Thursday, 6 December 2012

Northern Canada eyes BP oil spill technology

CALGARY, Alberta, Dec 5 (Reuters) - Canada's Northwest Territories is studying oil well monitoring technology used by BP Plc in the Gulf of Mexico following its 2010 oil spill there in hopes that it can be applied to Arctic wells, the Territories' industry minister said on Wednesday.

David Ramsay, minister of industry, tourism and investment in the resource-rich and sparsely populated territory, said it may be possible that such gear can be used to satisfy Canadian regulators, who reviewed regulations for offshore oil and gas operations in the Arctic following BP's Macondo disaster.
Ramsay toured BP monitoring facilities this week in Houston, where he also spoke at an event hosted by the Canadian consulate.

The Northwest Territories is seeking investments in oil and gas as a way to bring economic benefits to a region that suffers from high unemployment. A long-sought pipeline to move gas from the onshore Mackenzie Delta to southern markets is years behind schedule.

"They (BP) are going to be a player in the Beaufort, in the Arctic, so it's important for us to meet with them to get an understanding of how they are going to try to address the same-season relief well requirements," he told Reuters in a telephone interview.

After its review, Canada's National Energy Board reaffirmed a long-standing policy that requires drillers in the Far North offshore to demonstrate that they can drill a relief well during the same season of its initial well in case of a blowout.

The NEB said, however, that applicants wanting to depart from the rule would have to show how they would meet or exceed the policy's intended outcome, aimed at protecting the environment in the fragile region from contamination.

Ramsay said it is important for the territorial government to see what might be available as far as offering "equivalencies" to same-season relief wells.

He was shown BP's monitoring stations and a capping stack, a massive steel structure like the one the company used to finally cap the blown-out Macondo well that spewed nearly 5 million barrels of oil into the Gulf of Mexico for almost three months.

Last month BP agreed to pay $4.5 billion in penalties and plead guilty to criminal misconduct over the disaster, which caused the worst offshore oil spill in U.S. history.
As part of a deal announced in 2010, BP pooled its Canadian Beaufort acreage with that held by Exxon Mobil Corp and Imperial Oil Ltd. The aim was to avoid duplication of equipment and personnel.
The partners are currently assessing options for exploring and developing the acreage, but there are no current plans to start drilling, Imperial spokesman Pius Rolheiser said.
"We hope to someday have activity back in the Canadian Beaufort and be able to look at monitoring the in the Beaufort in the Northwest Territories," Ramsay said.
Chevron Corp has been conducting seismic studies in the region and expects to return in the summer of 2013, and a small British company, Franklin Petroleum, is also devising a seismic program for next season, he said.
In his speech on Wednesday, Ramsay said the Northwest Territories has an estimated 81 trillion cubic feet of natural gas and almost seven billion barrels of oil.
The trick has been developing the resources and getting them to market. The Imperial-led Mackenzie Valley Pipeline is stalled against a backdrop of weak natural gas prices and booming shale gas supplies closer to market.

The government is optimistic, however, about the Conol shale oil formation near Norman Wells in the central Mackenzie Valley, where companies such as Husky Energy Inc, Royal Dutch Shell Plc, ConocoPhillips and MGM Energy Corp have launched exploration programs to tap an estimated two billion to three billion barrels of crude.

Friday, 2 November 2012

An Overview of the Mobile Phone Industry in Kenya

When the cellphone first landed on Africa's shores in the late 90s, no-one could have expected its use would have exceeded 70% of the population in just a decade. Although this figure is debatable, it certainly holds true for most of Africa's urban areas.

Ethically, mobile phone operators are wont to spread usage to the rural areas. However, this may not be commercially viable as penetration may not yield matching revenues. This means that the operators' core market, the urban areas, may already be saturated and future growth prospects minimised.
The competition for this market in Kenya has been especially heated and now resembles a Red Ocean with competitors going for each others' share.
The only logical way to sustain revenue growth is for operators to concentrate on improving services to this segment and explore ways to expand it.
Kenya currently has 4 service providers- Airtel, Orange, Safaricom and Yu. This is unlike other countries in the region that have upto 6 providers.

