not alone. It's been called the "dirty little secret everyone in Washington knows" – a set of financial truths so inconvenient that most elected officials don't even want to talk about them, which is exactly why David Walker does.
--------------------------------------------------------------------------------
"I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan but our own fiscal irresponsibility," Walker tells Kroft.
David Walker is a prudent man and a highly respected public official. As comptroller general of the United States he runs he Government Accountability Office, the GAO, which audits the government's books and serves as the investigative arm of the U.S. Congress. He has more than 3,000 employees, a budget of a half a billion dollars, and a message he considers urgent.
"I'm going to show you some numbers…they’re all big and they’re all bad," he says.
So bad, that Walker has given up on elected officials and taken his message directly to taxpayers and opinion makers, hoping to shape the debate in the next presidential election.
"You know the American people, I tell you, they are absolutely starved for two things: the truth, and leadership," Walker says.
He calls it a fiscal wake up tour, and he is telling civic groups, university forums and newspaper editorial boards that the U.S. has spent, promised, and borrowed itself into such a deep hole it will be unable to climb out if it doesn’t act now. As Walker sees it, the survival of the republic is at stake.
"What’s going on right now is we’re spending more money than we make…we’re charging it to credit card…and expecting our grandchildren to pay for it. And that’s absolutely outrageous," he told the editorial board of the Seattle Post Intelligencer.
You have heard this before, from Ross Perot 15 years ago. You might have even thought the problem had been solved, when President Clinton announced, "Tonight, I come before you to announce that the federal deficit … will be simply zero."
"Well, those days are gone. We've gone from surpluses to huge deficits and our long range situation is much worse," Walker says.
"President Bush would argue that the economy is in pretty good shape, unemployment is down, the deficit is actually less than expected," Kroft remarks.
"The fact is, is that we don't face an immediate crisis. And, so people say, 'What's the problem?' The answer is, we suffer from a fiscal cancer. It is growing within us. And if we do not treat it, it could have catastrophic consequences for our country," Walker replies.
The cancer, Walker says, are massive entitlement programs we can no longer afford, exacerbated by a demographic glitch that began more than 60 years ago, a dramatic spike in the fertility rate called the "baby boom."
Beginning next year, and for 20 years thereafter, 78 million Americans will become pensioners and medical dependents of the U.S. taxpayer.
"The first baby boomer will reach 62 and be eligible for early retirement of Social Security January 1, 2008. They'll be eligible for Medicare just three years later. And when those boomers start retiring in mass, then that will be a tsunami of spending that could swamp our ship of state if we don't get serious," Walker explains.
To illustrate their impact, he uses a power point presentation to show what would happen in 30 years if the U.S. maintains its current course and fulfills all of the promises politicians have made to the public on things like Social Security and Medicare.
What would happen in 2040 if nothing changes?
"If nothing changes, the federal government's not gonna be able to do much more than pay interest on the mounting debt and some entitlement benefits. It won't have money left for anything else – national defense, homeland security, education, you name it," Walker warns.
Walker says you could eliminate all waste and fraud and the entire Pentagon budget and the long-range financial problem still wouldn't go away, in what's shaping up as an actuarial nightmare.
Part of the problem, Walker acknowledges, is that there won't be enough wage earners to support the benefits of the baby boomers. "But the real problem, Steve, is health care costs. Our health care problem is much more significant than Social Security," he says.
Asked what he means by that, Walker tells Kroft, "By that I mean that the Medicare problem is five times greater than the Social Security problem."
The problem with Medicare, Walker says, is people keep living longer, and medical costs keep rising at twice the rate of inflation. But instead of dealing with the problem, he says, the president and the Congress made things much worse in Dec. 2003, when they expanded the Medicare program to include prescription drug coverage.
"The prescription drug bill was probably the most fiscally irresponsible piece of legislation since the 1960s," Walker argues.
Asked why, Walker says, "Well, because we promise way more than we can afford to keep. Eight trillion dollars added to what was already a 15 to $20 trillion under-funding. We're not being realistic. We can't afford the promises we've already made, much less to be able, piling on top of 'em."
With one stroke of the pen, Walker says, the federal government increased existing Medicare obligations nearly 40 percent over the next 75 years.
"We’d have to have eight trillion dollars today, invested in treasury rates, to deliver on that promise," Walker explains.
Asked how much we actually have, Walker says, "Zip."
So where's that money going to come from?
"Well it's gonna come from additional taxes, or it's gonna come from restructuring these promises, or it's gonna come from cutting other spending," Walker says.
He is not suggesting that the nation do away with Medicare or prescription drug benefits. He does believe the current health care system is way too expensive, and overrated.
