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Triple Crunch Log                                                                                                            

BP is one more accident away from oblivion: FT’s Lex column. “Bob Dudley has been at the company long enough to appreciate that fact. His two predecessors as chief executive were felled, directly or indirectly, by an entrenched corporate fecklessness about safety.”886

The IMF’s praise for UK austerity package is “foolish:” Martin Wolf in the FT. “Yes, inflation expectations should remain anchored. But, in the medium term, the danger is one of very low inflation, if not deflation, rather than the reverse. The widely held view that expansion of the central bank’s balance sheet must generate high inflation is wrong. With a broken credit system, it does no such thing.”887

Four oil companies agree to end Iran operations in face of US pressure on unilateral sanctions. FT: “The US said it had reached agreement with four oil companies that they exit Iran rather than face sanctions, while Japan said a state-owned oil group would end its involvement in a huge Iranian oilfield. James Steinberg, deputy secretary of state, said Statoil, Eni, Royal Dutch Shell, and Total had agreed with the US to end their investments in Iran, following the entry into force of new US unilateral sanctions legislation.888

1.10.10 North America's race to exploit oil sands and shales creates multiple dangers. Guardian:  “Energy companies are rushing to exploit new sources of oil in Canada and the western US - but government officials don't seem concerned about the environmental consequences … In communities from Wyoming to Texas, thousands of trucks now rumble down rural roads, carrying the huge amounts of water — 2 million to 4 million gallons per well — needed to free oil and natural gas from shales by blasting them with high-pressure fluids. In places such as North Dakota, which receives modest amounts of rainfall, local residents and conservationists worry that the energy boom will deplete aquifers. …. The pulverizing process, called hydraulic fracturing or "fracking," involves sinking drill bits two miles deep and then turning them to move horizontally through the shale. An armada of tank trucks hauls several million gallons of water to each well site, where pumps shoot it down the well at such super high pressure — 8,000 pounds per square inch — that the rock splits. The practice is risky. Earlier this month, an oil well undergoing fracking near Kildeer, N.D. ruptured. The blowout leaked 100,000 gallons of fracturing fluid and crude oil before being plugged two days later.”889

Chevron to begin deepwater drilling off UK coast. Operations on a new well in the West of Shetlands are due to begin within days, as Greenpeace plans to take legal action against the government is to being operations on a new oil well in deepwater West of the Shetland islands.890

Sinopec invests $7bn in Brazil oil alliance with Repsol, aiming to exploit pre-salt reserves. FT: “China is putting down roots in the backyard of Petrobras, the newly-crowned share issue king of world stock markets, with the announcement of a $7.1bn oil alliance in Brazil between Sinopec and Repsol. In the latest step in China’s global hunt for oil - and one of the more expensive - Sinopec, a state-owned oil and gas company, is to take a minority stake in the Spanish energy group’s Brazilian subsidiary in order to exploit its oil deposits in the country. … Repsol Brasil operates some of its field in partnership with Petrobras. Repsol’s first big pre-salt field due to come into production is Guara in 2013, the spokesman said.891

3.10.10. Osborne pledges to end City’s dominance of the UK economy. The chancellor will tell the Conservative conference that he does not want “growth confined to one corner of our country or one sector of our economy”, adding that Britain should never again hitch “its entire fortunes to the City of London”.892

Bankers discuss restoring “values and trust” in their industry. Guardian: “The bankers, lawyers and other dignitaries pitching up at the Mansion House tomorrow to discuss “values and trust” in the City are unlikely to be much bothered by the tube chaos promised for that day by striking RMT and TSSA workers. Cushioned from the real world in their chauffeur-driven cars, the bosses of Britain's banks lost touch with the tube-travelling public long ago. Now, a fortnight shy of the second anniversary of the taxpayer rescue, bankers are making noises about rectifying the damage to their reputation. Their fall from grace is so complete even David Cameron, a Tory prime minister bankrolled by City financiers, has failed to invite any of them to sit at his table of business advisers. … Banks could also curtail the practice of setting up offshoots in tax havens such as the Cayman Islands. While groups such as Barclays insist this is nothing more than good business practice, it leaves the impression the banks are more interested in avoiding tax than making a contribution to society. And they could sign up to the Robin-Hood tax. Paying a 0.1% tax on their financial transactions would help refill coffers depleted by the bailout. The chances of any of this? Zero. Trust being restored? No chance.”893

IMF admits that the West is stuck in near depression. Telegraph: “If you strip away the political correctness, Chapter Three of the IMF's World Economic Outlook more or less condemns Southern Europe to death by slow suffocation and leaves little doubt that fiscal tightening will trap North Europe, Britain and America in slump for a long time. The IMF report – "Will It Hurt? Macroeconomic Effects of Fiscal Consolidation" – implicitly argues that austerity will do more damage than so far admitted.”894

Ireland the latest casualty in a grim new game of beggar thy neighbour. Ambrose Evans-Pritchard in the Telegraph:  “The most toxic mixture in modern economies is banks and property bubbles. When the bubbles burst the destruction of so much illusory wealth brings economic disaster. The prompt for these thoughts has been the plight of Ireland, where the government has just committed to inject another €30bn (£26.2bn) into Anglo-Irish Bank. Unfortunately, I doubt that this will be the end of it. … When major property bubbles burst, the weight of debt hangs around your neck like an albatross – for consumers, banks and governments. The financial consequences of past mistakes immobilise current economic activity. And the conventional levers of policy don't work: interest rates fall to zero but banks don't want to lend or borrowers to borrow; governments should be boosting demand by Keynesian policy but they feel they cannot for fear of falling into the debt trap, from which the only escape is default or inflation. A period when anything seems possible and politicians can indulge their wildest dreams morphs into a period when the future looks irredeemably bleak and governments are reduced to impotence.” … And regarding beggar they neighbour” responses: “Something has to give. I am still looking for the way out but cannot see it. Please, someone, tell me that I'm blind.”895

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