Leading Competitors

Safaricom was first off the blocks in the industry and now has the lion's share of the market with over 70% of phone users on its network. Call quality on its network is satisfactory but its coverage like its competitors is limited to the densely populated areas of the country. In the northern region where insecurity is rampant, the 4 companies have shied away from erecting boosters and the available ones are few and far between Safaricom's media presence is more pronounced than its competitors and this is probably what has helped it maintain loyalty among its customers. Its management has also taken the lead in embracing the innovation and the company was among the first in the world to adopt and popularise mobile money-transfer technology.
In the early days of mobile telephony, Safaricom received healthy competition from Kencell Communications which is currently Airtel. Kencell's management had a very competitive and efficient media presence that is not matched by the current competitors. Unfortunately, the company has changed hands severally since then and this has inevitably affected its competitiveness. It now comes 2nd to Safaricom in terms of market share with less than 20%. It's also unfortunate that its call quality was previously regarded as the best in the country. It has also found itself lagging behind Orange and Safaricom in regards to the new frontier in the industry- provision of internet/broadband.

Sick Man of the Industry

Orange-Telkom is the sick man of the industry which is not surprising given its backing. Government backing more often than not means that good management is compromised by bad politics. It has all the resources to make it an industry leader and even has boosters in the remotest parts of the country but all its efforts to redeem itself always come unstuck. I t could have a monopoly in the remotest parts due to its CDMA technology but doesn't take advantage of that.It also has a monopoly in the landlines sector but its service here doesn't deserve mention in the 21st Century- most customers despaired long ago and discarded their old telephones. Another area it displays its lethargy is the broadband segment. Orange-Telkom has a potentially controlling stake in the fiber optic cable that connects Kenya to the rest of the world but won't use it. It's technical staff are knowledgeable and its back office skilled but bureaucracy can't let this company take advantage.
It recently applied for a government bail-out and was successful at the 2nd attempt. The rest of the competition doesn't seem to have the same financial issues but state-backed companies have seen a rise in cases requiring bail-outs. South African Airways recently applied for a bailout from its government after failing to meet its obligations.
Yu is the 4th operator and revels in market penetration pricing to gain market share- a strategy that seems to be working.
Airtel and Orange outsource their customer care departments and this is where they might be shooting themselves in the feet. Most of the outsourcing firms have financial troubles o their own. Their staff are demoralised, underpaid and have been in the spotlight recently after going on strike for unpaid salaries. Surprisingly, these 2 have skilled personnel expatriated from parent companies in more developed countries- India and France respectively but they aren't able to replicate their expertise into success in the local industry- at least not yet.

Thursday, 4 October 2012

Rosneft CEO to meet investors in London on Friday

MOSCOW | Tue Oct 2, 2012 10:07am EDT

Oct 2 (Reuters) - Igor Sechin, chief executive of Rosneft, a contender to buy BP's stake in a Russian rival TNK-BP, will meet with minority shareholders in London on Friday, a Rosneft spokesman said.

"It is part of our regular roadshow, which we conduct every year," the spokesman said. He said Sechin would meet with the company's shareholders but would not meet with any BP investors.

The CEO has said BP could use some proceeds from a planned sale of its stake in TNK-BP, its Russian joint venture, to buy a direct equity stake in Rosneft. The spokesman said Sechin was not planning to discuss that deal with investors on Friday.

Rosneft, Russia's largest oil company, is still majority-owned by the state but is on a list of companies to be fully-privatised. But Sechin, a deputy prime minister in the cabinet of Vladimir Putin before Putin was elected president in March, has said he wants to raise the market value of Rosneft before plans are put in motion to privatise it.