"On cost we're number one in the world. We spend 50 percent more of our economy on health care than any nation on earth," he says.
"We have the largest uninsured population of any major industrialized nation. We have above average infant mortality, below average life expectancy, and much higher than average medical error rates for an industrialized nation," Walker points out.
Walker says we have promised almost unlimited healthcare to senior citizens who never see the bills, and the government already is borrowing money to pay them. He says the system is unsustainable.
"It's the number one fiscal challenge for the federal government, it's the number one fiscal challenge for state governments and it's the number one competitive challenge for American business. We're gonna have to dramatically and fundamentally reform our health care system in installments over the next 20 years," Walker tells Kroft.
And if we don't?
"And if we don't, it could bankrupt America," Walker argues.
You’re probably expecting to hear from someone who disagrees with the comptroller general’s numbers, projections, and analysis. But hardly anyone does. He is accompanied on the wake-up tour by economists from the conservative Heritage Foundation, the left-leaning Brookings Institution, and the non-partisan Concord Coalition. The only dissenters seem to be a small minority of economists who believe either that the U.S. can grow its way out of the problem, or that Walker is over-stating it.
"The Wall Street Journal for example calls you 'Chicken Little,' running around saying that the 'sky is falling, the sky is falling,'" Kroft remarks.
"Unfortunately they don't get it. I don't know anybody who has done their homework, has researched history, and who's good at math who would tell you that we can grow our way out of this problem," Walker replies.
Federal Reserve Chairman Ben Bernanke validated much of Walker's take on the situation at congressional hearings this year, and so did ranking Republicans and Democrats on the Senate Budget Committee. Senator Kent Conrad of North Dakota is the chairman.
Sen. Conrad thinks David Walker is "providing an enormous public service."
Asked if he agrees with Walker’s figures and his projections, Sen. Conrad says, "I do. You know, I mean we could always question the precise nature of this projection or that projection. But, that misses the point. The larger story that he is telling is exactly correct."
Conrad acknowledges that most people in Washington are aware how bad the situation is. "They know in large measure here, Republicans and Democrats, that we are on a course that doesn't add up," the senator tells Kroft.
"Why doesn't somebody do something about it?" Kroft asks.
"Because it's always easier not to. 'Cause it's always easier to defer, to kick the can down the road to avoid making choices. You know, you get in trouble in politics when you make choices," Sen. Conrad says.
Asked if he thinks taxes should be raised, the senator says, "I believe first of all, we need more revenue. We need to be tough on spending. And we need to reform the entitlement programs … we need to do all of it."
But he admits he doesn't think there's a consensus for raising taxes.
"Any politician who tells you that we can solve our problem without reforming Social Security, Medicare, and Medicaid is not telling you the truth," Walker told an audience at the University of Denver.
Over the next year, the nation’s top accountant will be traveling to the early primary states, telling voters that we need to begin raising taxes or government revenues and put a cap on federal spending if we want to maintain our economic security and standard of living.
"If you tell them the truth, if you give them the facts, if you explain this in terms of not just numbers but values and people, they will get it and empower their elected officials to make tough choices," Walker argues.
Asked if he knows any politicians willing to raise taxes or cut back benefits, Walker says, "I don't know politicians that like to raise taxes. I don't know politicians that like to cut spending, but I think what we have to recognize is this is not just about numbers. We are mortgaging the future of our children and grandchildren at record rates, and that is not only an issue of fiscal irresponsibility, it's an issue of immorality."
Oil expected to rise to US$65 this year
Goldman Sachs Group Inc. commodity analyst Jeffrey Currie said he expects a "swift and violent rebound" in energy prices in the second half of the year.
Oil prices may have reached their lowest point already, after falling to US$32.40 in mid-December, and are expected to rise to US$65 by the end of this year, the analyst said. There is scope for a "new bull market" in oil, Mr. Currie said.
World oil demand is likely to fall by about 1.6 million barrels a day this year, the Goldman analyst said Monday at a conference in London. That's bigger than the reduction expected by the International Energy Agency, which last week forecast a decrease of about 500,000 barrels a day, or 0.6 %, this year.
A recent tactic of using supertankers to store crude oil to take advantage of higher prices later this year is "difficult" to profit from and is "near the end of this process" anyway, the Goldman analyst said.
New York crude futures for delivery in December, trading near US$56 a barrel, currently cost some US$15 a barrel more than March futures, a market situation known as contango, where prices are higher for later delivery.
The contango is likely to flatten as supply cuts by OPEC and other producers take effect, reducing the availability of oil for immediate delivery, Currie said.
