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12 October 2013

Press Review 12-10-2013

During the past four weeks I was in three different countries and had little or no space to nurture this weblog; apologies if you have been waiting for the weekly reviews.

A lot went by these past few weeks, but what I feel to be the most important development is the unprecedented diplomatic exchanges between the US and Iran. The economic sanctions imposed on the Islamic republic apparently produced the desired effect, and without bloodshed or social unrest, ironically, all through a democratic process. This is by far the greatest foreign policy achievement for the Obama administration.

Immediately on the wake of the events a the UN, news burst out of a new deal with Russia to further expand the Iranian nuclear fleet.
Russia Today
Tehran, Moscow agree to build new nuclear power plant - Iran’s nuclear chief

Tehran and Moscow will cooperate on the future construction of a new nuclear power plant, according to Iranian nuclear chief Ali Akbar Salehi. The news comes as Russia hands over operational control of the first unit of the Bushehr nuclear plant to Iran.

“The operation of the Bushehr nuclear power plant from this day has been passed to Iranian specialists and will come under full control of the Iranian side after a two-year warranty period or seven thousand hours of work,” said the head of the Atomic Energy Organization of Iran (AEOI), Ali Akbar Salehi, as quoted by IRNA news agency.

"The Iranian people have been waiting for the commissioning of the Bushehr nuclear power plant for 37 years," he added.
Sadly, the success with Iran is the exception to the rule for US (and NATO) foreign policy. The recent tragedy at the shores of Lampedusa serves to remind that mistakes have consequences. I have been postulating that Libya ceased to exist as a state when Colonel Gaddafi was executed. Last Wednesday the BBC ran a piece claiming exactly the same, explaining how Cyrenaica (whom has unilateral declared independence) is boycotting petroleum exports in a bid to cease monetary flows to Tripolitania and Fezzan. And yesterday we had the spectacular kidnapping and voluntary release of the prime minister, once again proving that power is rather pervasive at the moment.
Was Libya really a triumph for liberal interventionism?
Tim Whewell, 09-10-2013

More than two years since western intervention in Libya, it is a far from secure and settled state.

Newsnight's Tim Whewell has returned to eastern Libya where the revolt began and where it was declared victorious, to consider if Libya still looks like a triumph for liberal interventionism.
In the US itself the uncertainty surrounding shale oil prospects has been fuelled again by the media. With production peaks in hand's reach at Bakken (North Dakota) and Eagle Ford (Texas), other plays have been touted as possible replacements for this new domestic energy source. But there was a reason why Bakken and Eagle Ford were the first to get drilled: cost.
Wall Street Journal
Oil Firms Seek to Unlock Big California Field
Jim Carlton, 22-09-2013

California's Monterey Shale formation is estimated to hold as much as two-thirds of the recoverable onshore shale-oil reserves in the U.S.'s lower 48 states, but there's a catch: It is proving very hard to get.

Formed by upheaval of the earth, the Monterey holds an estimated 15.4 billion barrels of recoverable shale oil, or as much as five times the amount in North Dakota's booming Bakken Field, according to 2011 estimates by the Department of Energy. The problem is, the same forces that helped stockpile the oil have tucked it into layers of rock seemingly as impenetrable as another limiting factor: California's famously rigid regulatory climate.
The declining costs of renewable energy persists in the news. In New England Wind is now seen even as capable of cutting cost to electricity consumers.
The Boston Globe
Wind power now competitive with conventional sources
Erin Ailworth, 23-09-2013

The state’s biggest utilities, in a milestone for New England’s wind power industry, have signed long-term contracts to buy wind-generated electricity at prices below the costs of most conventional sources, such as coal and nuclear plants.

The contracts, filed jointly Friday with the Department of Public Utilities, represent the largest renewable energy purchase to be considered by state regulators at one time. If approved, the contracts would eventually save customers between 75 cents and $1 a month, utilities estimated.

“This proves that competitively priced renewable power exists and we can get it, and Massachusetts can benefit from it,” said Robert Rio, a spokesman for Associated Industries of Massachusetts, a trade group that represents some of the state’s biggest electricity users.
On its turn the solar industry seems set for a quick recovery from the setbacks imposed by the European Commission and several European governments. Demand is picking up everywhere else and 2014 appears bound for near record revenues.
Solar Daily
Global Solar Installation Growth Set to Hit Three-Year High in 2014