Monday, 1 October 2012

Australia's Arrium rejects $1 billion bid from Noble, POSCO group; shares soar

 SYDNEY/MELBOURNE | Mon Oct 1, 2012 12:28am EDT

(Reuters) - Australian miner and steel maker Arrium rejected a A$1.01 billion ($1.04 billion) takeover offer from a consortium including Noble Group and POSCO calling the approach undervalued.
Arrium's shares jumped as much as 29 percent on Monday to a one-month high as investors anticipated the company would remain in play. The bidding consortium, called Steelmakers Australia, is expected to respond to the rebuff on Monday afternoon.
The consortium, which also includes National Pension Service of Korea, Korea Investment Corp and Korea Finance Corp, offered 75 cents a share or a 37.6 percent premium to Arrium's close on Friday. Arrium's shares traded above A$0.75 as recently as August 29.
The consortium joins a string of firms aiming to cash in on a drop in the value of resource firms due to tumbling commodities prices. Its bid comes just weeks after Arrium produced its first iron ore from its expanded production.
"There has been a lot of consolidation in the global steel industry for a long time. This is a further working through of the globalization of the industry," said Richard Morrow, director at E.L. & C. Baillieu Stockbroking in Melbourne.
The bid propelled larger rival BlueScope Ltd's (BSL.AX) shares up as much as 8 percent on Monday on hopes of further consolidation in the sector.
A shake-out from sliding iron ore and coal prices has touched off a spate of asset sales as tough times spread from Australia to Indonesia in what has been a lean year in the mining sector.
Iron ore prices, while recovering from a low of $86 a metric ton, remain nearly a third below this year's high of $150 a metric ton as Chinese demand cools. This has rattled share prices, and forced miners including BHP Billiton to put some expansion on hold.
Asia-Pacific mining deals so far this year total $47.6 billion, down 23 percent from a year earlier, Thomson Reuters data shows, but signs of a revival in appetite were evident as near record-low valuations spur deals.
Cashed-up Japanese, Korean and Chinese buyers are cherry-picking mining assets, investment bankers and lawyers say.
Activity has picked up in recent weeks, led by a $960 million bid by Thai state-controlled energy company PTT to privatize coal miner Sakari Resources .
POSCO and others are in talks to buy a 20 percent stake in PT Borneo, which aims to reduce $1 billion in debt incurred last year when it bought a stake in London-listed Bumi Plc.
Shares in Arrium had fallen by over a fifth this year to Friday's close. Declines have been exacerbated in the last month, thanks to the uncertain demand outlook. As of 0408 GMT, Arrium shares were trading up 22.9 percent at A$0.67 while the broader market .AXJO was flat.

"We have carefully considered the proposal. We believe that the proposal undervalues Arrium, and is not in the best interests of Arrium shareholders," Arrium's chairman, Peter Smedley, said in a statement on Monday.
"We also believe that the highly conditional nature of the proposal carries significant risk."
The conditional offer represents a premium of 8 percent over the volume weighted average price of Arrium's shares during the last three months, the firm said in a statement.
Conditions to the offer included a six-week due diligence period, negotiations with existing lenders, no dividend payment and a requirement for no material adverse change to Arrium's operations or capital structure.
Arrium plans to raise iron ore capacity to 11 million metric ton a year by mid-2013 from 6 million metric ton now. It posted an underlying net profit of A$195 million on sales of A$7.6 billion in 2011/12 and had net debt of A$2.14 billion.
The bulk of its sales comes from steel and mining consumables, with iron ore mining contributing just A$819 million to revenue in 2011/12, filings showed. The bid comes .
The company earlier this year changed its name from One Steel Ltd to reflect its shift towards a diversified global mining and materials business and to attract new investors.
Arrium has retained UBS as its financial adviser and Allens Linklaters as its legal adviser. The bidding consortium is being advised by Bank of America Merrill Lynch, according to two people familiar with the bid. ($1 = 0.9616 Australian dollars)

(Reporting by Narayanan Somasundaram and Victoria Thieberger; Editing by Ed Davies and Ken Wills)