The Organization of Petroleum Exporting Countries started another round of supply cutbacks at the start of this month. The group's compliance with its overall efforts to cut production will probably peak at 75%, or a reduction of about 3 million barrels a day out of an announced aim of 4.2 million barrels a day, Goldman Sachs said.
In several steps, 10 OPEC members have pledged to reduce production to 24.845 million barrels a day, a cut of 4.2 million barrels a day from September's level.
Morgan Stanley hired an oil tanker to store crude oil in the Gulf of Mexico, joining Citigroup Inc. and Royal Dutch Shell PLC in trying to profit from the contango, two shipbrokers said in reports earlier Monday.
Oil prices may have reached their lowest point already, after falling to US$32.40 in mid-December, and are expected to rise to US$65 by the end of this year, the analyst said. There is scope for a "new bull market" in oil, Mr. Currie said.
World oil demand is likely to fall by about 1.6 million barrels a day this year, the Goldman analyst said Monday at a conference in London. That's bigger than the reduction expected by the International Energy Agency, which last week forecast a decrease of about 500,000 barrels a day, or 0.6 %, this year.
A recent tactic of using supertankers to store crude oil to take advantage of higher prices later this year is "difficult" to profit from and is "near the end of this process" anyway, the Goldman analyst said.
New York crude futures for delivery in December, trading near US$56 a barrel, currently cost some US$15 a barrel more than March futures, a market situation known as contango, where prices are higher for later delivery.
The contango is likely to flatten as supply cuts by OPEC and other producers take effect, reducing the availability of oil for immediate delivery, Currie said.
The Organization of Petroleum Exporting Countries started another round of supply cutbacks at the start of this month. The group's compliance with its overall efforts to cut production will probably peak at 75%, or a reduction of about 3 million barrels a day out of an announced aim of 4.2 million barrels a day, Goldman Sachs said.
In several steps, 10 OPEC members have pledged to reduce production to 24.845 million barrels a day, a cut of 4.2 million barrels a day from September's level.
Morgan Stanley hired an oil tanker to store crude oil in the Gulf of Mexico, joining Citigroup Inc. and Royal Dutch Shell PLC in trying to profit from the contango, two shipbrokers said in reports earlier Monday.
Sunday, January 18, 2009
Simple But Difficult Discipleship
1 Thessalonians 5:16-18
One of the most perplexing questions for a Christian is this one: What is God’s will for my life? When we ask that question we generally want to know,
· What job should I take?
· What school should I attend?
· What person should I marry?
· What ministries should I be involved in?
Often we ask the question at crisis points in our life (as we should). Today’s text is going to challenge the way we normally think about God’s will. I think our text suggests that when we ask “What is God’s will for my life?” we should put less emphasis on “What does God want me to do?” and more emphasis on the question “What does God want me to be?”
In 1 Thessalonians 5:16-18 we find what some call the “standing orders of the church”. If you want to know what God’s will is for your life here’s where you can start. Whereas in verses 12-15 Paul instructed us on our interpersonal relationships, in these verses he talks to us about our attitudes.
16 Be joyful always; 17 pray continually; 18 give thanks in all circumstances, for this is God’s will for you in Christ Jesus.
Each of these commands is in the Imperative, which means these are commands. Paul is not really talking about our feelings; for the most part, we can’t control our feelings. Paul is addressing our mindset; our focus.
I’ve titled this message: “Simple but Difficult Discipleship” because these three commands are not difficult to understand. We know God wants us to be joyful, praying, and filled with thanksgiving. However, the modifiers of each directive is what makes these commands difficult: we are to be ALWAYS joyful; CONTINUALLY praying; and thankful in ALL circumstances.
Be Joyful Always
In Philippians 4:4 Paul told us to “rejoice in the Lord always, again I say, rejoice!” Before we can begin to understand what this means we have to be clear about what it DOESN’T mean. Paul is not telling us that we should be happy all the time. That would be foolish.
There are many things in life that bring unhappiness. Circumstances can bring sadness, grief, and a sense of bewilderment. I don’t believe Paul is telling us to simply “put on a happy face”. God doesn’t want us to be phony; He wants us to be real. Sometimes we don’t feel happy.
Joy is deeper than happiness. It is unrelated to the circumstances of life and it is anchored to our relationship with God. It is that exhilaration of spirit that derives from our deep-seated confidence in God’s love, power, and His work in our lives. The deeper our roots extend in our relationship with God, the more joy we will know.
So, let’s state the obvious. If you don’t have a true and vital relationship with God, you cannot know this kind of joy. The prerequisite to joy is a true and vital relationship with God through Jesus Christ. In other words, If you are still putting your confidence in your own abilities, if you think you can “do it on your own”, if your faith is more of an academic issue than a vital relationship in your life, you will never find this kind of joy.