Annual solar installations are predicted to expand at a rate of 18 percent in 2014, reaching 41 GW and firmly marking the end of the solar industry's two-year slowdown. IHS reaffirms its prediction made in early 2013 that installations this year will amount to 35 GW. PV installations in 2014 will rise by 17 percent, according to the quarterly IHS PV Demand Market Tracker. This represents an increase from 15 percent in 2012 and 13 percent in 2013. The year 2014 will bring the highest rate of growth since the 35 percent increase in 2011. Market revenue in 2014 will amount to slightly less than the all-time-high of $89 billion set in 2011. "PV installations will accelerate in 2014 driven by low system prices, the creation of new markets in emerging regions and the continued growth in major countries such as the United States, Japan and China," said Ash Sharma, senior research director for solar at IHS. "As the industry's recovery accelerates and market revenue returns to near record levels, solar manufacturers will leave behind the turmoil of recent years and enjoy improved business conditions."
In Portuguese there is a saying that goes more or less like this: "The jug goes to the fountain just so many times, at one point it'll stay there". The regular political gridlock in Washington around the mechanisms that allow the US to issue the world's preferred reserve currency is becoming too frequent to ignore; some day they might just break the jug. It is unfathomable to a foreigner why such power would ever be put at stake from within the country, but the fact is that it has. Anyone holding financial assets from the US is wise to take precautions and diversify, it won't be pretty if things go wrong.
Der Spiegel
Shutdown Spectacle: 'America Is Already Politically Bankrupt'
Charly Wilder, 02-10-2013

The illustration on the cover of German business daily Handelsblatt on Wednesday morning fairly well encapsulates the way the US federal government shutdown is being perceived across the Atlantic. The Statue of Liberty stands bound in chains, her torch hand hanging listlessly by her side. Across it reads the headline: "The Blocked World Power."

Many Germans have found it hard to understand American lawmakers' inability to resolve their budget disagreements in time to prevent a shutdown of all nonessential government services, which went into effect at midnight on Monday night. "What Washington currently offers up is a spectacle, but one in which the spectators feel more like crying," writes the conservative daily Frankfurter Allgemeine Zeitung.

"Because Republicans and Democrats, House and Senate, Congress and president could not agree on a stop-gap budget, hundreds of thousands of federal employees were sent on involuntary leave and many agencies were forced to shut down," continues the editorial. "The main actors in this dispute, which brings together many factors, both ideological and political, took a huge risk and, unhindered, proceeded to validate everyone who ever accused the political establishment in Washington of being rotten to the core -- by driving the world power into a budgetary state of emergency. The public is left wondering how things could have been allowed to get to this point and why there is so much poison in the system."
Unilateral action by the US government to avoid a sovereign default is possible, but highly controversial. This issue will certainly dominate the news in the following days and perhaps weeks.
Market Watch
If all else fails, Obama will raise debt ceiling himself: analyst
Greg Robb, 25-09-2013

If Congress fails to raise the debt limit by Oct. 17, could President Barack Obama step in and raise the ceiling by executive action?

Greg Valliere, chief political strategist for Potomac Research Group, says Obama would do so, if faced with the prospect of a certain default on paying the nation’s creditors.

“I am not flat out saying that [executive fiat] is the end game, but it has to be on the table if a default looks imminent,” Valliere said in an interview with MarketWatch.

During the last debt ceiling showdown in the summer of 2011, there were scholars and senators who suggested Obama did have such a silver bullet — the 14th Amendment to the Constitution.

None other than former President Bill Clinton agreed.
I was in an air-plane when one of the most beautiful chapters of Portuguese sport was written in Florence. I only learned the extraordinary news several hours later but it still filled me with joy. We have a new hero, an icon of persistence and success abroad, a badly needed national reference in this time of despair. Just like Agostinho before him.
Rui Costa, le champion du monde qu'on n'attendait pas

Personne ne l'attendait. Au milieu des favoris qu'étaient Nibali ou Froome, c'est l'outsider Rui Costa (26 ans) qui a arboré le maillot arc-en-ciel, dimanche. A Florence, le Portugais est devenu champion du monde au terme d'une course de plus de sept heures rendue éprouvante par la pluie. Homonyme du footballleur lusitanien, Rui Costa le cycliste est devenu le premier coureur portugais à décrocher le maillot arc-en-ciel. Après 272 kms, celui qui a remporté deux étapes sur le dernier Tour de France a devancé au sprint l’Espagnol Joaquim Rodriguez.
And that's all for this time. Note that I added a series of new entries to the list of blogs worth reading; it seems that almost everyone that used to work for TheOilDrum has started (or re-started) a personal weblog, which makes the shut down of the website all the more enigmatic.

I'll be visiting a different country next week, a new review probably only in two weeks time. Until then.

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