Thursday, 27 September 2012

KenGen invites bids for 560MW geothermal plants

 Thu Sep 27, 2012 5:54am GMT
NAIROBI (Reuters) - Kenya's main electricity producer, KenGen, has invited parties to submit bids for the development of 560 MW geothermal power plants, the company said on Thursday.
The company said it planned to develop the power plants in phases of 140 MW each at Olkaria within the east African nation's Rift Valley under a joint venture arrangement in which successful bidders would build, and later transfer, the facilities back to the firm after 10 to 20 years.
"The successful bidder or consortium would be the majority shareholder," KenGen said in a call for the bids in the Kenyan newspaper, the Daily Nation.
Kenya is the first African country to drill geothermal power, tapping vast reserves of steam energy in the country's Rift Valley region, which remains geologically active.
The country has the potential to produce 7,000 MW and is targeting production of at least 5,000 MW of geothermal power by 2030.
Although expensive to drill initially, development of cheaper geothermal power means the country will come to rely less on thermal power, prone to the vagaries of high international prices, and rain-fed hydroelectric dams.
The cost of energy is a key factor in the east African nation's inflation levels.
Kenya's peak electricity demand has risen to about 1,200 MW, compared with 780 MW in 2002, driven by economic growth. KenGen produces 1,141 MW and the rest is generated by independent power producers which mostly rely renewable energy such as wind power.
KenGen said in February it planned to raise $12 billion to build six geothermal power plants that should generate 585 MW by 2016, as it pushes to diversify its power sources.
The company on Wednesday posted an 11 percent rise in its full year pretax profit to 4.045 billion shillings, helped by increased output from new plants.
East Africa's biggest economy has embarked on capital-intensive alternative power generation projects, in a bid to reduce dependency on unreliable rain-fed hydroelectric dams and thermal power prone to erratic rainfall.

TNK-BP co-owners to bid for entire BP stake

A British Petroleum (BP) logo is seen at a petrol station near the Burj Khalifa in Dubai August 29, 2012. REUTERS/Jumana ElHeloueh
MOSCOW | Wed Sep 26, 2012 1:16pm EDT
MOSCOW (Reuters) - The billionaires who own half of Russian oil firm TNK-BP plan to make a cash offer for BP's 50 percent stake, raising the prospect of a bid contest with state-backed Rosneft, which analysts say could net BP well over $21 billion.
Such an auction would pit the four Soviet-born tycoons, who amassed their assets in the chaotic 1990s, against Rosneft's chief executive Igor Sechin, a confidant of President Vladimir Putin who wants to build his company into a national champion.
A source close to the AAR consortium, which groups Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik, said it would make a binding offer by mid-October.
"We will pay cash, but have not yet determined the price," said the source.
AAR had previously said it was willing to pay $10 billion for half of BP's stake in Russia's third-largest oil company.
But BP, which put its entire TNK holding up for sale in June after a collapse in shareholder relations, was not interested in that offer, industry sources said.
AAR then expanded the scope of its bid after Rosneft said it also wanted to buy BP's stake, for cash and stock.
Analysts say BP now stands to make three or four times its original investment of $7 billion made in 2003, as it faces multi-billion-dollar damages arising from the Gulf of Mexico disaster in 2010.
"Anything that leads to the end of a fight (between TNK's shareholders) with an impossible solution is positive," Riccardo Orcel, deputy chief executive of VTB Group , a Russian state bank close to Rosneft, told the Reuters Russia Investment Summit on Wednesday.
"TNK-BP is a phenomenal company - it has probably been the best ever investment that BP has made."