I was reading this week and excellent book by Erwin Lutzer on what happens after we die. In the book Lutzer told of a time he was bobbing on a boat on Lake Michigan. When he began getting seasick his friend told him to choose a building on the shore and keep his eyes fixed on it. Lutzer writes,
I chose the Sears Tower and discovered in a few moments that I felt better. He [his friend] explained that the motion of a boat confuses our balance system if we look at the very object that is causing our movement. But we can handle the ups and downs if our eyes have a fixed object that is unmoved by our own vacillation. (Your Eternal Reward, p. 122)
This is how we experience joy. We cannot focus on the circumstances of life or life will make us sick. We will be joyful sometimes but often we will find joy lacking. We must instead put our focus on something that is constant. That constant is the nature, character, and promise of God. John MacArthur [Commentary on 1 Thessalonians] gives a number of “constants” we should to take away the seasickness of life’s circumstances, We should focus on,
1. God’s Righteous Character (Nehemiah. 8:10, Psalm 71:23)
2. Christ’s redemptive work (Luke 10:20, Romans 5:1-2; 1 Peter 1:8-9)
3. The Holy Spirit’s ministry on our behalf (Romans 8:14-27)
4. The Spiritual blessings we possess (Philippians 4:13, 19; 2 Peter 1:3)
5. God’s providence as He orchestrates everything for our benefit (Rom. 8:28–30; James 1:2–4)
6. The promise of future glory (Jude 24)
7. Answered Prayer (John 16:24)
8. The gift of God’s Word (Psalm 19:7-11)
9. Deep and sincere relationships in the body of Christ (1 Thessalonians 3:9)
10. The privilege of being able to share the life-changing message of the gospel
Do you notice something about this list? These are generally not the things that we think of as the key to our joy. We would list things like: good health, family, job satisfaction, great experiences, and personal achievements. Our focus is on the storm tossed circumstances rather than the stable character of God.
Let me repeat something I said in a sermon on Philippians.
We often miss out on joy because we try to create it ourselves. When we try to "produce" joy we are working against joy. You see, when we look to our activities and our devices to bring us joy we are NOT looking at the Lord. When we are relying on external things we are distracted from the internal work of God's Spirit. The harder we work to find joy the further we drift from the Lord and that joy we are looking for.
It's like a person who is drowning. They need to trust the lifeguard who comes to save them. The more they struggle to "save themselves" the more difficult it is for them to be saved. Or maybe it is like the patient in the hospital. They wake up from surgery and find tubes in them. The more they fight the tubes and pull at them, the longer it will be before they get better. Instinct says to fight, but in this case instinct is wrong.
So it is with joy. Our instinct is to try to DO things to produce joy. We can't produce joy by our choruses, music, methods, campfires, meditation or anything else. The harder we try to create joy the more elusive it becomes. Joy comes from resting not running. It comes from trusting not working.
Pray Continually
The second command is to pray continually or as the King James puts it, “pray without ceasing.” Many dismiss this command quickly as ridiculous hyperbole or exaggeration. They reason if anyone prayed all the time, they would actually be quite useless in the world. They would not function.
However, Paul does not mean that we should constantly spend our lives in a prayer meeting or in formal prayer. He isn’t saying we should always be on our knees or have our eyes closed. That is only one kind of prayer. Paul is encouraging us to be in constant communication with God. Most of us would actually have a better time with prayer if we kept up a running conversation with the Lord throughout the day.
When we talk about communication in marriage we are not simply talking about those times when we sit down to have formal conversations with our spouse. Communication in marriage takes place constantly. We communicate through our words, our actions, and through our silence. Have you noticed that people who have been married a while start often finish each others’ sentences? Many times something will be said and they have exactly the same response. At times it is maddening. A conversation is progressing and all of a sudden a husband and wife start talking about something totally unrelated. Why? Because they have shared their lives with each other to such a degree that they have begun to think alike. Wouldn’t it be great to have that kind of relationship with God? Wouldn’t it be wonderful to have such a continuing conversation with the Lord that you regularly “knew” what God wanted you to without even having to ask? Wouldn’t it be great if you could hear His voice of love in your head in every crisis?
People wonder, “What in the world would I talk to God about all day long?” Again, we have to adjust our thinking. We think of prayer as “asking God for stuff”. Prayer is much more than merely making requests. Prayer is meant to be a conversation with the Lord. It is a time for us to align our hearts and minds with His.
There are times when we need to confess our sin; times when we can express appreciation for God’s creative wonders; times we should express our love; times when we should admit our fears or seek His guidance; and times we should be giving thanks. There are times when we simply need to seek to align our hearts with the heart of God. If you will, there are times we need to discuss things with the Lord. To pray without ceasing means we are living and thinking in the presence of God.