Under a shareholder agreement, AAR has exclusive rights to make an offer by a mid-October deadline that falls 90 days after BP put the stake up for sale. Other suitors may then seek to strike a deal, creating the prospect of a bidding contest.
AAR would "likely" fund the deal by borrowing through TNK-BP and tapping other funding, the source said. How much the AAR shareholders themselves might invest is unclear. The consortium will start talks with banks this week.
Bankers have told Reuters that it would be possible for AAR to finance a significant portion of any purchase by leveraging up TNK-BP, which has paid out $19 billion in dividends since BP came into the venture in 2003.
TNK-BP posted a record $14.6 billion in earnings before interest, taxation, depreciation and amortisation (EBITDA) last year. At year-end it had a low debt to equity ratio of 26 percent.
With net debt of around $3 billion now and EBITDA estimated at $13 billion, "there is huge capacity for additional debt", the AAR source said.

BP expects to receive bids from both AAR and Rosneft and will consider them on their merits. "We will evaluate, negotiate and make a decision," a spokesman said.
Bankers and analysts say that BP is likely to prefer Rosneft as a buyer and would seek to use good relations with the Kremlin to gain new opportunities for oil and gas exploration in Russia.
BP has, however, lost the Arctic offshore territory that it had hoped to explore with Rosneft in a joint venture deal which was killed off by a challenge from its TNK partners.
Rosneft subsequently turned to ExxonMobil for an Arctic deal, with the U.S. firm's chief executive Rex Tillerson now a regular visitor to Russia.
Under a sale of its TNK stake to Rosneft, BP would plough back part of the proceeds into Rosneft stock, a source familiar with its thinking said, but would not embark immediately on any joint exploration operations with the Kremlin-backed company.
Meanwhile the 12 international banks that have already started financing talks with Rosneft are unlikely at the same time to talk about financing for AAR's full bid, banking sources in London said.
But bankers said the final outcome could be for Rosneft to eventually take complete control of TNK-BP, creating a global major pumping nearly 4 million barrels per day of oil.
BP could be joined as a minority shareholder in the merged group by a Chinese buyer, fulfilling government plans to sell down the state's 75.1 percent stake in Rosneft, the bankers said.

(Additional reporting by Isabel Witt in London; Editing by Louise Heavens and Greg Mahlich)
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Wednesday, 26 September 2012

The workplaces building Africa's business future

Building site in Kampala
Under construction: Like much of Kampala, Uganda's start-up ecosystem is growing from the ground up, with the help of flourishing co-working spaces and technology hubs across the city     
Thomas Ssemakula is an impressive young man.
Smartly dressed in a shirt and tie, he has just come from a meeting with an investor who has agreed to fund his agricultural services start-up. He smiles widely, his happiness infectious as he talks about how his business got started.
"I started Brave East Africa without a coin on me. That was June 2010 when I finished my final year at Makere University, I was doing bachelor of animal production at the college of veterinary medicine," he says.
Inspired by his single parent mother, Mr Ssemakula set about creating what he hopes will become a multinational agribusiness that helps east African farmers build profitable and sustainable businesses.

"My mother has been father and mother, supporting the family slowly through her work. I wanted to follow the same path."
The first step was to find somewhere to work from. But with no money options were limited - so he came up with the idea of trading veterinary officer services for a seat in an internet cafe, run by a group of farmers.

Writing for a newspaper about agriculture, in return for having the name of his business and contact details prominently displayed, attracted customers, bringing precious funds to invest in the business. Finally he was ready to move to an office environment which would allow him to meet clients and investors and to be taken seriously.
Setting up on your own in east Africa isn't cheap. Not only is there rent to consider, there's furniture, utilities and the internet connection that remains prohibitively expensive for ordinary Ugandans.

So instead Mr Ssemakula decided to become a member of the Mara Launchpad, one of a new breed of home-grown co-working spaces and innovation hubs in Kampala.
Community property "If you're working from home or out of your car here in Uganda people don't take you seriously," says Mara Launchpad's Nigel Ball.
Mara Launchpad The Mara Launchpad is on the third floor of an office block, above a Tusky's supermarket, just across the road from Makere University.
"They're worried because trust levels are lower, and if you don't have an office how do they track you down if things go wrong."
Providing office space is a simple thing to do, says Mr Ball. But what the Launchpad wants to do is give technology and non-technology companies credibility in the eyes of potential clients or partners.
"Getting the right kind of office that projects the right kind of image, that's in the right location, at the right price, is not an easy task," he says.
There's a large open plan room filled with desks, with wifi connectivity, as well as various meeting rooms. In the room next door regular Friday night innovation events are held, organised by the Mara Foundation and the Angels Finance Corporation, the people behind the Launchpad.
The Grameen Foundation's Ravi Agarwal The Grameen Foundation's Ravi Agarwal talks to Launchpad members about how to market their businesses successfully at the regular Friday night innovation event
Business incubation and mentorship is available, as well as a six week acceleration program that runs twice a year.
Ideas exchange Over the last couple of years, tech hubs and other co-working spaces have started popping up in towns and cities worldwide.
For emerging economies, the services and advice they offer can have even more impact than in the developed world. Taking the lead from the granddaddy of them all, Nairobi's iHub, they are spreading rapidly across the African continent.
In an office block on a residential street in Kampala, Barbara Birungi sits at her desk with a cup of tea. She is the manager of the Hive CoLab, less a co-working space than a start-up incubator. Technology entrepreneurs who fit their criteria can spend two years based in the open plan offices.
"It's not about strict business. It's also about coming here to share your ideas, and collaborate. Because out of sharing and collaborating come ideas," says Ms Birungi.
Hive CoLab The Hive CoLab was opened to give the technology scene in Uganda a space that they could call their own and come and collaborate, says Barbara Birungi
"Apart from just offering them a space we see how we can take an idea to the next level. Because many startups fail within the first two years of existence."
As well as regular events and Mobile Monday innovation sessions, the incubator offers mentoring and support finding investors, helping them to protect their intellectual property.
"We have seen examples where investors actually take up someone's idea, and because there's no paperwork, there's no proof they have done that," she says.
Kampala's newest space is Outbox, a co-working space and technology start-up incubator and accelerator that counts Google among its partners.
Richard Zulu is a co-founder. He says working with developers and realising they needed help to get them to the next level pushed him to open the hub.
Outbox hub The Outbox hub is a co-working space for a diverse group of people and a technology incubator and accelerator
"It's very important that the people that start these places share the same passions as the people that work in them," says Mr Zulu.
"A place like this creates a focal point, where you'll be able to meet A, B, C, D people in the tech community. Through the co-working initiative it drives entrepreneurship and innovation through the participants of the space.
"The core is community."
The space specialises in mobile and web start-ups, and Outbox is already home to at least one award-winning business.
Smooth transitions Senegalese-born social entrepreneur and blogger Marieme Jamme mentors founders and managers of some of Africa's technology hubs.
She believes that while the hype surrounding the new hubs is increasing the visibility of African developers, the type of mentorship available in the Ugandan hubs is vital to their success. And it's not available at all of the spaces opening up across the continent.
"You have ideas generated within those tech hubs, but they don't know how to scale those businesses. They have the business acumen and the passion, but they don't know how to go through setting up that business, or writing that business plan.
"You'll find out that 90% of them don't know how to do it. But when an investor comes in they hide their discomfort, and pretend they know how to do it. This is African pride, this is inside the African mindset.
"It's not because they're not good people, it's the way the mindset works."

Another problem according to Ms Jamme is the gap between theoretical and practical knowledge when it comes to coding and development.
"That's why it's very important for us to go back and say, it's ok if you don't know, and work out how you help these entrepreneurs scale their businesses.
"How can you move the coder from a coder to a CEO?"
Mr Ssemakula is certain coming to the Mara Launchpad was the right thing to do.
As well giving farmers agricultural and financial advice, the company is working on technology to link the farmers to high-value markets using text messages.
"The Mara Launchpad has changed my business by providing me with a professional business environment that commands more credibility in the eyes of my customers, in this case the farmers, who find me in such a setting and they see my business as a serious business."