Give Thanks in All Circumstances
Paul tells to give thanks in all circumstances. Once again we need to qualify. Paul is not saying we should give thanks FOR all circumstances. Obviously we should not be thankful for injustice, for tragedy, for disease, or for war. None of these things are good. However, we are to be grateful IN every circumstance. This is an important distinction. Like joy, our thankfulness is anchored to our relationship in Christ rather than to the circumstances of life.
No matter what happens in life we can be grateful that
1. We are forgiven and loved in Christ
2. Nothing can separate us from God’s love (Romans 8:38)
3. God is working in every circumstance (even in the circumstances that aren’t good in and of themselves) for our good. (Romans 8:28)
4. God will supply our needs (Philippians 4:19)
5. God will give us the strength we need. (Philippians 4:13)
6. We will live even though we die (John 11:25); and if this earthly tent we live in is destroyed, we have an eternal house in Heaven not made by human hands. (2 Corinthians 5:1)
7. No one can snatch us from His hand (John 6:39)
8. God will finish the work He started in our lives (Philippians 1:6)
9. We have been extended mercy rather than justice.
If we get this; if we understand the implications of these truths; then we will be able to be grateful in every circumstance. No matter what happens, we can still be grateful that we have not been treated as we have deserved but have been treated with the mercy and love of God.
Periodically on the news someone is interviewed who recently lost their home to fire. In the midst of the devastation these people often say things like: “we lost everything, but thankfully no one was hurt.” These people understand that they can be grateful even in the midst of such terrible loss. They have the right perspective.
We ought to not only thank God in the hard times . . . we should also be grateful in the good times. In the hard times we recognize our lack of strength; so we turn to the Lord. In the good times we have a tendency to feel that we have somehow earned what we have. We tend to pat each other or ourselves on the back. We forget to give thanks. Every day of life is a gift. Every blessing is an expression of the mercy and love of God.
Let me apply this even further.
· In the case of a death of someone we love, we will be grateful that there is life beyond the grave
· In the case of a devastating illness we can be grateful that God knows our weakness and has promised to give us strength. If the illness leads to death we again can be thankful (and draw strength from the fact) that this life is not all there is.
· In the case of injustice, we can be grateful that God will vindicate us.
· In the case of a promotion, we thank God for the new responsibility He has entrusted to us.
· In the case of a job loss, we can be grateful that God will work in the situation for our good or that God is giving us some kind of new opportunity.
· In the case of a financial windfall, we should give thanks that God has equipped us to steward His resources.
· In the case of divorce, we can be grateful that God will forgive our failures and heal our heartache.
The point is this: if we focus on the circumstances of life we will be grumblers. If we focus on the Lord we will be thank-ers. No one promised that life will be easy. In fact, Jesus told the disciples, “In the world you will have tribulation.” However, Jesus then adds, “but I have overcome the world.” (John 16:33) That’s the perspective that leads to a continuously grateful heart.
Conclusions
I struggle with these commands. Too often I find myself swallowed up by complaints rather than gratitude; a sour mood rather than an attitude of deep-seated joy. I admit that at times I have to remind myself to talk with God.
However, what Paul commands of us; what God desires from us; is not unreasonable and certainly not impossible. We must stop looking at these verses as if they were grand exaggerations. We CAN be joyful always; praying without ceasing; and we can always be grateful. It all depends on our relationship with God.
So it is time for us to get serious. Let’s be honest with ourselves.
· We lack joy because we lose sight of God
· We become lax in prayerfulness because we think to highly of ourselves
· We find gratitude illusive because we have put our focus in the wrong place
We must remember that doing the will of God starts by being the person God has called us to be. If you want to do His will the place to start is to develop an intimate relationship with Him.
The thing about these three commands is: if you really start working on one, the others will tend to follow. If we find our joy in the Lord in all circumstances we will want to talk with him and we will be grateful. If we adopt an attitude of gratitude we will find ourselves giving thanks at all times and our attitude and outlook will be one of joy. If we learn to pray without ceasing we will find the joy of our relationship with God will overshadow the trials of our lives and it will lead us to a constant sense of gratefulness.
So, start somewhere. Here are some simple suggestions,
· Put up some little signs around your house that ask, “have you talked to God lately?” We often tell our children that they need to “check in” with us periodically. As God’s children we need to check in with Him.
· Memorize the words to the hymn “Count your Blessings”
· Draw a picture of a heart that has a big smile to remind yourself that joy is a heart issue
· Memorize 1 Thessalonians 5:16-18
· When you feel yourself getting anxious or uptight about the events of life, learn to say to yourself, “look to the Lord”. When you face a daunting task, ask, “Do I trust Him or don’t I?”
These commands are not unrealistic. Each one of us can do these things. And if we would work on these areas of our life, we will find that our Lord will become more precious, the trials of life would be less devastating, and we would be a lot more fun to be around. So, if you want to know what the will of God is for your life, start here.
One of the most perplexing questions for a Christian is this one: What is God’s will for my life? When we ask that question we generally want to know,
· What job should I take?
· What school should I attend?
· What person should I marry?
· What ministries should I be involved in?
Often we ask the question at crisis points in our life (as we should). Today’s text is going to challenge the way we normally think about God’s will. I think our text suggests that when we ask “What is God’s will for my life?” we should put less emphasis on “What does God want me to do?” and more emphasis on the question “What does God want me to be?”
In 1 Thessalonians 5:16-18 we find what some call the “standing orders of the church”. If you want to know what God’s will is for your life here’s where you can start. Whereas in verses 12-15 Paul instructed us on our interpersonal relationships, in these verses he talks to us about our attitudes.
16 Be joyful always; 17 pray continually; 18 give thanks in all circumstances, for this is God’s will for you in Christ Jesus.
Each of these commands is in the Imperative, which means these are commands. Paul is not really talking about our feelings; for the most part, we can’t control our feelings. Paul is addressing our mindset; our focus.
I’ve titled this message: “Simple but Difficult Discipleship” because these three commands are not difficult to understand. We know God wants us to be joyful, praying, and filled with thanksgiving. However, the modifiers of each directive is what makes these commands difficult: we are to be ALWAYS joyful; CONTINUALLY praying; and thankful in ALL circumstances.
Be Joyful Always
In Philippians 4:4 Paul told us to “rejoice in the Lord always, again I say, rejoice!” Before we can begin to understand what this means we have to be clear about what it DOESN’T mean. Paul is not telling us that we should be happy all the time. That would be foolish.
There are many things in life that bring unhappiness. Circumstances can bring sadness, grief, and a sense of bewilderment. I don’t believe Paul is telling us to simply “put on a happy face”. God doesn’t want us to be phony; He wants us to be real. Sometimes we don’t feel happy.
Joy is deeper than happiness. It is unrelated to the circumstances of life and it is anchored to our relationship with God. It is that exhilaration of spirit that derives from our deep-seated confidence in God’s love, power, and His work in our lives. The deeper our roots extend in our relationship with God, the more joy we will know.
So, let’s state the obvious. If you don’t have a true and vital relationship with God, you cannot know this kind of joy. The prerequisite to joy is a true and vital relationship with God through Jesus Christ. In other words, If you are still putting your confidence in your own abilities, if you think you can “do it on your own”, if your faith is more of an academic issue than a vital relationship in your life, you will never find this kind of joy.
I was reading this week and excellent book by Erwin Lutzer on what happens after we die. In the book Lutzer told of a time he was bobbing on a boat on Lake Michigan. When he began getting seasick his friend told him to choose a building on the shore and keep his eyes fixed on it. Lutzer writes,
I chose the Sears Tower and discovered in a few moments that I felt better. He [his friend] explained that the motion of a boat confuses our balance system if we look at the very object that is causing our movement. But we can handle the ups and downs if our eyes have a fixed object that is unmoved by our own vacillation. (Your Eternal Reward, p. 122)
This is how we experience joy. We cannot focus on the circumstances of life or life will make us sick. We will be joyful sometimes but often we will find joy lacking. We must instead put our focus on something that is constant. That constant is the nature, character, and promise of God. John MacArthur [Commentary on 1 Thessalonians] gives a number of “constants” we should to take away the seasickness of life’s circumstances, We should focus on,
1. God’s Righteous Character (Nehemiah. 8:10, Psalm 71:23)
2. Christ’s redemptive work (Luke 10:20, Romans 5:1-2; 1 Peter 1:8-9)
3. The Holy Spirit’s ministry on our behalf (Romans 8:14-27)
4. The Spiritual blessings we possess (Philippians 4:13, 19; 2 Peter 1:3)
5. God’s providence as He orchestrates everything for our benefit (Rom. 8:28–30; James 1:2–4)
6. The promise of future glory (Jude 24)
7. Answered Prayer (John 16:24)
8. The gift of God’s Word (Psalm 19:7-11)
9. Deep and sincere relationships in the body of Christ (1 Thessalonians 3:9)
10. The privilege of being able to share the life-changing message of the gospel
Do you notice something about this list? These are generally not the things that we think of as the key to our joy. We would list things like: good health, family, job satisfaction, great experiences, and personal achievements. Our focus is on the storm tossed circumstances rather than the stable character of God.