 His dreams of sitting at the helm of a multi-national agribusiness are becoming more tangible, with plans for his first branch office in Nairobi, Kenya.
"[The Launchpad] has given me access to free business mentorship and how to go about being an entrepreneur in a practical way."
"I'm glad to be here."

Wednesday, 19 September 2012

Russia's Putin meets with top Rosneft, BP executives

SOCHI, Russia, Sept 18 | Tue Sep 18, 2012 3:52pm EDT
(Reuters) - Russian President Vladimir Putin met on Tuesday with Rosneft Chief Executive Igor Sechin and BP CEO Bob Dudley and Chairman Carl-Henric Svanberg to discuss a potential expansion of the British oil major's presence in Russia.

"Right now there is a meeting of the president with Sechin and his colleagues from BP - Svanberg and Dudley," said Putin's spokesman Dmitry Peskov, speaking to journalists in Sochi, where Putin was holding the meeting.

"At the meeting, the issue being discussed is connected with the continuation of the broadening of the presence of the company BP on the Russian market."

In June BP announced it would start the process of selling its 50 percent stake in Russia's third largest oil company TNK-BP, and a month later Rosneft said it was in talks to acquire half of the troubled venture.

In return for its share in TNK-BP, the British oil major may gain access to other assets in Russia.
Earlier this month Sechin said state-owned Rosneft had taken a time-out in talks to buy the TNK-BP stake to avoid falling foul of the shareholder pact.

Under the TNK-BP shareholders agreement, outside buyers may hold talks on buying a stake, but cannot close a deal for 90 days.

Tuesday, 18 September 2012

US Election 2012: leaked video shows Mitt Romney saying Obama voters are 'government dependents'

Mitt Romney's efforts to relaunch his presidential campaign were overshadowed on Monday after video emerged showing him appear to dismiss nearly half the country as government dependents who "believe that they are victims".

11:08PM BST 17 Sep 2012

The Republican told a group of donors that the 47 per cent of Americans who do who do not pay income tax would automatically support President Barack Obama because they "believe that they are entitled to health care, to food, to housing, to you-name-it".
"My job is is not to worry about those people. I'll never convince them they should take personal responsibility and care for their lives," Mr Romney says in the video, which was filmed surreptitiously and leaked to Mother Jones magazine.

The footage, shot by an unknown film maker, is potentially explosive for the multimillionaire former private equity executive who is often caricatured by Democrats as a wealthy man out of touch with the hardships of everyday Americans.

It reportedly shows Mr Romney addressing wealthy donors earlier this year and speaking candidly about his strategy of focusing on the small sliver of the population that remains undecided ahead of November's election and not attempting to win over low income voters.

"There are 47 percent who are with [Mr Obama], who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it," Mr Romney said. "And they will vote for this president no matter what."

The Obama campaign immediately seized on the footage Jim Messina, the President's campaign manager, said: "It’s hard to serve as president for all Americans when you’ve disdainfully written off half the nation".
In the footage, Mr Romney also cautions against harshly criticising the President because it could alienate voters who supported him in 2008 and continue to like him personally, even if they disapprove of his handling of the economy.

"When you say to them, 'Do you think Barack Obama is a failure?' they overwhelmingly say no. They like him. But when you say, 'Are you disappointed that his policies haven't worked?' they say yes. And because they voted for him, they don't want to be told that they were wrong, that he's a bad guy, that he did bad things, that he's corrupt."

Mr Romney also jokes about his father, George Romney, who was born in Mexico to American parents, suggesting that there would be an electoral advantage if he were of Hispanic descent.
"He was unfortunately born to Americans living in Mexico. He lived there for a number of years. I mean, I say that jokingly, but it would be helpful to be Latino," he said.

Monday, 17 September 2012

Meet The Blogger Who May Have Just Saved The American Economy

The Fed's announcement of QE Unlimited was a clear departure from past strategy: Rather than seeing asset purchases as an amount of money injected into the financial system, the Fed is now aggressively using the power of future guidance.