Let me repeat something I said in a sermon on Philippians.
We often miss out on joy because we try to create it ourselves. When we try to "produce" joy we are working against joy. You see, when we look to our activities and our devices to bring us joy we are NOT looking at the Lord. When we are relying on external things we are distracted from the internal work of God's Spirit. The harder we work to find joy the further we drift from the Lord and that joy we are looking for.
It's like a person who is drowning. They need to trust the lifeguard who comes to save them. The more they struggle to "save themselves" the more difficult it is for them to be saved. Or maybe it is like the patient in the hospital. They wake up from surgery and find tubes in them. The more they fight the tubes and pull at them, the longer it will be before they get better. Instinct says to fight, but in this case instinct is wrong.
So it is with joy. Our instinct is to try to DO things to produce joy. We can't produce joy by our choruses, music, methods, campfires, meditation or anything else. The harder we try to create joy the more elusive it becomes. Joy comes from resting not running. It comes from trusting not working.
Pray Continually
The second command is to pray continually or as the King James puts it, “pray without ceasing.” Many dismiss this command quickly as ridiculous hyperbole or exaggeration. They reason if anyone prayed all the time, they would actually be quite useless in the world. They would not function.
However, Paul does not mean that we should constantly spend our lives in a prayer meeting or in formal prayer. He isn’t saying we should always be on our knees or have our eyes closed. That is only one kind of prayer. Paul is encouraging us to be in constant communication with God. Most of us would actually have a better time with prayer if we kept up a running conversation with the Lord throughout the day.
When we talk about communication in marriage we are not simply talking about those times when we sit down to have formal conversations with our spouse. Communication in marriage takes place constantly. We communicate through our words, our actions, and through our silence. Have you noticed that people who have been married a while start often finish each others’ sentences? Many times something will be said and they have exactly the same response. At times it is maddening. A conversation is progressing and all of a sudden a husband and wife start talking about something totally unrelated. Why? Because they have shared their lives with each other to such a degree that they have begun to think alike. Wouldn’t it be great to have that kind of relationship with God? Wouldn’t it be wonderful to have such a continuing conversation with the Lord that you regularly “knew” what God wanted you to without even having to ask? Wouldn’t it be great if you could hear His voice of love in your head in every crisis?
People wonder, “What in the world would I talk to God about all day long?” Again, we have to adjust our thinking. We think of prayer as “asking God for stuff”. Prayer is much more than merely making requests. Prayer is meant to be a conversation with the Lord. It is a time for us to align our hearts and minds with His.
There are times when we need to confess our sin; times when we can express appreciation for God’s creative wonders; times we should express our love; times when we should admit our fears or seek His guidance; and times we should be giving thanks. There are times when we simply need to seek to align our hearts with the heart of God. If you will, there are times we need to discuss things with the Lord. To pray without ceasing means we are living and thinking in the presence of God.
Give Thanks in All Circumstances
Paul tells to give thanks in all circumstances. Once again we need to qualify. Paul is not saying we should give thanks FOR all circumstances. Obviously we should not be thankful for injustice, for tragedy, for disease, or for war. None of these things are good. However, we are to be grateful IN every circumstance. This is an important distinction. Like joy, our thankfulness is anchored to our relationship in Christ rather than to the circumstances of life.
No matter what happens in life we can be grateful that
1. We are forgiven and loved in Christ
2. Nothing can separate us from God’s love (Romans 8:38)
3. God is working in every circumstance (even in the circumstances that aren’t good in and of themselves) for our good. (Romans 8:28)
4. God will supply our needs (Philippians 4:19)
5. God will give us the strength we need. (Philippians 4:13)
6. We will live even though we die (John 11:25); and if this earthly tent we live in is destroyed, we have an eternal house in Heaven not made by human hands. (2 Corinthians 5:1)
7. No one can snatch us from His hand (John 6:39)
8. God will finish the work He started in our lives (Philippians 1:6)
9. We have been extended mercy rather than justice.
If we get this; if we understand the implications of these truths; then we will be able to be grateful in every circumstance. No matter what happens, we can still be grateful that we have not been treated as we have deserved but have been treated with the mercy and love of God.
Periodically on the news someone is interviewed who recently lost their home to fire. In the midst of the devastation these people often say things like: “we lost everything, but thankfully no one was hurt.” These people understand that they can be grateful even in the midst of such terrible loss. They have the right perspective.
We ought to not only thank God in the hard times . . . we should also be grateful in the good times. In the hard times we recognize our lack of strength; so we turn to the Lord. In the good times we have a tendency to feel that we have somehow earned what we have. We tend to pat each other or ourselves on the back. We forget to give thanks. Every day of life is a gift. Every blessing is an expression of the mercy and love of God.
Let me apply this even further.
· In the case of a death of someone we love, we will be grateful that there is life beyond the grave
· In the case of a devastating illness we can be grateful that God knows our weakness and has promised to give us strength. If the illness leads to death we again can be thankful (and draw strength from the fact) that this life is not all there is.
· In the case of injustice, we can be grateful that God will vindicate us.
· In the case of a promotion, we thank God for the new responsibility He has entrusted to us.
· In the case of a job loss, we can be grateful that God will work in the situation for our good or that God is giving us some kind of new opportunity.
· In the case of a financial windfall, we should give thanks that God has equipped us to steward His resources.
· In the case of divorce, we can be grateful that God will forgive our failures and heal our heartache.
The point is this: if we focus on the circumstances of life we will be grumblers. If we focus on the Lord we will be thank-ers. No one promised that life will be easy. In fact, Jesus told the disciples, “In the world you will have tribulation.” However, Jesus then adds, “but I have overcome the world.” (John 16:33) That’s the perspective that leads to a continuously grateful heart.
Conclusions
I struggle with these commands. Too often I find myself swallowed up by complaints rather than gratitude; a sour mood rather than an attitude of deep-seated joy. I admit that at times I have to remind myself to talk with God.
However, what Paul commands of us; what God desires from us; is not unreasonable and certainly not impossible. We must stop looking at these verses as if they were grand exaggerations. We CAN be joyful always; praying without ceasing; and we can always be grateful. It all depends on our relationship with God.
So it is time for us to get serious. Let’s be honest with ourselves.
· We lack joy because we lose sight of God
· We become lax in prayerfulness because we think to highly of ourselves
· We find gratitude illusive because we have put our focus in the wrong place
We must remember that doing the will of God starts by being the person God has called us to be. If you want to do His will the place to start is to develop an intimate relationship with Him.
The thing about these three commands is: if you really start working on one, the others will tend to follow. If we find our joy in the Lord in all circumstances we will want to talk with him and we will be grateful. If we adopt an attitude of gratitude we will find ourselves giving thanks at all times and our attitude and outlook will be one of joy. If we learn to pray without ceasing we will find the joy of our relationship with God will overshadow the trials of our lives and it will lead us to a constant sense of gratefulness.
So, start somewhere. Here are some simple suggestions,
· Put up some little signs around your house that ask, “have you talked to God lately?” We often tell our children that they need to “check in” with us periodically. As God’s children we need to check in with Him.
· Memorize the words to the hymn “Count your Blessings”
· Draw a picture of a heart that has a big smile to remind yourself that joy is a heart issue
· Memorize 1 Thessalonians 5:16-18
· When you feel yourself getting anxious or uptight about the events of life, learn to say to yourself, “look to the Lord”. When you face a daunting task, ask, “Do I trust Him or don’t I?”
These commands are not unrealistic. Each one of us can do these things. And if we would work on these areas of our life, we will find that our Lord will become more precious, the trials of life would be less devastating, and we would be a lot more fun to be around. So, if you want to know what the will of God is for your life, start here.
Friday, January 9, 2009
Friday, January 2, 2009
The top performer on the S&P/TSX
Interview with ELD CEO Paul Wright
Eldorado Gold Corp. shares soared 65.5 per cent to $9.65 in 2008 making it the top performer on the S&P/TSX composite index, while in a year most commodity prices get slaughtered.
Gold managed to hold its own closing at $884.30 (U.S.) an ounce, up from $838 a year ago. Yet bullion is still well below its peak of $1,032 an ounce it reached in mid-March as the credit crisis took hold.
Gold producers accounted for five of the top 10 companies on the S&P/TSX. The other five were Alamos Gold Inc. (up 58 per cent), Kinross Gold Corp. (23 per cent), Red Back Mining Inc. (21 per cent) and Agnico-Eagle Mines Ltd. (15 per cent).
Eldorado Gold Corp. shares soared 65.5 per cent to $9.65 in 2008 making it the top performer on the S&P/TSX composite index, while in a year most commodity prices get slaughtered.
Gold managed to hold its own closing at $884.30 (U.S.) an ounce, up from $838 a year ago. Yet bullion is still well below its peak of $1,032 an ounce it reached in mid-March as the credit crisis took hold.
Gold producers accounted for five of the top 10 companies on the S&P/TSX. The other five were Alamos Gold Inc. (up 58 per cent), Kinross Gold Corp. (23 per cent), Red Back Mining Inc. (21 per cent) and Agnico-Eagle Mines Ltd. (15 per cent).
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