 Blogger and Bentley College professor Scott Sumner

It's a step in the direction of Nominal GDP targeting, the hot idea endorsed recently by Michael Woodford at the Jackson Hole conference. But while Woodford is one of the most respected monetary academics in the world, the economist who deserves the most credit for taking a wonky idea and making it mainstream is Bentley economics Professor Scott Sumner who writes the blog The Money Illusion.
Tyler Cown of Marginal Revolution writes:
I haven’t seen anyone else say it yet, so I will.  The Fed’s policy move today might not have happened — probably would not have happened — if not for the heroic blogging efforts of Scott Sumner.  Numerous other bloggers, including the market monetarists and some Keynesians and neo Keynesians have been important too, plus Michael Woodford and some others, but Scott is really the guy who got the ball rolling and persuaded us all that there is something here and wouldn’t let us forget about it.
And Matt Yglesias writes:
Professors at Bentley University who've never published a famous book don't normally shift the public debate. But Sumner's vigorous and relentless blogging throughout the crisis on the potential of expectations-focused monetary policy really broke through. It all began with some links from Tyler Cowen and perhaps a tiff with Paul Krugman. I became a regular reader and his ideas have done a lot to influence me, and you can clearly see the influence on Ryan Avent at the Economist, Matt O'Brien at the Atlantic, Ramesh Ponnuru at National Review, Josh Barro at Bloomberg, and a few of the Wonkblog contributors. Outside the exciting world of online economics punditry, NGDP targeting hasn't (yet!) caught fire as rapidly but it gained explicit allegiance from Christina Romer, Krugman, the economics team at Goldman Sachs, and eventually Chicago Federal Reserve President Charles Evans who started out with a different but similar-in-spirit program.
That really is the key here: Not only has he been incredibly influential, but he really has done it almost entirely through his blog. Also, the bi-partisan swath of his adherents is remarkably rare for an economic pundit.
It's also rare for ideas to simultaneously gain currency among academics and Wall Street economists like Goldman's Jan Hatzius, who endorsed the idea about a year ago in a much buzzed-about note.
The jury, obviously, is still out on the Fed's actions, but the folks we like to listen to, like Bill McBride at Calculated Risk, are very hopeful that this can accelerate the economy.
And if it does, then Sumner's blogging and promotion of the idea that the Fed should signal its unwillingness to let off the gas pedal, until the economy has more than recovered, will deserve major credit. Bloggers have accomplished some remarkable things, and this one will be one of the biggest.
On the FAQ section of Sumner's blog, he explains Nominal GDP targeting in the simplest means possible:
1.  OK, if you’re so smart what should we do?
It is not about being smart, it’s about setting specific goals and promising to do whatever one can to meet those goals.
I’d like to see the Fed set an explicit target path for nominal GDP.  But at this point even a price level or inflation target would be better than nothing.
Do “level targeting,” which means you commit to a specified path for NGDP or prices, and commit to make up for any deviations from the target path.  Thus if you target NGDP to grow at 5% a year, and it grows 4% one year, you shoot for 6% the next.
Let market expectations guide Fed policy.  Ideally this would involve the sort of NGDP futures targeting regime that I have proposed in this blog.  Right now they could focus on the yield spread between inflation-indexed and conventional bonds.  The spread is currently than 1/2% on two year bonds, which means inflation expectations are far too low for a vigorous recovery.  It should be closer to 2%.
The Fed should stop paying interest on excess reserves, and if necessary should put a small interest penalty on excess reserves.  This would encourage banks to stop sitting on all the money that has been injected into the system.
If they did these things it would be easy to get inflation expectations up to 2%.  But if I am wrong, they should do aggressive quantitative easing (QE), something they have not yet done (despite misleading news reports to the contrary.)  They should buy Treasury bills and notes, with Treasury bonds and agency debt available as a backup.